Why The T2D3 Roadmap to SaaS Success Inspired the Name of My Own Company, Triple & Co.

In a 2015 blog post that has now become a must-read for SaaS entrepreneurs and investors, Neeraj Agrawal, General Partner at Battery Ventures, introduced a concept that encapsulates what he believes are the seven phases of go-to-market success for disruptive SaaS companies aiming to reach a billion-dollar valuation. He called the mantra “triple, triple, double, double, double”, or T2D3 for short, referring to a company’s annualized revenue growth. It’s a formula (or a version of it) that has worked for companies like Marketo, NetSuite, Omniture, Salesforce, ServiceNow, Workday and Zendesk – and it’s such a logical roadmap for revenue-growth (which is what I specialize in), it inspired the name of my own consulting business.

In the post, which he titled “The SaaS Adventure”, Agrawal likens the seven phases of go-to-market success to climbing Mt. Kilimanjaro: It’s a feat that’s impossible to accomplish in a single day and must therefore be split up into smaller achievable milestones. If a SaaS company is totally focused on each goal in its turn, it should position itself incrementally in the best possible standing to tackle the next, and the next, until the peak of the mountain is reached, or in other words $100 million in ARR (annual recurring revenue) which is generally thought of as the milestone that indicates potential to achieve a billion-dollar outcome.
In an interview with The SaaS Revolution podcast’s Alex Theuma, Agrawal opined, “Ultimately, I think venture capitalists are pattern recognizers at their core. We realized there was this pattern developing with the companies we worked with, and that it provided a natural way to sequence growth both from a financial and operational perspective.”
Agrawal’s “T2D3” growth paradigm for SaaS companies isn’t the only formula for success. In fact, some of his colleagues at Battery Ventures have since suggested that while many of T2D3’s insights are still relevant almost six years since he penned the now-famous blog post, some tech companies are growing at unprecedented rates, heralding a new paradigm they call “Billion-Dollar B2B”, referring to “a new class of cloud-first, enterprise-tech behemoths with the potential to reach $1 billion in ARR, not $100 million – and achieve market capitalizations in excess of $50 billion or even $100 billion.”

That may be the current reality, six years later, but when you’re an entrepreneur in a SaaS startup’s early days and your company’s revenue is still teetering in the single digit millions, striving for $1 billion in ARR is more akin to a trip to the stratosphere than a mountain climb, which is why the T2D3 roadmap is still a prudent, seven-phased first step to getting you to that $1 billion launch pad.

Here are Neeraj Agrawal’s seven phases of go-to-market success for SaaS companies aiming to reach a billion-dollar valuation:

Phase 1: Establish a great product-market fit, ensuring the company is solving their customers top one or two most pressing pain points.

Phase 2: Get to $2 million in ARR, or annual recurring revenue. This phase – which usually takes 1-2 years – involves perfecting your sales pitch and funnel strategy and getting the relevant number of customers (depending on the deal size) to reach $2million ARR.

Phase 3: Triple to $6 million in ARR. This phase involves setting up your “sales machine” for optimal growth, by hiring a killer sales team and a sales leader who can scale their efforts to close deals.

Phase 4: Triple to $18 million. In this phase, which according to Agrawal is where “the magic kicks in” but which is also among the most challenging for SaaS companies – revenue growth occurs not only thanks to renewals and referrals, but also by adding an additional layer of sales management, such that the founders are no longer closing deals themselves as their responsibilities in managing their company grow. This adds a new gear of scalability to the company’s sales machine that makes it possible to reach the next phase.

Phase 5: Double to $36 million in ARR. This phase is for expanding the business by penetrating new regions. Agrawal recommends beginning with EMEA, but going “deep versus wide”, focusing on “some combination of U.K., France and Germany” and getting a strong foothold in those markets rather than a not-so-strong foothold in many countries all at once. This allows the company to understand the process and write their playbook for the next phases of regional expansion.

Phase 6: Double to $72 million. This phase, according to Agrawal, is “rife with operational challenges” such as “establishing non-linear growth, or getting the reseller or partner channel working”. Overcoming these conundrums is different depending on the company’s individual circumstances, but nailing the solutions is what sets them on a path to the final phase of reaching a $1 billion valuation.

Phase 7: Double to $144 million. Reaching this phase means that the potential for an IPO is in sight, Agrawal points out that this is by no means the ‘final’ stage, because it also represents a new beginning of tremendously hard work, since most of the company’s value is actually created post-IPO. Still, reaching phase seven is a triumphant milestone that sets the company on a path to another monumental goal of reaching $1 billion in revenue.

Breaking the process down to seven distinguishable phases may give the impression that this is an ‘easy’ formula to follow. And while it does define the different stages of revenue-growth that allow a company to set realistic milestones and a path to an ‘ultimate’ goal – it is anything but easy, especially if you’ve never done it before, which is the case with most entrepreneurs.

But as someone who has raised over $70 million in funding and built a SaaS ‘machine’ that saw my own company’s revenue triple again and again, ranking among the top 1% fastest-growing SaaS companies worldwide – I now know the steps.

And it’s precisely because I’m now in possession of the best ‘trail maps and mountain-climbing gear’, so to speak, that I decided to launch my own consultancy and offer other entrepreneurs the benefit of my hindsight.

Neeraj Agrawal’s “Triple, Triple, Double, Double, Double” growth paradigm has served me well, so when it came to naming my company, Triple & Co. was a no-brainer.

You can read Neeraj Agrawal’s “The SaaS Adventure” blog post here.