This post was originally written by Michael Cardamone on Medium.
I’ve seen many people write about how to scale from $1M in ARR (Annual Recurring Revenue) to $100M in ARR, but I haven’t seen much written about the grind of getting started and getting to your first $500k in ARR. The founding story and the scrappiness of getting your first customers is different for each company and I wanted to tell those stories. My hope is that we can pull out key insights and some commonalities that others can use for their own businesses. I’ll be interviewing SaaS founders who have recently gotten to that $500K ARR mark and sharing their stories here. If you would like to share your story, feel free to reach out to me.
With that in mind, my first interview was with the co-founder & CEO of TalentIQ, Sean Thorne (full disclosure: Forum Ventures is an investor). TalentIQ’s data integration services make recruiting and sales databases actionable by updating your existing candidates or leads with the latest data. I asked him about why they started the company, challenges the company faced, and how to hire top talent.
If you’re looking for guidance on how to create and scale a SaaS startup, I’m hoping this is a useful read for you.
Why was TalentIQ Founded?
Sean explained that TalentIQ was inspired by a real-life issue. The team had used recruiters before and saw first hand how inefficient they were in identifying candidates and aggregating updated contact information for them. He saw an opportunity to automate the data piece of it. It’s the standard scratching-an-itch issue.
They began by building an MVP. Sean said it’s the only way to develop your product (and I tend to agree). Their MVP allowed them to test product-market fit before investing their time and money into developing a full fledged product.
For early stage companies, both are precious commodities. Make sure you spend it wisely.
Startups are hard. The only way your company has a chance to succeed is if you can persevere through the peaks and troughs of the startup rollercoaster. Sean said that one of the most difficult things was how often people tell you “no.” You need to be relentless and scrappy if you’re going to find a “yes” and ultimately be successful.
Customers Above All Else
Sean explained that to gain traction, a startup must over-deliver to make your customers happy, even if that model is not scalable. It’s important that your biggest initial focus is product and customers. If you don’t have happy customers, nothing else matters.
We covered a bunch of other topics. You can (and should) read our full interview below:
1. Why did you start the company? What was the inspiration?
We had used a recruiter at a previous company and saw HR industry inefficiencies related to data. We realized these issues weren’t confined to HR, and that data management and upkeep of existing person data (candidates, leads, targets, accounts, customer success) within large enterprises is a massive issue.
2. Is your idea the same now as it was when you first started? If not, how quickly did you change it and why?
Same idea, but initially we got off the ground by building a simple MVP. We believe our vision is ambitious so we wanted to take an initial step to gain momentum and revenue.
3. How long did it take from idea to first revenue? How long from first revenue to $500K in ARR?
Our MVP took two weeks to build and we had our first paying customer at week three. Ironically we had not incorporated or set up a company bank account yet, so we had to make up excuses to the customer why we were sticking a net-60 on a then $100 Saas product.
We got to 500k ARR at month ten and should hit $1M in ARR by month twelve.
4. What are the top 3 products (sales, marketing, hiring, productivity, etc) you use for your business that you could not live without?
5. What has been your biggest challenges along the journey so far?
If you’re going to start a company, you realize you will be told no many times, but you have thick skin and are emotionally immune. That said, it’s an objective issue, in successfully navigating critical early issues like early adopter concerns or finding ways to make your product work on zero budget. Turning nothing into something is not easy, so being as scrappy as possible to gain traction is key.
6. What have you done to succeed that you knew wouldn’t scale but was very helpful at the earliest of stages?
Huge fan of doing things that don’t scale. We provide our Enterprise API and database integration customers with free data consulting so they can best utilize our products. A lot of VCs say consulting is bad and it’s not “productized” — but frankly it wins customers, increases up-sell, and it’s actually justified given our recent increase in deal size. You want enterprises to think “you’re the crazy people who will go above and beyond for you.”
7. At what point did you make your first hire and what were your initial key hires for?
At month six we hired our first three engineers. Today we are a team of ten — six are engineers and 3 are sales/marketing.
8. Any other advice you would give to founders just getting started with a SaaS company?
I would say focus on the only two things that matter early on — product and customers. Our team is not allowed to do anything that doesn’t directly impact these areas and receives fines if they waste time on non-focused items — we use fine money for company happy hours, and it’s all in good fun. Focus builds a great culture, team wide buy in, and you can have fun being focused.
An example of focus is how our logo is a literally a ‘T’ I typed in three seconds and downloaded, as no customers care about a logo, they care about the product. Another example is how we don’t do go after any press as we have enough customer channels. PS — My co-founder will likely fine me for wasting time answering these questions. : )