How We Got to Profitability at $5 ARR Growing 100%. It Won’t Work For Most, However.

So I was trying to remember how at Adobe Sign / EchoSign we got to profitability at $5m in ARR, and still grew 100%

And then I looked back …

1/ We only had 25 employees (!) at $5 ARR. Everyone had to truly execute at a high level. This still happens today, but it’s rare.

2/ We spent almost $0 on marketing. We ran what today would be a 90% PLG playbook, with a 10% boost from self-serve.

3/ We invested $0 in our self-serve business. Probably a mistake, but it let us put that money into sales comp.

4/ Our product was truly viral — and we did invest a lot there in ease-of-use and viral propagation at the product level.  I didn’t fully understand it at the time, because viral coefficients are lower in B2B and our directly measured viral acquisition was maybe only 10%.  But the number of high-quality leads it generated was outstanding.

This was too lean, however. After we got cash-flow positive, we ramped up hiring and spend, and doubled not too long thereafter.

• 25 employees simply wasn’t enough redundancy. Anywhere.  Especially, we cut too many corners on QA and DevOps by making the engineering team do most of both.
• We didn’t have any excess capacity in the sales team at all. We had to more than double after that just to catch up.
• Spending $0 on marketing was a mistake — now I know. It meant we just could only show up where we were already #1 or very strong.  We had so many leads from second-order revenue, viral, partners, etc. that we mostly just focused on making those work.
• We didn’t do outbound for a long time.  This seemed to save money, by focusing on in-bound.  But it also meant we lost a chance to take down some bigger deals.

Still, it did work, and the business was always cash-flow positive thereafter.  And this playbook got us to 100%+ growth at $10 ARR.  So maybe, for this product, at that time, it wasn’t a bad strategy.

Just one way to do it. Not always the right way.

Published on February 3, 2023