4 Characteristics of Scale-Ready Companies
Scale-ready companies have certain characteristics as they've reached an advanced stage of Product-Market Fit:
- Close Rates > 25% -- Meaning that when a deal enters the pipeline, there is an efficient sales process behind the engine to convert it to Closed Won.
- Net Revenue Retention > 100% -- Meaning your customer base's value grows over time despite the attrition you experience.
- YoY Growth + EBITDA > 40% -- This is the rule of 40. It means the business has enough growth or profitability or both to keep growing the enterprise value of the business.
- CAC Payback < 18 months -- Meaning that the cash invested into growth is returned within a reasonable period. This number should normally be below 12 but when growing aggressively, being below 18 is fine.
If a company has all 4 of these characteristics, Marketing should be scaled aggressively across channels, programs and people.
It means making a big bet on your thesis in a market and believing there is far more TAM available to grow to the next level.
It also means avoiding distractions that do not connect with the core business because there is so much more potential to capture.
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