Our ARR hockey-sticked from 1M to 15M over 2years, but it's tailed off since then (15 to 17, 17 to 20). Should I try tosell the company instead of sinking money into trying to find a new growth spurt?‍

I firmly believe companies are bought, not sold. I believe this even though there are myriad articles out there that say that this is wrong, that this adage makes founders believe if they do a specific set of things in a specific order, the world will reward them with a huge exit and all will be right, that life is a meritocracy so just build a beautiful business and you’ll get rich. You get the drift.

I don’t believe that’s what the saying means. To me, it simply means that a sale happens not because you want to sell, but because someone wants to buy. It doesn’t happen on merit. It happens because you’ve got something that a potential acquirer is salivating for. It can be some fantastic graph going up and to the right, showing an increasing install base, revenue growth, general awareness of your software being THE anointed winner in the space, or it can be a celebrity using your product in a TikTok video… I don’t care what it is, but you’ve got something that makes someone stand up and say, “I want that”.

It’s the opposite of having the most beautiful product in a hot market but with zero sales. Why would someone buy something pretty but that nobody wants? They won’t, and they don’t. It’s like in grade school in the school cafeteria. Nobody sat with the lone dork at the table in the corner (although they should have, because that dork is no doubt ruling the world). They aimed instead to sit with a gaggle of popular girls, or the strongest, hottest jocks.

 How do you get your company sold, then? In today’s example, we’ve actually got a decent revenue base (20M is nothing to sneer at), but it seems like there are scaling issues. It could be for a number of reasons, including:

·  The market is tapering off and the company needs a new product to continue pushing the bounds of opportunity. You’ve always got to be asking, What’s next? The blocker might be that the founding leadership is tired, or the company needs a new infusion of product ideas, or something else completely, but there’s always got to be a “next thing.” Tesla isn’t a car company; they’re an autonomous platform for thef uture, off of which they can sell software, hardware, and services. What’s the analogy for your company?

·  The sales and/or marketing teams aren’t appropriate for this stage of growth. What gets a company to $1M doesn’t get it to $5M doesn’t get it to $10M doesn’t get it to$25M and certainly doesn’t get it to $100M. They are each distinct phases, and it’s especially on the go-to-market side that iterations need to happen. Depending on the industry, marketing might switch, for example, from open source “how-to” videos to a massive presence at conferences. Sales might have started with SMB but now might be at the enterprise or even government contract stage, both of which are definitely a different motion than the spirited AEs (account executives) the company started with.

Both of these hypotheses are easy enough to test.

For the first, sit your team down and see if they can come up with a new product or two to sell into the existing customer base. Are they able to theorize how to expand the existing market? Is it possible that the company has hit its cap and is better off with an acquirer? If it’s possible to sell in a new product and you can see another $25M in revenue sitting there, then go for it! Or if it feels like it’s better as a tuck-in, that’s an easy story to sell to a conglomerate.

And on the sales and marketing side, take a long, hard look at what’s driving leads. Can the current marketing team bring them in? Or is your buyer now lurking somewhere else? Is there a huge opportunity in enterprise but things are now simply not converting? A trusted outside advisor might be an advantage here, because sales and marketing leaders tend to freak a bit when pressed on whether they’re the right people for the job, but if that’s the answer, you need to know it. Transforming both of these teams takes time, so it most likely will need to come with more runway; consider whether you have that luxury.

In any case, the one thing I’d suggest is to create relationships with potential acquirers from the start. And if you have to start now, so be it! In the "Exits" chapter of my book, I describe how so often we founders close up and refuse to talk to anyone about what we’re building, especially to the competition. People are going to find out – your job listings page is public, after all, and investors gossip – so at least get coffee with the CPO or CEO of the companies who have the cash to buy you. Decision are made by people who have the power, and those are typically in charge of a revenue stream. Creating that case from zero doesn’t work, so worst case the coffee goes nowhere, but they at least know your name for when the time comes!