Death of Companies Over $7M of ARR
I was speaking to a good friend and former portfolio company executive yesterday. We have long since sold the company to a private equity roll-up, and since then, the company has started slowing in growth. When I asked him what he attributed it to, he told me it was because the technology that was rapidly growing and adopted within the vertical had since been a commodity. The reason for this was that the technology was relatively simple.
Coincidentally I was speaking to another company executive we just sold for, asking about some of the difficulties the company was having. The executive informed me that the competitors caught up, and the larger enterprise customers were outgrowing the platform’s functionality. Again, this was among the same flavor as the last conversation.
I learned that getting low-hanging fruit is one thing earlier in the company’s lifecycle to gain market adoption, funding, and first-to-market advantage. However, if you want to be able to survive over time, you need to be able to solve complex business problems with hard-to-build software. That is where actual company value is created.