The journey to $1m ARR – 4 key lessons so far

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I don’t think I’ll ever quite forget the day that a smart looking rep from IBM wandered over to our stand at the end of an event, pointed at our iPods and asked “So, where did you get that software from then?”

The event was a student careers fair at the NEC, and each member of our team was using an iPod Touch (remember them?) running a hastily written form ‘app’ that our team had put together to replace our paper system for data capture. We were pumped on coffee and run off our feet collecting the names and emails of students for five hours straight. It was early 2010, iPads were still only a twinkle in Steve Job’s eye, and this that was the second time we’d been approached by a really well known brand in a week. The initial interest we had from IBM and Morgan Stanley started a series of conversations that would change everything I did at work.

At the time I was still running RMP Enterprise – a student recruitment marketing business I co-founded in 2006 – the business connects employers with career-minded young people online and on-campus. We started to build a very basic in-house data capture application that could operate offline for use at student freshers and careers fairs, to simply solve our own challenge of collecting and processing student’s details on paper forms. Little did we know at the time how much shared pain we had with so many other businesses and event teams.

After that fortunate meeting, the momentum and interest in our little app continued to grow, and fairly ad-hoc at first, over the next couple of years, we started to build list of huge corporate employers who wanted to use our software for their own purposes at student recruitment events. There was quite a visceral sense that we’d stumbled upon a rather interesting opportunity.

By 2013, the RMP co-founders, our development team and I could see the opportunity was growing, and took the decision to spin the technology out into a separate company. We raised some seed funding from investors who had put early stage funding into RMP, co-opted a couple of stellar employees from RMP, and Akkroo was officially born… we took our first step into the world of SaaS.

Fast forward two and a half years, and we’ve learnt so much; it’s proving to be a real adventure with plenty of excitement. As it stands today, we’re growing MRR at 10% per month, we’ve just hit $1M ARR and I’m using this milestone as a chance to reflect on some key things I’ve personally understood better along the way as a UK built technology startup.

 

1 – On Hiring

 

Recruiting in London is hard when you’re just getting started. You can read 100s of articles emphasising how important it is to recruit A star players who fit with your culture and ethos – however that’s a difficult thing to do when your pockets aren’t lined with gold yet. We definitely made some hiring mistakes along the way, and now put cultural fit at the heart of our hiring process.

My co-founder Andy is fortunate enough to have spent quite a bit of time with Joel and Leo from Buffer in the last few years, and learning how they decided to deliberately invest in defining values way earlier than a lot of other companies do has really helped us improve the calibre of people we attract.

Key lesson number 1 – Establish your culture early and hire to that. This can’t be done overnight, and we believe should be a process owned by the whole team, but as soon as you can, start to define and evolve your values and the type of people you want to work with. Once you’ve got that established, decisions on hiring become much easier to make.

 

2 – On Focus

 

On the face of it, Akkroo’s forms could be applied in billions of situations. In the first 12-18 months, we went after anybody and everybody who we thought could benefit from using Akkroo to replace paper forms and as a consequence, ended up with a thinly spread range of customers using the platform in all sorts of weird and wonderful ways. Different use cases have lots of quirks and requirements, feature requests and the knock-on effect meant a engineering team being pulled pillar-to-post, and a wild development roadmap.

Key lesson number 2 – FOCUS. In retrospect, what was interesting is that sometimes it’s hard to understand what focus really means when you can’t see the bigger picture and don’t yet understand if you’re working in a horizontal market or across verticals. That definitely confused us early on, but with a clear understanding that achieving focus was important, we did eventually get to where we needed to be. It took us too long to really pull our nets in on good-fit customer personas vs. bad-fit. As soon as we made that conscious decision to define and focus on our Ideal Customer Profiles (and become braver in saying no to bad-fit leads), it made a big difference to all parts of the business.

 

3 – On Pre-paid, Annual Customers

 

We are super fortunate to have this working well now. These types of deals put us in a really strong position for continued growth and further investment rounds.

We eventually realised we should focus upmarket, on the enterprise. We realised we didn’t want to be an “off-the-shelf, self-serve $10 per month” app; whilst we can and do cater for SMBs with occasional use on monthly plans, all of our marketing and outbound sales efforts are focused on big businesses with a scaled, ongoing requirement for a solution like Akkroo.

We were very much inspired by Jason Lemkin’s Solution vs. Tool article here.

We’re trying to solve a genuine business process problem with several stakeholders involved in the decision making process, an implementation and on-boarding requirement plus ongoing customer success support, so in many cases, a 12 or 24 month licence is the only viable option.

Key lesson three – if you can, secure annual licences. Whilst we’re by no means the finished article and there’s always more work to be done to move up the enterprise food chain, this strategy means that over 70% of our ARR is in pre-paid, annual licences, ensuring a healthy cash flow which can be reinvested in growing the business. We also see really low levels of churn on annual clients; we have a full 12 month, pre-paid commitment from the customer to work with them and ensure success. This leads nicely into key lesson number four…

 

4 – On Customer Success

 

When we first started out, we hired a guy straight out of uni and put him into our one and only technical support role. At the time, the software was pretty buggy and as such, he spent most of his days fire-fighting and only really speaking to customers when they had a problem.

As our knowledge of successful B2B SaaS businesses started to grow, we could see value in really building out a modern Customer Success approach, and we hired a second person (we’re now looking for a third too…) to put on-boarding, training and support processes in place to proactively work with customers, as opposed to simply being in a reactive state all of the time.

The moment we switched, we started to benefit in so many ways, ultimately ensuring our annual customers get the most out of Akkroo and to build great working relationships that lead to high levels of renewals and upgrades.

Key lesson four – as soon as you can afford it, over-invest in Customer Success. It really does pay for itself and more. As Lincoln Murphy points out, the LTV of every customer should increase every year!

I hope you’ve found this article useful – more than happy to answer any questions or if you’d like to find out more about Akkroo or joining the team, drop me an email on chris@akkroo.com

by Chris Wickson

chris wickson

Chris Wickson is CEO at Akkroo. Chris co-founded a student recruitment marketing business (RMP Enterprise) whilst still at university in 2006 and then launched Akkroo, an event data capture solution, in 2013 as a spin-off SaaS company

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  • Sat Sindhar

    Well done Chris, great to see good solid growth, not scrimping on the back office function and customer success is essential