Scaling SaaS from $1M to $20M ARR - ICONIQ Growth Report

Live from Schenectady, New York, it's SaaS Talk with the Metrics Brothers, Growth and CAC.

And I'm Growth, better known as Ray Reich, founder and CEO of Benchmarkit.

And I'm CAC, better known as Dave Kellogg, EIR at Balderton Capital, independent consultant. And the author of Kellogg.

And together we are the Metrics Brothers.

And we go together like Butch Cassidy and the Sundance Kid.

I got vision and the rest of the world wears bifocals. One of my favorite movie quotes of all time, Dave.

Well, I have a couple, I have a couple favorites. One was, morons, I have morons on my team, if you remember that one. My other was, I shoot better when I move, which is actually my favorite line from the movie. 'Cause they asked Sundance to shoot and he wants him to just hold a gun and shoot and he can't do it. And he actually draws it and he's amazing. But Ray, we need to move you forward in time here. Like we can move you forward 30 years and still not be in the 2000s. That movie was made in 1969.

Yes, but they did have a remake in the early 2000s and now they're getting ready to do a Netflix TV series on it, Dave.

Oh, there you go. I did not know that.

I know I had to go do my research 'cause like, God, I don't wanna be the old guy in the room, but I am. But you know what, even though I agree with you, let's focus on today's topic. It's another iconic report. This one is Scaling SaaS from $1 Million to $20 Million: Building Strong Foundations in the Early Stages.

So you want to start out by talking about Butch Cassidy and Sundance and then go to iconic? Are you saying the VCs are like bank robbers, Ray? I'm really confused.

Oh boy, I got to be careful. I don't think I'm going to raise VC money again, but that is not what I meant.

You're going to be bootstrapping Benchmarket, Ray.

No, what I, what I want to talk about is scaling in that very granular 1 to 5, 5 to 10, 10 to 15, and 15 to 20. But before we dig into it, let's hear a word from our sponsor. The Metrics Brothers is proudly sponsored by Benchmarket, the B2B AI and software industry's largest, broadest, and most contextualized benchmarking index. Dave Kellogg and Ray Grothright Have put the Metrics Brothers podcast on hiatus for remainder of 2026. All episodes we have ever recorded are still available on your favorite podcasting app. You can reach Dave at Kellogg and Ray on LinkedIn at Ray Reich. Thank you so much for listening to the Metrics Brothers podcast. Okay. Hey Dave, I saw in the script you had another little Zap here. You want to go with the zap?

Can't sneak one by you, Ray. I was actually trying to skip that. Um, but in any case, I'll take metaphor duty next week, Ray, because I'm still dubious about these VCs and bank robbers. But, uh, off we go into the, uh, into the data.

Okay, so let's talk a little bit about this iconic growth report. It was published in September. It does include 107 Private B2B— I think private B2B SaaS companies, but at least 107—

Yeah, oh, actually, sorry, you're right, 107 B2B SaaS companies, let's say.

Okay, and then 13 of those are high-performing public SaaS companies, but they really focused on the metrics at each stage of growth, as I mentioned earlier. So what are some of these top 5 metrics? $1 to $5 million, $5 to $10 million, $10 to $15 million, and $15 to $20 million. And one of the things I did like, Dave, was they looked at these companies over 12 quarters. So you can see how a company changes its performance metrics from 1 to 5 versus 5 to 10 versus 15 to 20 over 12 quarters. So I like that about this report.

I'm not sure where the 12 quarters is coming from, but I, I like that it is segmenting heavily by size, right? But saying, hey, what— first they do a really nice thing, which is what matters at different sizes. They use color coding to say, hey, we think ARR growth is super important at 1 to 5. And as you get bigger, burn multiple gets important. So I like them saying what's important. I also like that it's segmented by size, but it unfortunately almost requires— doing that creates a problem, which is you're talking about companies. Let's talk about the public companies in here. Atlassian, Samsara, Appfolio, Cloudflare, Shopify, Veeva, HubSpot, Monday.

Right.

You're talking about big public companies and they're going back in time, in cases way back in time, like 12 years, not 12 quarters, back to 2012 to say, oh, when Shopify was in this size bracket, here's what their numbers were.

And it's kind of cool that we see the segmented data by size bracket.

It's kind of not cool that we're comparing companies today to companies 12 years ago. And by the way, compared to 12 years ago, it might actually be better than comparing to 4 years ago, right? When we were in peak ZIRP.

Yeah.

So it introduces this time problem. So there's 2 problems with Iconiq stuff, and this is not the first time they've had this time problem. They do this a lot. And the other problem is these are high-performing companies, right? Iconiq is a growth investor who invests in already successful companies for the most part when they're investing. And these public companies are also top, top tier. So you're basically comparing SAT scores with Ivy League applicants, right? You're right up there at the top. So it's, you know, if you're bootstrapping a company, if you're backed by PE going for 3x on the investment, right? These benchmarks are going to be very high for you.

Yeah. On another point, another thing Iconiq Growth loves to do is they take their Ivy League portfolio companies and then they say, and let me tell you the benchmarks for the top quartile of the Ivy League companies.

Yeah, yeah, yeah. So these are going to be tough benchmarks. Just be ready. 2 interpretability problems. One, it's a very kind of bright group of companies. And 2, you've got this time dimension because you've got data in here from when Atlassian is $5 million, which I'm guessing is somewhere around 2005, although they say it only goes back to 2012 in one of the footnotes. So I'm confused. But in any case, because I think by 2012, Atlassian was already well over $100 billion. I'm not sure. In any case, you have this time problem.

Had to be. Well, let's, let's kind of move on. And we'll always say the page numbers so that the audience can follow along with us with the report. But it's a nice distribution when they say by our ARR scale, you know, from $1 to $5 million, it says it represents 22% of the companies, from $5 to $10, 27%, 26% were in the $10 to $15, and 25% in the $15 to $20. So on the actual page 10, Dave, it looks like it's pretty good distribution across that population. That we're talking about.

Yeah, I find this weird, frankly, Ray. Like, I don't know why it's not a flat distribution, because presumably all the companies were in all the buckets at some point in time, uh, unless somebody went from $2 million to $15 million overnight. So, so I'm a little confused by it, but maybe they didn't have access to the data. Uh, maybe it was before their 2012 cutoff date, if that was the cutoff date. But, but yeah, it's a nice mix of the size ranges, as you would expect.

Okay, let's dive into the first thing that I kind of brought out. It's page 17. And it was showing the iconic Growth Enterprise 5, their top 5 metrics. And I really— they put a lot of qualitative overlays on the metrics themselves. One was it says growth is the guiding principle, and not just year-over-year ARR growth is one of the 5 metrics, but also quarter-over-quarter new logo velocity. And I really like the combination of those because new logo velocity provide you more upsell opportunities over time. And then the other metrics that they put in their top 5 are gross revenue retention, net revenue retention, and then they include the burn multiple. And on this page 17, it shows you the different benchmarks at each of those segments of $1 to $20 million.

Yeah, the thing you left out, Ray, was the, the color coding, which I think is actually pretty important. So this chart is actually color coded in dark green, light green, lighter green, and white. And the darker the color, the more they think it matters. For example, in the $1 to $5 million range, they're saying, hey, the 3 of these 5 that matter the most, and the single one that matters the most is the darkest green, is ARR growth, followed by kind of a tie in terms of importance of new logo velocity and gross dollar retention. And just to contrast it, by $15 to $20 million, I think they're all the same shade. The 3 that matter the most are ARR growth again, because it matters in every size range, and then net dollar retention and burn multiple.

Yeah.

Right. So, so kind of new logo velocity and gross dollar retention have been swapped when you go from the first bucket to the fourth bucket, uh, for net dollar retention and burn multiple. And I think their color coding is generally correct. Let's talk a little bit about the numbers, Ray. Do any of these numbers surprise you or bother you?

I thought the gross dollar retention that they showed, even from 1 to 5 million, it said number one, 92 to 97, but But then in the top quartile, it's 100%. And even at $5 to $10 million, it showed 98% in the top quartile. So that jumped out at me as unusual. Now, in the report, they did say it's mostly mid-market and enterprise companies that this reflects. But even there, Dave, that seems high to me.

Yeah. Yeah. I mean, they have 98%, 97% gross dollar retention at $10 to $15 million. That's a— that's top quartile. But wow, that's pretty good. That range they put below, 90 to 95%, they call it the median range. And I don't know if that's just some range they arbitrarily picked around the median, kind of eyeballing the data, or if that's what I thought was called the interquartile range, right, for the 25th to 75th. But it would be the top of that range should be the bottom of the top quartile. So I don't know what that number is. I don't know if you do, but I'm going to just assume it's kind of like this is a relatively tight range around the median. And that is also quite high in these cases, right? They're saying that, you know, the gross dollar retention, 90 to 95%. 88 to 93%. I think we've got the Ivy League student issue here, but, but, but, you know, I think it's more like the median, 85. I mean, it might even say 85 is good these days, but now we have the time problem. But, but these days, I think 85 is pretty good as a median. What do you think?

Yeah, no, I think this year we saw actually go up to 86%, but, you know, very much aligned. You know, the other thing that jumped out at me, Dave, and you and I talked about this Nothing to do with the podcast a couple weeks ago, and that was the burn multiple. If you look at the $10 to $15 and $15 to $20 million and you look at that top quartile, 0.8x, 1x at $20 million, to me that just seems really, really good.

Yeah, I don't actually understand it. I mean, certainly not many of these companies were in this size range during ZIRP, 'cause I would believe it's absolutely impossible, the zero interest rate phenomenon, i.e., the growth at all costs era. There's no way. Nobody was burning those burn multiples. People were burning a lot more. So, I don't know, this could be the time problem. It could be the Ivy League student problem, but I find the burn multiples very low, particularly in the sub-$10 million range. You know, I saw data somewhere else, Ray. I can't remember if it was Battery or— oh, I mix these reports up sometimes. But I remember it looked more like in the bottom bucket, 8, And then it went like 8, 4, you know, 3, 2, 1 was kind of the curve of the burn multiples. This is just kind of basically 2, 2, 2, 2, 2, 2, right? Flat.

Yeah. Even I know my, when we did the benchmark benchmarks for fiscal year 2023, we saw the burn multiple had improved pretty drastically, but it was still in the, you know, 1.4 to 1.8 range. For the top tier of this. So this is better than I've ever seen.

And that's another metric, by the way. I mean, burn multiples are lower right now than ever. So this time problem I'm talking about is not a little issue because burn multiple, I think you were allowed— if you weren't burning a lot of money, you weren't growing fast enough to exert. And now everybody's trying to get to cash flow breakeven for the most part. And it sounds like they're not getting there, but they're getting close.

You know, one of the things I wanted to jump ahead to was it's really topic number 3 as I was reading this report. And it's What Iconiq is calling the growth plateau. And the thing that they've pointed out in this data was between $20 and $25 million ARR, companies are hitting this growth plateau. And they're really looking at— they compared '22 to '24 in the growth rates. And specifically on this page 22, it showed that the companies between $25 and $50 million, Dave, Went from, I believe, and you can correct me if I'm wrong here, a median growth rate of 65% kind of at the end of ZIRP, right? '22. And now it's at 35%. But it was only that segment of revenue that had that drastic of a decrease. They all saw decreases, but they saw decreases 5%, 8%, 10%, not 30%. What say you?

Yeah, I mean, one, I want to make sure we're interpreting the 2 bars. So this is a clustered bar chart by company size range, and the size ranges go like less than $10 million, $10 to $25 million, $25 to $50 million, $50 to $100 million, $100 to $150 million, etc. Uh, and Ray is pointing out the one that appears to get hammered the most is the $25 to $50 million range. But the 2 bars, one is 65%, one is 35%, hence, hence the 30% gap Ray is talking about. But, but The, the lighter green, the 65%, is all time, right? So it's for all their data back through 2012. What was the growth rate when you were in that bucket?

Um, you know, that's why I dislike this report, because then— so the green bar, the dark green bar, is 2022 through 2024 companies in that size range in the last 2 years.

Yeah, you're comparing the entire data set back to 2012 with the last 2 years. And they're saying that people in this $25 to $50 billion range kind of got hammered because if you look at the whole data set, they should be growing 55%. Now they're growing 35%. Look, I agree with the conclusion the companies have been hammered. I, I think it's more across the board. I, I just have trouble with this all-time notion. I mean, I'm going to sound like a broken record, Ray, but yeah, it makes it hard to interpret. But so it's just, yeah, I don't know.

But well, at least the other thing, if it's all time versus '22 through '24, And they do each of these segments, it still does show that that particular $25 to $50 million segment does have a much larger delta than any of the others.

Yeah, I would say the last 2 years, those companies are all growing at 35%. Let's just say that, that's a fact. Forget the all-time comparison for a minute. And that's still not great, especially for these, for these Ivy League companies. They need to be growing a lot faster than 35% to justify their valuations.

And what's, what's amazing is $50 million to $100 million, which has at the bottom all time, I believe it says like 313 is the end. They're growing at 57%. So that's a significant reacceleration from 25 to 50 to those companies that make it to the $50, $100 million. You're back up to 57%.

Yeah. Now, if you, if you look, I'm not sure it's the same companies, right? So you're saying it's an acceleration and given it's only the last 2 years, it would be an acceleration only if I, you know, In 2022, it was growing at 35, and then in 2023, I was growing at 57, right? That would be an acceleration. These are different companies. So just bear that in mind. But I do think it— Thank you. The part I think is rock solid reliable is to say these are the median growth rates by size in the last 2 years. That's just a fact. And the hardest, I mean, if you're coaching a company, tell them it looks like the hardest part with Tom Petty, the waiting's the hardest part. The $25 to $50 million is the hardest part. Yeah. Because it looks like The companies in this dataset, once they get to $150 million, are able to grow a lot faster.

Yeah, I know. I have a friend who's a CEO and he calls this the valley of death because it's really hard sometimes to get through that $20 million.

It is true. You know, it is where a lot of companies get stuck, to be honest with you. It's exactly what I would call the stuck range. So I don't know if it's a growth plateau or if it's a stuck range. Like a lot of cars just go off the road here and don't make it. I mean, look at the end size. This isn't that indicative, I don't think. But there's 389 companies in that bucket and 313 in the next bucket, right? Again, these aren't in all cases the same companies moving through. In some cases they are, right? So this is again confusing.

You just don't know.

Yeah, you literally don't know. But in any case, I don't know, I'm gonna interpret this loosely and just go, yeah, if you get to live to make it to the next phase, you're growing faster.

Okay, so if I go to the next page that I pulled out, it was page 25. And it shows new logo growth. So quarter over quarter, new logo growth, one of the Enterprise 5 that Iconic Growth talks about. Now, this is where, if you look at the chart, you see the, I believe it is quarter since 1 million and see how it does 12 quarters, Dave, 0 through 12. That's what I was referring to is that 12-quarter kind of longitudinal view.

Got it. Now I understand. I was confused by the 12 years 'cause the report itself goes back 12 years. So, okay, this is, yeah, Bingo, I got it.

What I really liked about this was, and Battery Ventures showed the same thing on a report from last year, the importance not only of ARR growth but logo growth. And what it shows here is almost all the way from 2 million all the way up to 30 million, that it's, you know, bounces between low of like 8, kind of in that 13 to 19% range. That's the target for the number of new logos that you're growing every quarter over quarter. So I really like this because I've never seen something like this before. Dave, what do you think?

Yeah, I mean, it's gonna be a grumpy day for the Metrics Brothers, Ray. I don't particularly like it. I'm a big believer in track as few metrics as humanly possible, uh, because you can only focus on so many things. I think the name of the game is ARR. I would only focus on logo count if a company had a problem. So, I would join the board, let's say, we'd focus on ARR only. And then all of a sudden, we find that we're hitting our ARR goals by doing bigger deals, let's just say, which is good. But we're not acquiring as much new logos or we're hitting ARR in worst case by doing expansion deals, which you'd see through another metric like expansion as a percent of total ARR. But once there's a problem, then a metric like this to me earns its way into the summary dashboard. But by default, I don't put it there because there's only so many things you can track.

Yeah.

And I, the name of the game to me is ARR, not logos. And I don't want to be hearing we missed the ARR target by a million, but good news, we signed more logos. You know, it's more logos than planned and missed plan. It means we're doing lots of little deals, which is really kind of not what we're here for, at least in most of the companies I work with.

Yeah, I don't think it's ARR growth or logo growth. I think it's ARR growth and logo growth because the more logos you have, You're also not hiding that your growth is coming more from expansion than possibly new ARR, right?

Yeah, but I would look at new ARR and I get it, Ray. But the problem with the and is, and you know this, I can't see you because I got a different screen up right now and I don't want to make you mad. But the problem with and is you could and yourself to death and all of a sudden you're looking at screens full and full and full of numbers and you can't see anything anymore. So I'm super sensitive, especially on like summary key metrics, right? They picked this as the big 5. No way would Dave Kellogg put that in the Big 5 because the Big 5 is extremely valuable real estate, and I don't think it's worthy of it unless my strategy calls for it or unless I've had a problem. Then I would definitely promote it.

Yeah, well, I'm going to— well, I'm not going to jump to page 29, but I thought you might like page 27, and it really showed OpEx trends by quarter after hitting $1 million. And once again, it shows kind of a rolling 12 quarters. And the thing that jumped out at me, which I've never seen something like this before, Dave, so maybe I'm too easily impressed, but it showed that even around $16 million of ARR, that 85% of revenue was going to S&M, sales and marketing, and 70% to R&D. But by the time they hit around $30 million, it was still high as far as sales and marketing as a percentage of revenue, 79%. But R&D went down to 56%. So it's when R&D took less percentage of revenue than sales and marketing. And I really love that by stage.

Yeah, I think it's nice, Ray. I mean, look, these are very fast-growing companies. First, just to be clear, in the course of 12 quarters, they're going from $0 to $30 million. So what's that? 12 quarters divided by 4, it's 3 years. That's pretty quick from $0 to $30 million. So once again, right, high growth.

That's better than triple, triple, double, double, double.

Uh, well, I can't remember that. Oh, do you remember what that gets you to? 140 in what, 5 years, 6 years? I mean, that, um, I think it might be 8 years. All right, so, and you're saying you think this is roughly consistent with that? Maybe I do.

I really do. Yeah, because this one starts after it hits $2 million. Period zero here is at $2 million of ARR.

Got it. Got it. And that's weird because the— because let's just be clear, they're saying you're going in one quarter from $1 million to $2 million because the metric is supposed to be quarters since $1 million. And at the end of the first period, they're saying you're $2 million, which is right. That's kind of weird. I mean, it's great if you can grow that fast, but I, I, you know, not a lot of companies do.

You know, you know what we need to do, Dave? We need to get one of the iconic researchers on SaaS Talk with the Metrics Brothers so we can ask them these questions.

Or maybe we ask them offline, Ray. I don't know. We're still new to the interviews. We did our first one. I don't know if it's been released yet, but let's see. I love the first— we did the second one. The first was Nick Mehta that we did, Megan Gill from Ugly Bee on sales ops. So let's see how it goes. But yeah, we should probably talk to these guys to try and figure this out because— or guys and gals, I know it's a mixed team. Yeah, because some of the stuff doesn't make a ton of sense to me. And I actually like to hear their objection on time. Yep.

Totally agreed. You know, our episode's coming to an end, so I'm gonna let you name our adventure. The last one we could hit is new ARR versus expansion ARR by these segments, or we could look at ARR per FTE. Which would you prefer to cover?

Oh, let me see the timer rate. I don't have it up. Can't we just slam both in if we promise to go fast?

Okay, let's slam both in. Okay, page 30 of the report, new ARR versus expansion ARR. So $1 million net $5 million, 23% of total growth ARR was expansion, 23%. At $5 to $10 million, 26%. $10 to $15 million, 29%. $15 million to $20 million was 35%. Dave, we're very close to your rule of 30.

Yeah, I've always used that rule. Just ballpark, you want to be about 30% expansion and 70% new logo ARR, which by the way, since that is a top-line metric for me, that's one of the reasons I don't have to track logos so closely because if they're off, I'm going to see it on the ARR slide. All right, next.

Unfortunately, to your point, because this wasn't time-based, they have top quarter quartile NRR is 120 to 125%, um, once the company hits $10 million. I call bullshit on that, but I just don't know what the time frame here is, Dave.

Yep. And let's hit the end here. Burn multiples, we talked about this up front. So it's, uh, free cash flow divided by net new ARR, which is a pretty standard way to calculate it. They're saying, uh, top Quartile is about 1 across the sound size ranges, and it drops from 2.4 to 1.7. So let's just say about 2 for the median. And I find these very low, particularly for the super small companies, and I don't know what to make of it. Uh, I think they say in the report that it's also with high revenue growth, so it offsets the high expense. So that's why the burn is not that high, but, but I don't know.

I agree. Well, we'll let the, the audience kind of read this report for itself. So once again, what we just covered was the iconic scaling SaaS from $1 million to $20 million, building strong foundations in the early stages. Reader beware, we already gave those, um, cautions, but I think everyone should take a look at it, Dave.

Yeah, me too.

Okay, goodbye everyone.

See you, Dave.

Bye-bye. Thanks.

The Metrics Brothers AI, SaaS, and More is a production of The Metrics Brothers Growth and CAC and a member of the Benchmarkit Podcast Network. By accessing this podcast, you acknowledge that the Metrics Brothers make no warranty, guarantee, or representation as to the accuracy or sufficiency of the information provided or the humor content of the jokes told. Ray? Information, opinions, and recommendations presented are, according to our spouses, probably wrong and provided for information purposes only. This podcast should not be considered professional or, for that matter, unprofessional advice. We disclaim any and all liability for any direct, indirect, indirect, misdirect, incidental, special, ordinary, consequential, inconsequential, or other damages arising arising out of any use of, or God help you, reliance upon the information presented here.

Ray Grothreich is based in New York City and available on X @RayReich.

Dave Kellogg is based in Silicon Valley and available on X @Kelblog. Schedectady, which is French for unspellable, is not our actual production location. Thanks for listening.