7 ms·

I’m not cut out for VC track businesses. - $25K ARR per person with >40 employees. - $50K ARR per person with >100 employees. - $100K ARR per person with >1,

by jot 5y ago

I’m not cut out for VC track businesses. - $25K ARR per person with >40 employees. - $50K ARR per person with >100 employees. - $100K ARR per person with >1,000 employees. There are plenty of independent SaaS businesses that make it past $200K ARR per person with teams of <10.

deleted 5y ago
[deleted]
SOLAR_FIELDS 5y ago
Well, when we consider that VC funding is usually trending towards a model of hyper growth, it becomes fairly straightforward to see that the model leans towards throwing people at the problem to make it grow faster. I do think it would be interesting to see a study comparing growth rates of companies comparing to number of employees as (educated guess here) operating with that many employees that quickly is going to result in a number of inefficiencies.
- deleted 5y ago
  [deleted]
- rhizome 5y ago
  I wonder if "VC funding" lives in a space between old-style business development and hierarchy, vs. new-style revenue expectations. We get middle-heavy startups (backbiting optional) trying to cover zillion dollar AWS bills by perpetually pretending they're on the verge of a Google-up. This is why they need $50MM rather than 1/10th that.
PragmaticPulp 5y ago
> There are plenty of independent SaaS businesses that make it past $200K ARR per person with teams of <10 Which is great for companies aiming to stay small and self-bootstrapped. There's nothing wrong with this model for founders who want to stay independent. The VC alternative allows companies to grow faster than organic revenue growth might allow. It can take a long time for a 10-person company with $2mm ARR to grow to $2.2mm ARR so they can hire the next person they need. Alternatively, they can take VC money and hire the next 100 people they need without waiting for revenue to get there first. One model isn't inherently better than the other. The important thing is for founders to decide which type of company they want to be and stick to it. A founder who wants to grow organically is going to have a bad time if they take money from investors who want growth. A founder who wants to grow as fast as possible is going to have a bad time if they're constantly stuck waiting for organic growth to let them make the next hire.
- ketzo 5y ago
  I like this comment. The archetype of the bootstrapped "lifestyle" software company is quite popular on HN, and for good reason, and venture capital often the subject of (often well-deserved!) criticism; but hey, the VC business model exists (and produces some spectacular successes) for a reason.
- dcolkitt 5y ago
  The other point to add is that while the organic business is waiting to get from $2mn to $3mn, their VC funded competitor can throw 100 people at the problem and eat the entire market. The point is if you’re in a VC heavy space, you often have no choice but to dance along with the music.
  - golergka 5y ago
    That's great until the music stops and you find out who's left standing without a chair.
    - floridageorgia 5y ago
      Do you mind explaining this? This is what I understood it to mean: a startup grows marketshare rapidly with VC money infusion in an easy money environment. But when credit dries up like it did in 2008, the startup could be left hanging as VCs might not fund the next round of their previously star startups as they want to deploy resources to their absolutely top-rung startups. So, even good startups can be left stranded. That's the feeling I have. Would like to know if my thinking is on the right track.
ZephyrBlu 5y ago
> There are plenty of independent SaaS businesses that make it past $200K ARR per person with teams of <10 How many of them become billion dollar companies in less than a decade though? In this case I think the ARR per person is probably more of a proxy for "are you growing fast enough?" rather than the number itself mattering.
blacktriangle 5y ago
Um....are you sure those numbers aren't MRR? I'm running a 2-person business with over $100K ARR, and we're not special as far as I can tell from talking to other more micro-style founders. EDIT: Oh per person, I missed that part. Still though, that puts us at over $50k ARR per person at an org size of 2. However it also makes the comparison completely pointless.

by jot 5y ago

deleted 5y ago

[deleted]

SOLAR_FIELDS 5y ago

Well, when we consider that VC funding is usually trending towards a model of hyper growth, it becomes fairly straightforward to see that the model leans towards throwing people at the problem to make it grow faster. I do think it would be interesting to see a study comparing growth rates of companies comparing to number of employees as (educated guess here) operating with that many employees that quickly is going to result in a number of inefficiencies.

deleted 5y ago
[deleted]
rhizome 5y ago
I wonder if "VC funding" lives in a space between old-style business development and hierarchy, vs. new-style revenue expectations. We get middle-heavy startups (backbiting optional) trying to cover zillion dollar AWS bills by perpetually pretending they're on the verge of a Google-up. This is why they need $50MM rather than 1/10th that.

PragmaticPulp 5y ago

> There are plenty of independent SaaS businesses that make it past $200K ARR per person with teams of <10 Which is great for companies aiming to stay small and self-bootstrapped. There's nothing wrong with this model for founders who want to stay independent. The VC alternative allows companies to grow faster than organic revenue growth might allow. It can take a long time for a 10-person company with $2mm ARR to grow to $2.2mm ARR so they can hire the next person they need. Alternatively, they can take VC money and hire the next 100 people they need without waiting for revenue to get there first. One model isn't inherently better than the other. The important thing is for founders to decide which type of company they want to be and stick to it. A founder who wants to grow organically is going to have a bad time if they take money from investors who want growth. A founder who wants to grow as fast as possible is going to have a bad time if they're constantly stuck waiting for organic growth to let them make the next hire.

ketzo 5y ago
I like this comment. The archetype of the bootstrapped "lifestyle" software company is quite popular on HN, and for good reason, and venture capital often the subject of (often well-deserved!) criticism; but hey, the VC business model exists (and produces some spectacular successes) for a reason.
dcolkitt 5y ago
The other point to add is that while the organic business is waiting to get from $2mn to $3mn, their VC funded competitor can throw 100 people at the problem and eat the entire market. The point is if you’re in a VC heavy space, you often have no choice but to dance along with the music.
- golergka 5y ago
  That's great until the music stops and you find out who's left standing without a chair.
  - floridageorgia 5y ago
    Do you mind explaining this? This is what I understood it to mean: a startup grows marketshare rapidly with VC money infusion in an easy money environment. But when credit dries up like it did in 2008, the startup could be left hanging as VCs might not fund the next round of their previously star startups as they want to deploy resources to their absolutely top-rung startups. So, even good startups can be left stranded. That's the feeling I have. Would like to know if my thinking is on the right track.

ZephyrBlu 5y ago

> There are plenty of independent SaaS businesses that make it past $200K ARR per person with teams of <10 How many of them become billion dollar companies in less than a decade though? In this case I think the ARR per person is probably more of a proxy for "are you growing fast enough?" rather than the number itself mattering.

blacktriangle 5y ago

Um....are you sure those numbers aren't MRR? I'm running a 2-person business with over $100K ARR, and we're not special as far as I can tell from talking to other more micro-style founders. EDIT: Oh per person, I missed that part. Still though, that puts us at over $50k ARR per person at an org size of 2. However it also makes the comparison completely pointless.