When Mike and I first started SimpleCrew in 2012, our friend, mentor, and investor John Campbell gave us some sage advice.
He reminded us that, while we may have our eyes set on the distant goal of getting to $1M ARR (annual recurring revenue), we shouldn’t let that goal burden us in the beginning.
Going back to the math of subscription software and recurring revenue, the $1M ARR threshold is crossed at just over $83k MRR.
When you’re just starting out, just a couple small town sons of Appalachian turd miners working to bootstrap your first software product, those numbers can be a burden. Big, distant, and seemingly unattainable.
Keep breaking those numbers down though, and they become more digestable.
If you can maintain an average subscription rate of $50 per month, you’ll reach the $83.3k MRR threshold at 1,666 customers.
Still a big number, but way more attainable then $1M ARR.
And here’s where John’s advice really kicked in:
Don’t worry about 1,666 customers.
You’ll get to 1,666 customers if you get to 1,000.
You’ll get to 1,000 if you get to 500.
You’ll get to 500 if you get to 100.
You’ll get to 100 if you get to 50… to 20… to 10.
The hardest part about building a million-dollar business is getting to 10 customers.
To be fair, the logic connecting 10 customers to 1,666 is hypothetical: you might not get to 1,666 customers just because you got to 10.
But the point, and whats important for anyone just starting out to remember, is that most software startups fail building something that anybody wants.
Said another way, most startups fail going from 0 to 10 paying customers, and therein lies the wisdom of John’s advice.
When you’re just starting out, don’t be burdened by your ultimate goal of 1,666 customers, $1,000,000 Annual Revenue, or whatever the metric may be.
Just focus on building something that 10 people will pay you for.