Five Lessons from 50 Startups That Reached $1M ARR

Hey Rob, it's good to see you. You look a little bit like death warmed over at the moment. We're back with girl dad Rob, who's got a 1-year-old who is bringing home illnesses of all from all over the world.

We're going to see how long my voice holds out. I'm going to do my best.

Yeah. Well, first of all, early congrats. You've got your book coming out here in a week and last chance if anybody wants to preorder it. Anything you'd add on, uh, on the book coming out?

No, I think many lessons learned about writing and publishing a book that I hopefully will never be dumb enough to have to use again. Uh, yeah, because writing a book is not worth doing, but whatever.

Well, I'm, I'm super excited about it, and anybody that's interested can find the link in, in the show notes. Um, and also it's been kind of nice for me as somebody who's never written a book to get to learn all these lessons vicariously through watching your suffering over the last couple of months, unfortunately.

Yeah. The only thing better than— is that writing a book is not good. Having written a book is good. The only thing better than having written a book is not having written a book, having avoided the enterprise entirely. So, amazing.

Well, despite the pain that's behind the writing and the publishing and everything like that, excited for the book to be available for the rest of us to enjoy without having to experience that pain. Today we've got a reflective post. So 5 lessons from 50 0 to 1 million journeys. So Rob, you took a step back, thought about, you know, at this point we've talked about the thousands of sales calls from startups that you've watched. You've worked probably with hundreds of startups at this point, and more than 50 have gone 0 to 0 to 1 million, um, which is kind of a crazy statistic, like being part of the, maybe what does it mean to have been part of 50 0 to 1 million ARR journeys?

So I've, I've done 3 as a founder. Um, and then I have been a kind of like advisor consultant thing, some, some way, like directly involved almost always. Shaping the sales pitch and the sales process for, you know, these, these other companies, um, for, you know, a variety too. And it's like been interesting too. I was thinking through the different kinds. There's, you know, what's, what's in my wheelhouse, which is the mid-market B2B AI startup. You know, those are, those are great. They make a ton of sense. Um, but then I was like, oh wait, no, there's, there's been a consumer company or two. There's been deep tech companies, you know, out of, like out of Harvard grid thing for professors who are building startups, which has been kind of interesting. And, and so yeah, it's been a variety of different things. And so I like went back through my list and I was like, oh wow, it is. And it's, it is, there's even been a product-led growth one. There's been some enterprise one. There's been, there's been some like ones that sell into public sector. Even, I've even, I used to kind of like tap out and say, if you sell a contract that's over $100,000, I'd have idea how to help you. Well, cool. There's been a couple that have sold multimillion-dollar contracts as well. And so it's like, all right. So it's been, it's been interesting to see what's similar and different across all of these different contexts, across all the different industries. And the, I guess we'll get to the similarities, but there are very, there are some very striking similarities in all these cases. Yeah.

Let's, let's jump into that. And we're going to hit 5 lessons I really enjoyed. Reading through these, I think some of the themes will jump out to folks as familiar, but also a really helpful reminder of like the core principles of applying the pull framework, of finding demand, of, you know, again, that lesson that's just like burned into my brain. It's easier to build a fast-growing startup than a slow-growing startup in many ways. And for anybody that's, you know, it— I think founders that are focused on that. Is there anybody else that this is particularly relevant for that you'd flag?

No, I think founders generally, anybody who's interested in entrepreneurship, why startups take off, why people buy things, this will be helpful.

Cool. And before we jump into the 5 lessons, do you have— all right, you've had, you've had 50 that you've worked with. Do you have favorites that jump out?

I do. I do. So the, the 2 favorites I have were the first ones where it worked that weren't my startup. So it was a startup called Mooktest, which did AI QA automation services. So like services as software before that was a thing. And OnRamp, who do customer onboarding software. And both of those were friends' startups who reached out and I was like, I don't know if I can help you, but sure, let me, let me give it a try. And both of those cases that like started to work and it was very cool to see it go from not working to working. And then I guess the other one that's been super cool There's been quite a few who have done like this, but the one that I've kept closest in touch with is Jump, where they basically, you know, we do, we spin them up a sales deck and they go zero to raise $100 million within 2 years. And it's just like insane how fast they've grown. I think they have, I think they put this publicly, like 30,000 customers or something like that in 2 years. And just, it's just amazing. And they still use the same sales deck, the, and the exact same sales deck, maybe with a couple of, you know, aesthetic improvements, which I am incapable of. But it, but it's just cool to see when it's been cool to see just that it works. Like it's just kind of shocked the first couple times. It was like, I don't know. I don't, I can't even articulate what I think I learned doing this myself a couple times. So let's see if it works. And then, and so it was cool to see, oh, it actually kind of does, does work. And then, oh wow, it really like it, this isn't just for companies that are desperate to get anything to work and get to zero, zero million after they've suffered forever, like this can actually create hypergrowth, was— it's been neat too.

Yeah, that's— those are some of the ones that I really enjoy hearing about and interacting with the founders kind of via you in many cases are the folks that they have a product and it's growing, but there's just something that's not quite there. It's like people are buying, but they're maybe buying slowly. And then it's often something very subtle that you'll come in and be like, oh, the the positioning is off by a little bit, or you're targeting this level, you need to be targeting this level. Or we talked about an example recently, I think on the podcast, that it was like they were targeting one industry, they took the same supply, moved it to a different industry, and it just— it hockey stick basically because the demand and the pull existed there. And so they just showed up into that space and like seeing some of those, I find them very inspiring as, you know, to see how founders have taken startups that, yeah, like they're viable and turned it into something that's really special and just hard but also fun, you know, fun to do.

Yeah. And I think, I think one of the, one of the other ones I can't talk about it publicly, but what, what we found was they, they were positioning— it was, it wasn't a big product and still they were positioning it too big. And so they had like a 70, 80% close rate in sales calls, but the sales calls just went super long and it, it just wasn't. And so we slimmed it down to one slide, one feature, two, maybe two slides, one feature they focused on. And, and like, it's just, it's just a machine now. And it's really, really cool to see that.

That's awesome. All right, cool. Let's jump into a couple of these. The five lessons, Rob, I'll read through the five and then why don't we pick a couple of them to jump into? The first lesson is pull is everything. The second lesson is it almost always takes at least one unfolding. We should, we should probably talk about that one because we haven't talked about unfolding in a little while. The, the third one is the thing that works is almost always embarrassingly small. The fourth is most founders are counterproductive at sales, but so are most salespeople. And number five is everything hinges on figuring out how to get potential customers to talk to you, which is harder than you think. Are there, are there ones there, Rob, that that jump out that are worth double-clicking on?

So we have, we can't, so I say everything I, every time I think I talk about pull too much, I realize I don't emphasize it enough. We, we therefore have to talk about pull, um, and then we can move on from there. And I think, I think we can hit all of them cuz I think we, we can give a high-level, um, overview. There's, there's this thing about pull where Aristotle has four causes, um, I don't ask me to name all of them. I know material efficient, something or something else, obviously. And I know that there's like the, this idea of causality is really, really interesting and important and not something that we really talk about a lot, but pull in every sense of the word cause causes a startup to work. I think it's, we're just the philosophy nerds here are going to just just take me out back and beat me senseless for this, but I think there's this thing called— oh God. Uh, like the ontological cause. Is that a thing?

Uh, it probably is. You're not talking with a philosophy or a logic nerd, unfortunately, Rob Snyder. So I'm not going to be helpful.

Well, there's this idea that, um, the, the, the light emitted on a wall from a lamp is not possible without the existence of the lamp, right? Like, and so what we see it when we look at business, when we look at a business's website, when we see its metrics, when we see its products, we see the light reflecting on the wall. We don't see the lamp itself. Pull is the lamp that is causing that, that is bringing that into existence. And so it is This, um, it is the thing that makes a startup take off that we are not taught about. We are not taught to look for. It is way more precise than pain points or problems. It's not about value props, but it's what makes value props work or not work. And basically every startup that takes off— no, no, not basically every startup. Every startup that takes off finds pull. You can brute force your way to a million ARR. I've seen a bunch of startups do it with close rates of 10 to 20%, and it's kind of all founder twisting arm, all begging, but you're convincing people to buy and then you have to convince them to not churn and it just always stalls out. And so at some point when you're pushing, a lot of startups push for the first kind of 10 customers to find the one who, who pulls, but you always always have to find who pulls, what is pull, and how do we get that repeatable? Like, how do we find the repeatable version of that and, and sell based on it? That's, it's just, I cannot understate that if you don't know what pull is in your situation, your startup will only take off by accident.

Yeah. And, um, You know, when you— when I really like that lamp example, embarrassingly, I thought, okay, what's the lamp? While you were still talking through that. And I was like, the lamp is like the product or the— I mean, like my, my default was to go to the supply and, you know, rather than like the lamp is actually much closer to what is going on in a customer's life and many customers' life, whether or not you exist. And then the startup discovers that and that is what the thing that explodes. If, you know, if folks are new to the, to the pull framework or just a refresher, go back and read. I go back and re, reread your, some of your original work on pull every, like so often just to refresh on the, the elements of it and such. Um, anything else you want to hit on that one or should we go into the, the second one?

Yeah. So just the last thing on pull is like when pull is present, this, the cust— so it, it's a very weird thing, but this makes everything else work, which is they're already convinced to buy before they know about a startup and even before the startup exists. Their case study is written, just missing a few details.

Yeah.

The startup shows up and, and is basically the last couple of autocomplete bullet points on an already written case study. And it's just, you know, how exactly did we help them do the thing they were trying to do? That is, that is Um, and when somebody has pulled, they, they buy with almost no convincing, very, very little convincing, which leads to a different approach to like everything downstream. Hmm.

What, uh, what do you mean by the case study is already written?

So if you think about a customer case study, right, the important part is the, the first part where it's like they were struggling with XYZ and tried ABC and didn't work, but they're trying to accomplish this, and here's what they, what they wanted their world to look like, or what their world needed to look like, right? Those are all the parts of the case study except for the bullet point about how you help them overcome the limitations of their existing options. And it's just that. It's like, that's the bullet point that is missing.

Yeah. Interesting. I really liked that framing. Um, how about we hit the second one? It almost always takes at least one unfolding. And let me— I'm going to read a couple lines that you have from this one. The startups that don't take off cling to their product or vision in the face of market indifference. And this is the, you know, the concept that you've embedded into this one, which I really like, Rob Snyder. In their minds, supply— or you can think about product— is fixed, but demand is variable. Embracing pull, on the other hand, requires realizing that demand is fixed while supply is variable. Can you take that in whatever direction you want to go? Because I think that's really insightful.

So when I see startups not take off, it is because they have a fixed view of what their product is, what their vision is, how they want the world to work. And they are pitching that at people, looking for people who happen to want that. And so what winds up happening is they have a lot of conversations that get a lot of head nods, but no reactions otherwise. A startup came to me recently and, and, uh, said that they had to go through the experience of using the pull framework. In their sales calls to finally get to the point where they had to accept they were pushing supply onto a world that didn't have demand so that they could, for a moment, ignore their supply and ask, assuming we had no product, assuming like just our product is totally irrelevant here, what's actually on the demand side? Who is independent of us trying to do something and blocked. The existing options aren't good enough such that they will rip something out of our hands. And, and that requires you to say, okay, cool. Supply. Let's ignore, let's ignore supply. Let's totally not focus on supply and think just about people in their lives and in what ways they are stuck trying to do things that they're unable to do. And we, and, and like based on that, that is a thing that we don't control out there in the world. We have to find, once we find that we can design, we can bend the world to design something to unblock them in that case, which is basically supply is variable. We figure out what the thing is. And so basically every startup that, that I've seen take off, they always start with this kind of product vision. They start with this, and it always comes from a good place. It's always well-researched. It's always super logical. Makes a ton of sense. And in order to succeed, they almost always have to unfold based on what they learn on the demand side to design something that fits what actually is on the demand side, which is either, right? Like it's same product, but kind of to a different market or kind of same product to a different market. It's a slice of the product like we were talking earlier. Or it's something totally new. I've seen, I don't know, maybe 10, 10, maybe 20. I don't know if I had to ballpark it, say 10 or 20 of the startups that I kind of like helped zero to a million, including, including mine, my first one, full codebase rewrites, but no, nothing shared from version 1 to version that worked. Yeah.

Ctrl+A and delete. Yes. And let's talk, it's been a while since we've talked about unfolding. I really like what you wrote also in the blog. I won't read it here about the difference between a pivot and unfolding. We haven't, we haven't talked about unfolding in a little while. Rob Snyder, can you help us understand what, what do you mean when you talk about a product unfolding?

Yeah.

And then maybe, you know, if I can put a recommendation for your long list and growing list of topics, like dive more in the future in the difference between pivot and unfolding. But anyways, uh, why don't you help us understand unfolding real quick?

Yeah, unfolding comes from Christopher Alexander, who is an architect, and, um, it is about how it's, it's an evolutionary process and it evolves. We evolve towards something, um, rather than just kind of changing directions in a variety of different ways, changing random variables in a, in a, like, it doesn't, like, it doesn't make sense to just change one variable in a complex system because all the other variables are connected. And so you have to evolve a system like that. And unfolding is the process of evolving basically what you think pull is and what you offer on the supply side in a kind of sequential way based on what you learn that pull is.

Yeah. And is it always, uh, can unfolding be targeting? Can it be messaging or like what's the, yeah, what, what constitutes unfolding?

Uh, so I think of it mostly as like if you, if you imagine a case study, you have a hypothesis of a case study. As you change one line in the case study, the rest of the case study doesn't make sense anymore and needs to be rewritten. And so it's just, think of it as creating sequential case studies that are closer and closer to true pull.

Interesting. Interesting. Why don't we hit the third one? The thing that works is almost always embarrassingly small. You hinted at this with one of your, one of your favorites, but this is what you write about that the, the initial market isn't huge and the product this market needs seems tiny. Talking about the startups that you've seen take off, when you understand the pull framework and pull theory, you realize that customers don't want big. They just want whatever is on their to-do list done. Why don't you— are there examples that you would call out here, or what would you say about Um, yeah, why it's embarrassingly small.

So this is just always the reaction. So there's a startup that, um, that I was talking to, they're out of YC, they're selling into insurance. They had kind of like gone, gone in a bunch of different directions and, um, they wanted to sell this like platform that can do all these different workflows. And it turns out that the, the potential customers, these insurance brokers, like the product they actually want just does one simple thing. And they, the startup came to me and this is when it clicked for me because I keep hearing this, like, but it can't just be that. It was like, why not? And it's this common reaction that, that, that I see of when you find something that actually takes off, the surface area of it is actually super small and it can't be super big. It has to be, it has to be coherent, it has to fit what's on the demand side, but you don't want it to be big because the bigger it is, the more they have to think about, the more features they have to understand. And all of those things add surface area for them to be able to, one, understand it. It's very hard for people to understand what the heck we're talking about. And two, they understand each piece of it. They have to assess if each piece fits. The more things they need to have to assess if it's going to fit or not, the less likely it is to fit. It's just, it's, you know, it's, it would be weird if all 40 features you want to highlight actually fit what they need. Hmm.

I'm having a minor internal existential crisis about how big my product is right now. I think I need to heed your advice on this one. Why don't, why don't we hit number 4? Most founders are counterproductive at sales, but so are most salespeople. First, you're not saying that they're bad at sales. You're saying they're counterproductive at sales. Why don't you go off on that?

And a lot of the things that we are taught about sales make you worse. Worse at sales, make you more counterproductive at sales. Because like, yeah, I, I had a, I have a story in the book where I followed a very popular framework for sales that caused us, that caused the potential customer that I was pitching to, again, we followed the framework. We're not, not idiots like me and my head of sales. We read the book, followed the framework, and it went so poorly that they, that this massive potential customer that could have taken us from $5 to $20 million plus ARR and like months, right? Like, they were so offended that they took our pitch, gave it to a competitor and asked them to build it. And they did. And so it was, and so the, in order to sell effectively, consistently, you have to have a theory about why people buy things. And the, the theory, if you kind of read underneath our, first of all, our intuitions about how sales works, But also if you read some of the kind of typical sales books you're told to read, it feels like, and it's fine, they're designed for salespeople who are given a territory and said, and given a number and said, and don't worry about customer satisfaction necessarily, like hit the number. And that's okay. In that context, this, the kind of like sales advice is counterproductive, but it works well enough that whatever. What I've seen is just, yeah, this, all of this presupposes that sales is me convincing you to buy something.

Yeah.

And that doesn't, that's not what causes sales. We talked about the physics of sales before. What causes sales is if they have pull and if they have pull, they're trying to do something, blocked from doing it. All we need to do is show up and show them something that unblocks them, or even just talk about something that unblocks them and help them assess if it fits into what they need. Yeah, that simple, which is basically anything more than doing that is convincing them not to buy for the surface area reason we just talked about. It's creating additional surface area, or it's like lecturing them and say, I don't need to be lectured on the future procurement, thank you very much. Like, I'm, I'm trying to do X. And so all the anything other than just kind of finding people who have pull, who are weird not to buy, and and offering them something that fits and seeing what they do and like, and anything other than that tends to be counterproductive. And it's just because we have the wrong theory in our heads about why people buy things.

You know, I went back into my 3 years ago emails looking for a link that I shared with somebody and I came across one of my early, early decks and it was, it was Oh, I offended everything about like what you just talked about. Like there was education, there was market. This is why you should care. There was a lengthy explanation that didn't really make sense. There was, there was so, it was all supply focused and literally nothing that was remotely close to what's the project that you're trying to already accomplish and how we help you do that. You write something else really interesting in this. In this section about why most founders are counterproductive at sales. You write, every startup that grows very fast narrows their targeting and focuses more on disqualification than persuasion in their sales process. When they find someone with pull, sales is about helping that person buy. What do you— can you, can you just quickly, Rob Snyder, tell us what do you mean they focus more on disqualification than persuasion?

I was talking with the founder who has grown quite fast and, um, you know, I basically, I help startups kind of get figured out at first and then they will often bring in a kind of like sales coach for as they hire salespeople to help, you know, with all this kind of stuff. And, and what she said really struck me, which is, yeah, my time is insanely valuable. I only have so many hours in a day. And so I can't waste time with people who don't have pull and aren't going to buy. So she spends none of her time persuading in early sales calls. The early sales calls are just about like, do you actually have pull right now and want to buy? And like, does our product fit? Do you actually want to buy? If not, Great. Follow up with us when, when that's the case. There's no persuasion at all. Once they say, yeah, no, I do have pull. You seem like a fit. Then cool. Then it's worth her time to invest further. But if you, if, if you actually believe pull is a real thing and it governs why people buy, then you don't want to waste your time with people who don't have pull. And so you are really just trying to get the people— your sale, your goal is to only talk to people who have pull. And if they don't have pull, you want to remove them from your pipeline so you waste even less time with them.

Yeah. I bet our listener can think of a customer, maybe it's current, maybe it's a past one who they spent way too much time on. I can think of like 10 right now where it should have been like, wow, I wish I could have taken those hours and put them into a much more valuable search. For people that were easier, who were— there was— they already had demand. They didn't require convincing. All right, let's get to number 5 real quick and then, and then we can, we can wrap everything. Number 5, everything hinges on figuring out how to get potential customers to talk to you, which is harder than you think. What is going on like this? I want you to just talk about this for a second and also answer Why does this even need to be mentioned? Which, like, it does. I know it does. Like, I've made this mistake, but why, why is this something that we even have to bring up?

So I've just been talking to startups recently and I've been comparing the startups that take off with the ones that don't and, or the ones that just like take forever to get there. And so the ones that just take forever to get there are the ones that don't meet with many people or they don't want to. And like, that's, that's just the first bottleneck. And it's, you know, starting with one and they're like having 5 sales calls a month. It's like, okay, I know startups that are having 5 sales calls a day and learning from those. And if you just like, imagine you learn one important thing in each group of 5 sales calls, the difference in learning velocity is just, it's just obvious if you're having more. Sales calls in a given day. And so like, that's, it's just, if you think of, if you think of the case study factory, like the first bottleneck is pipeline. And so yeah, like if you don't have enough conversation and then the layer on top of that, which is like, whenever I talk to a startup in that situation, I feel like it's a 5-alarm fire crisis. Like I'd feel, I'd feel awful, anxious, like horrible not having— going a couple days without a sales call, like that would just be— that to me would make me just not feel good. And when I say this—

I can validate for the listener that you do feel that way.

Yeah.

I think that on the receiving end of DMs, whatever that's happened.

Yeah. And you should feel paranoid when that's not happening. Like it doesn't make sense not to feel that way. And the sense that I— and so I feel that way, but I don't feel like every founder feels that way. And, and, and then, you know, I just like, I'll push on it and be like, okay, so what does your calendar look like? And it's a bunch of nonsense. And so if you ask, what does my calendar say about my philosophy? It's like, it's often like, I think I'm going to take off even if I don't spend any time trying to get customers to meet with me, or even if I outsource lead gen to somebody, and it's just like, that's not, that's not going to happen. And so And so, yeah, it winds up being how fast can you find pull? How fast can you find pull? And then once you find pull, how fast can you debug the system so that you're just stacking new customers in as compressed a way possible, condensing your sales process, kind of filling your calendar with meetings that turn into a compressed sale with a very high conversion rate, then handing that off and then replicating and then scaling that. Like, that's the whole thing.. And so the main thing I just see is if people just don't— the people don't treat that like it's the only thing, like their life depends on that.

Yeah. Yeah. Rob Snyder also hit some bonus things specific to why the prevailing, you know, pop advice basically for sales and how startups work are wrong, which includes discovery interviews, unpaid design partnerships, big visions and plans, um, which are contradictory to several of the things that you wrote earlier in the blog. Anything else you would add here, Rob, before we, before we wrap?

So I would say the most of, hopefully most of what I talk to is like, uh, pretty practical and straightforward. It's just find people who want to buy from you and sell them what they want to buy and like figure everything else out along the way. That's always how startups have, have worked. And I feel like we have, I don't, I don't want to say over-intellectualized it, but we have like wrongly intellectualized it or incorrectly intellectualized it into a set of theories and playbooks and things that basically prevent you from doing that. That like actually prevent you from doing the obvious things and make you feel like you shouldn't be doing them. And so, um, yeah, I don't know. It's, uh, it is interesting to see how things can be, make total logical sense, be totally reasonable, even be backed by experimental data and be wrong. And makes you, it makes you, that's my broader thinking about the world. Uh, but, but, um, Yeah, that's kind of my reflection on everything that I've been taught about entrepreneurship.

Well, why don't we wrap around here? Any actions that founders should take in the meantime?

Go sell.

I don't know, get 5 calls a day or 5 calls a week and figure it out. Well, we'll leave the link to Rob Snyder's Substack in the show notes as well as links to preorder your book or order your book. It'll be out here shortly. And then you've also got a course that if folks want a deeper dive, basically you've got a publicly available course that folks can, can buy. And it's, it's very similar to your PMF camps that you've done in the past, like a lot of really great content there. If there's nothing else to add, Rob Snyder, why don't we call it a day?

Cool. I'm going to curl up in a ball and die.

All right. We'll see everybody next week.

Maybe.