Revenue growth forgives all sins

Back when I was VC, I had a simple framework for assessing a portfolio company’s readiness for capital. The framework was ‘Three Ps“: People, Product and Progress (or traction).

My belief was at the seed stage (where I invested), you needed 1 of the 3. To raise a series A, you needed 2 of them. For series B and beyond you needed all of them. And at any stage, if you were to emphasize one of them, make it progress.

You could be unknown, first time founders and have a product that is incomplete relative to your vision, but if said product is moving off the virtual shelves rapidly, investors will be all over you.

As I posted about recently, revenue growth is what transforms you as a CEO. Revenue growth is what creates value for your company. It is what attracts investors, strategic buyers, the best talent.

If I were to produce a pie chart showing the various components of enterprise value over the lifecycle of a company the single largest contributor of enterprise value (by far) is distribution or revenue.

So much emphasis is placed on building great product. While this is important, distribution > product in terms of creating value for your company.

If you don’t believe this, just look at Salesforce and Microsoft. Two of the largest software providers in the world. Selling software that most of us hate to use!

Revenue growth should be your first and primary focus as a CEO once you are post product-market fit.

Questions to consider

Am I spending enough time focused on revenue growth?

What changes do I need to make to my schedule to enable more focus on revenue?

As a company, have we identified a proven, repeatable process for finding, keeping and growing customers?

How do we create a flywheel for growth in this business?

Photo by Sharon McCutcheon on Unsplash