👋 Hey, I’m Lenny and welcome to a 🔒 subscriber-only edition 🔒 of my weekly newsletter. Each week I tackle reader questions about product, growth, working with humans, and anything else that’s stressing you out about work. Send me your questions and in return I’ll humbly offer actionable real-talk advice. Now, on to this week’s post…
To get you a clear answer, I reached out to two dozen of the smartest investors I know and asked them what they consider GOOD and GREAT growth rate by stage of business. Below is what I learned. Huge thank-you to the following amazing people for sharing their insights: Alexander Taussig and Arsham Memarzadeh (Lightspeed), Andrew Chen and Olivia Moore (a16z), Arra Malekzadeh (Craft), Caitlin Bolnick Rellas (CRV), Daniel Levine (Accel), Elad Gil, Ellen Chisa (Boldstart), Grace Ge (Menlo), Grant Ebenger (Tiger), John Luttig (Founders Fund), Jonathan Golden (NEA), Kanyi Maqubela (Kindred), Kimberly Tan (a16z), Leo Polovets (Susa), Mike Duboe (Greylock), Mike Vernal (Sequoia), Niko Bonatsos (GC), Nina Achadjian (Index), Patrick Chase (Redpoint), Rebecca Kaden (USV), Sandhya Hegde (Unusual Ventures), and Todd Jackson (First Round) 🙏 Why? Because percentages with a small base don’t mean much. This sentiment was true across every investor I talked to, e.g.:
That being said, if you’re looking for a month-over-month benchmark below $1m ARR, answers typically fell in the 15%-25% range. As John Luttig (Founders Fund) put it:
Broadly, the expectation is that getting to $1m ARR within a year of launch is GOOD, and getting there in three quarters (9 months) is GREAT. As Sandhya Hegde (Unusual Ventures) said, “You start the growth clock the month you go GA.” Grace Ge (Menlo) shared a similar point:
For this reason, you want to be strategic about when you launch:
However, a couple of investors specifically said that they don’t care about how long it takes you to get going, as long as when you do get going, it really gets going:
And if you get out of the gate slowly, you can sometimes still catch up:
Without fast ARR growth, you’ll need to show strong signals that people really want your product—through high retention and efficiency:
And Ellen Chisa (Boldstart) reminds us that in the early days, it’s often a trap to focus too much on growth:
And the quality of your ARR often matters just as much as your growth rate:
For B2C businesses, early-stage consumer investors look for how intensely people use the product, and share the product, versus revenue growth. For example, Mike Vernal (Sequoia) shared:
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