According to the book Scaling Up, 94% of companies — all types of companies, not just tech startups — never hit $1 million in revenue in a calendar year, ever. We’ve all heard the stat that most entrepreneurs fail within five years, but there’s a big difference between not failing and not building a seven figure+ revenue business. So, if 94% of all companies never hit $1 million in revenue, it’s safe to say that 99% of tech startups will never hit $1 million in revenue as tech startups are 10x harder than regular businesses (see the difference between innovative and replicative businesses).
As an entrepreneur building a tech startup, here are a few things to think about:
- Find a small, fast-growing market or re-segment an existing one
- Know that the market leader gets 10x the value
- Understand just how valuable it is to hit $1 million in revenue
- Figure out the right type of money to raise
- Remember that it often takes years of grinding it out before things really take off
Knowing that 99% of tech startups never hit $1 million in revenue makes success look even more daunting. The key is to continually learn and improve as fast as possible.
What else? What are some more thoughts on the idea that 99% of tech startups never hit $1 million in revenue?