How Do You Build a $100M Startup in 3 Years?
How to build a hundred million dollar startup in three years. Now, I know that's a huge promise. Wait with me, I'm gonna walk you through exactly why I'm talking about this video and how to do it. I mean maybe you just want to build any kind of business and you feel like all the growth options are confusing and how would you do this and how would you fund it. To me, it's like even how do you do it in a way that doesn't turn you into a stress ball? I'm going to unpack that big question and tell you where it came from, and build a sequence for you to just understand you can do it. These are the items that need to be true. And I think it's really important as a founder to understand the different aspects of a business model to really dissect what would it take to build that level of velocity and volume in your business. Now I've been fortunate enough to spend a lot of time, I lived in San Francisco for five years. I've been around entrepreneurs that have built companies that fast. And I understand the economics and the valuations, and the structure that's required to get there.
Now, for me, it came from one of my coaching clients. I had a guy that recently sold his company and wanted to get on a call with me, 'cause that was the question. He emailed me, I wanna build a hundred million dollar company in three years, how would I do that? And I was like, I didn't dismiss it because the guy just sold his business. So, I knew he was capable of building companies. But I was like an interesting thought experiment. So, I kind of took a few minutes, wrote down some notes, scheduled a time, and we got on a call, and this is what I shared with him. And at the end of it, I think he got real clear on oh okay, now I know what areas I need to focus on. Now I know what needs to be true to make this happen. And I thought it'd be really valuable to share it here. So, the first thing is you need to solve a huge, major problem. Okay, so for you to build that kind of company, it needs to be a problem that a lot of people have and it has to be a major problem that they all have. And you need to solve it in a unique and potent way. And the reason why I say unique and potent is that if other people are already solving it, then you have a competitor problem. So, it has to be unique to you and it has to be potent. Meaning that as fast as possible, they have a problem, and your solution gets them the result. That's what I mean by potent. The time I've got a problem and your solution has to be as short as possible. So, that's number one. Just has to be huge. You have to solve it in a unique, potent way. Some people call that product-market fit. But it's more than just product-market fit. It's literally like the fastest product-market fit in a non-competitive space. So, that's a big challenge, number one, not impossible, but needs to be solved.
Two is you need to grow a growth engine. So, when I talk about growth engines, my whole strategy is around marketing or demand, or attract, and sales or conversion, and getting people essentially to buy. And what you need to do, and this is the key, to build that level of growth, a hundred million in three years, you need to build a repeatable, scalable marketing engine. So that you need to be able to invest in a channel that's untapped and unlimited, or to some degree, predominately unlimited. And that the payback period and this is why it's an engine. That the amount of money you spend and the time you recuperate that investment. So if you spend $10 to acquire a customer, you need to get that as fast as possible. Most people on the small business side, just so you know, in the software space, they'll spend about $180 to $200 to get a free trial into their product. So, you need to be able to recoup that quickly, ideally 30 days. Some companies take them for 16 months. On average, it's about 10 to 12 months. So, you wouldn't be able to a hundred million in three years if the payback period took I would say literally longer than 60 days. You want to make that as fast as possible.
That's the second thing that needs to be true is just a growth engine from marketing, and sales, and velocity of payback period to your investment. The third thing is you're gonna need to build the best team. Okay, and the reason why is you are not that good. Like I get that you could be the most incredible founder in the world but you are not gonna be able to hold the number of balls in the air and juggle them at the quality level that's required to be able to scale up the customer accounts, to support those customer accounts, to build up the product, to build up the engineering team. All those different aspects, the financial structure, the dashboards, et cetera. Again, I'm game. You can do it. Three years, a hundred million. But you're gonna have to build the world's best team in each specific function of your business, okay? So that is you know, how do you recruit? How do you compensate? How do you bring them together? That's gonna be a big challenge that you need to develop that skill around finding, recruiting, convincing, leading, supporting, delegating, all these things that come around the people side, that's gonna be required. So that's the third big thing. The fourth is you're gonna need to raise money and here's why. A lot of people, they feel like well, if I can get customers to pre-buy the software, then I've got a positive cash flow situation. And that may be true on the initial cost, your cost to acquire a customer, maybe your marketing costs. And then if you can get them to pre-buy enough, then it has a positive cash flow. But that doesn't hold true when you gotta start investing in the team. One of the biggest line items typically for a software company is its people. So, it's not marketing typically, it's gonna be the people. So, if you wanna, you know, if you've got an ability to get a short payback period on your growth engine, on the marketing side, and your sales, that doesn't support your ability to hire top talent at scale to be able to get the people to run those different divisions. So, raising money to invest in marketing, to invest in your team is gonna be critical. Especially if you use a partnership strategy to acquire customers, 'cause that's a really viable strategy. They're gonna want to get paid in a short amount of time for getting those new customers to allow you to keep that ramp. The other thing I told him is to map out three years, a hundred million dollar revenue business, and work backward. Like the amount of revenue growth you would need to do on a month by monthly, the basis is alarming, is crazy. Not impossible, but you map that revenue growth to the investment that's gonna be required and that's the amount of capital that you're gonna need to raise. So, a lot of people think like oh I could just bootstrap this. There's no frickin' way. You know, I've grown a business, 150% year over year compounded and I know the sound that makes. It's this big swooshing sucking sound of cash. When you grow a business at scale, foosh, it takes capital. So, making sure that's part of the strategy is gonna be critical. 'Cause without it, you're not gonna be able to keep the growth. Even if you've got everything else working for you, you won't' be able to sustain it.
Finally, the fifth thing is you've got to build the business in a way that it can be sold. So, a lot of founders, they find growth channels, they find team members, but they don't build it in a way that's sustainable. They might find a loophole inside of some Facebook API or some Linkedin thing, or some scraping email, outbound system, or whatever it is. I've seen every variation possible, but they're not sustainable. So, you need to build the business where the comp structure for your executive team, where the marketing channels that you're using are not grey area, where the product allows it to sell itself. Those things are required and if you don't do it right then, you're just gonna build, you can actually hit the hundred million in three years, but then the whole thing's gonna come falling to the ground. So, that filter of saying can I build it in a way that's gonna be sold is going to allow you to actually build the right business.
Now, here's a tip, okay. 'Cause to me like it's okay, you want to do this, I love the ambition, let's go do it. Here's the pattern, here's the challenge you're gonna have to overcome. The tip is, and the question I asked this individual as you know, would you dedicate your life, the rest of your life, 25years, 30 years of your life if you knew that you only had a 50% chance of being successful in that business? And I love that question because it gets really clear for what's required. I know you think you're gonna build this thing in three years, it's gonna be a huge business. But what if it's not? And what if those three years ask everything of you? Your health, your relationships, your family, your mental capacity? What if that just sucks everything out of you and still, you don't even come close to hitting that? Is it worth it to you? Are you willing to dedicate your life with a 50% chance? And that question will help everybody get clear of why do you want to build a hundred million a year business in three years? Is it the right strategy for you and where you're at in your business? Is it doable based on your skill sets, your background, your experience with the things I just mentioned? But I think it's an incredible question. So, first thing, you need to solve a big major problem in a unique way. The second thing is you've got to build a growth engine that attracts people and allows the payback period to be short. You want to put together a world-class, player team to run, and manage, and lead every different function in your business. The fourth thing is you're gonna have to raise money to fund that growth. And then, fifth, build it in a way that the business could be sold so that you're not building a house of cards.