Guys, I've just ended the hardest quarter I've ever had, where over the last year, we have grown crazy fast from five to over 30 million in ARR in just the last 12 months.
But now we're paying the price of that growth.
Where this is actually the chart of our growth to date, where we ended last year going from 2 million to 15 million ARR plus.
And just over the last six months, we've actually doubled in size from 15 to 30.
But the problem is now we are flat lining where, in times like this, when you're going through such crazy rapid growth in the moment, you kind of feel like oh, the music's never going to stop.
And you're just going to keep ripping on this crazy growth trajectory where you're so busy, just like trying to keep up with the demand here and trying to stay sane and trying to keep the rocket ship on the rails when you're literally almost 10x-ing in just a year's time that you're not thinking about, hey, the music might stop soon and you might actually tap out on your growth channel, which is unfortunately where we found ourselves today.
So I want to spend today's update walking you guys through how we got here today, because I actually think that this kind of plateau is just something every business at some point will naturally hit.
And a real testimony of whether or not we as a company are fit to make it to the major leagues.
So 100 million plus ARR is whether or not we can actually figure out how to get out of this plateau.
And so I'm gonna walk you through all of the key red flags that we've missed here in the midst of the chaos of this growth, and then walk you through the game plan.
We have to get out of this rut, because I really think that this is a crucible moment for the company.
So let's talk financials.
So what's interesting about our financials this quarter is that if I were to tell you that we grew this quarter from 25 million in ARR to 30 million ARR, and did so profitably, you'd think that we were doing really, really well.
But that high level revenue number is only indicative of a certain period of time.
Aka, it was kind of a lagging indicator for all the hard work we had put in years before.
Because if you dig into our numbers and you look at our revenue growth curve on that Yes, we grew that amount on an absolute basis, but you can really see our engine start to decelerate in our month over month ARR growth curve.
Where, if we actually add our Q1 financials as well, you'll see that in the beginning of the year, with the new year, new me rush we had such a spike in new free trial signups.
So basically people trying out Stan, which then of course converts over time into actual subscribers and revenue.
And basically over the last few months you've seen that free trial growth start to slow down because of the cyclicality and the seasonality of like hey, more people are gonna start their business in the beginning of the year, with New Year, New Me, and very few people are gonna start their business come summer.
But I wanna walk you through why this current moment in time for our startup of flatlining revenue is super, super dangerous for us.
So I want you to think about your business like it's this bucket.
And our job is to fill this bucket up with as much water as possible.
And just doing this of getting water into the bucket here is a feat in and of itself where, if you think about it, in order to get someone to put water into your bucket, you first have to get your business entirely off the ground, right?
You have to build a product.
You have to figure out how to market it.
You have to find customers.
You convince them to purchase your product.
Like it took us years of hard work of building a product just to get like a tiny little stream of people actually putting water into this bucket.
And so your goal in business is to try to figure out how to get this tiny trickle stream of water and scale it into a much larger source of water, because then your bucket starts to really fill up.
But that is not reality.
This is reality.
Oh, okay.
AKA nothing in life is perfect.
And for every single business out there you have a ton of churn or basically a leaky bucket where you're so busy just trying to get water into this bucket that you don't realize.
Wait a minute, all of it's going out the other end.
And so the problem for us right now is that the amount of water that's going in, aka the size of our growth channel, is equal to the amount of water going out.
And so we're sitting in this awkward purgatory state where our growth channel isn't growing anymore, aka we saturated it and it's just adding enough people to actually just fill the amount of people who are also leaving out the door.
A.k.a. we're getting screwed on both sides, and we are going to need to slap on some duct tape.
So before I walk you through our game plan to actually try to get out of this rut, I actually want to spend some time talking through why this kind of period can be so emotionally difficult on you as an entrepreneur.
Because when I just show you the bucket analogy or just show you the financials, it can kind of seem obvious like well, duh John, like why wouldn't you also think about proactively building the next growth channel?
Like that seems so obvious in hindsight.
But hindsight is 20-20.
And I think it's really easy for us to sit back oftentimes and be an entre quarterback and be like well, of course, that company should have focused on growing while also fixing their retention and building a great product, because that's the objective analysis.
Of course it should do that thing.
But when you're in the thick of it, it is really fucking hard.
And so, to help you avoid this in your own career, I want to walk you through the red flag that we really didn't do a good enough job addressing, because we were so sucked into this hyper growth loop.
So back when we were first starting to experience this hyper growth around here, like a couple months ago, I would tell my fellow founder friends how hard it was to actually handle hyper growth.
And they would all tell me like, John, that isn't a champagne problem of all time.
Like we'd all love to have our revenue go skywards like this.
And what I tell them is yes, this is totally a champagne problem, but hyper growth like this scale can be super, super painful.
Because imagine going from serving a couple thousand people to basically overnight, over the course of just a few months, having to 10X that to serve an additional 60000 new customers who all have the same demands, who all are flooding your same support impacts, who are all testing your infrastructure, all in this really short period of time where you haven't figured out how to level up yourself.
And so what happens in this growth stage is that you are so enveloped in just trying to keep the train on the train tracks like trying to get this thing to not just spontaneously combust that you end up missing something that we didn't think thoughtfully enough about.
Because if you're only looking at your top line revenue growing, then you actually miss the fact that not every single customer who comes in the door as initial revenue is created equal for your business.
AKA a lot of the wave of people that signed up in the last few months and took us into this crazy extra boost of hyper growth were lower quality customers who yes, signed up initially but then weren't as likely to succeed and therefore were much more likely to churn out.
The backend and their revenue as well is actually a double-edged sword, because you end up being so busy trying to keep up supporting all of these new people who are less likely to use your product successfully, who likely have a ton more questions, who likely don't have as high of an intent to use your product well, and you spread yourself so thin just trying to support those customers who likely will end up churning anyways, that you don't actually have the time and energy or just the mind space to think about.
Hey, how do I practically build to the very next stage?
And so now we should talk about how I'm thinking about breaking through this growth plateau and really taking us to the next level.
So the last few months have been pretty hard on me because, as I've been seeing the numbers flatten out and also still trying to keep the company on its rails, I've been really toiling and really stressing about how are we actually going to break out of this and build new growth channels and get out of this growth plateau, while also keeping the ship open and also just kind of taking it personally.
Where you end up putting so much of your self-worth and identity into things always being perfect and going up, which isn't reality.
Like every single business, actually hits a natural plateau before ideally, you figure out and you hit the next stage.
But in that toiling and stress and emotional soul searching, I got really lucky in that The insight is always just anchor back into your customers, where I just got introduced to someone who's just starting out building their online breathwork coaching business.
And they had so many questions around, hey, like, how do I get started?
How do I start making good content?
Like, what do I actually do to book clients and process sales and host a course and all this stuff?
And they candidly, had absolutely no idea what Stan was.
And that was the light bulb moment for me where I realized that, despite our ripper of a growth on a micro scale, 95 of our total prospective customers out there so anyone who wants to start an online digital products business actually they don't even know that we exist.
And so the reason we've actually plateaued on this growth channel is, if you think about our business and why we've grown so fast to date, It's been because of our organic referral loop, where the reason why we've grown as quickly as we have is because we've kicked off this flywheel where customers come in and fall in love with us and then share it with their friends.
But the trade off, if you think about it, if you're only growing through organic word of mouth, the new customers that are coming in are purely from someone's existing network, AKA you kind of end up being stuck in your own bubble.
And so if you zoom out you kind of realize that we're stuck in our own little bubble where 95 of our total addressable market has never heard of us.
So the premise of our game plan and how we're going to evolve into the next stage of growth is to actually gain the confidence to start talking about our mission and our product at scale.
Because we've actually never spent a single dollar on marketing.
It's all been entirely inbound demand.
But if we want to continue growing our business at a stellar rate, then we have to start adding new channels and new audiences and new pockets of growth.
Which looks like getting more creators to do partnerships with us to share Stan with their audiences.
Which starts to add networks around our networks and ideally, all of these networks start to canvas more and more of the market.
And then on top of that, we really start blowing out our own content.
Because I actually had this dream for Stan that it becomes on the level of a Nike or a Red Bull and is known as the de facto brand to inspire you and support you in actually pursuing your dreams as an entrepreneur.
Like there are so many people right now who are dissatisfied with their status quo and just want something more.
Like whether it's literally just being able to afford groceries and putting food on the table to actually just having a career that's meaningful and fulfilling.
And time after time.
What we see here at Stan is that our hardest working customers who really wanna make that dream a reality, actually end up doing, and the sense of agency and confidence that they build in themselves and the financial freedom they deliver for their family.
Like all of the things that actually come out of their hard work.
Like I just want to give to as many people as possible.
And so over the next year, you're going to see us invest a ton into our content marketing team, where we want to work and partner with the very best creators out there to share their story and share Stan with their audiences, while also starting to invest a ton in our own branded content, like a Red Bull, and eventually have an organization and a brand that's known for creating such incredible content at a billion person impression scale.
Because when I think about the 95 of the market that hasn't yet heard about Stan, and then I think about just like how hard and how lonely the job of an entrepreneur actually is.
And then I think about what we at Stan can do in this world.
Like I truly believe our purpose in this world is to support as many people as we possibly can and actually pursuing their dreams.
Like I know that we could do so much to help all of those people on their journey and actually give them the tools they need to succeed the education and the support.
And I get really fired up and really excited about actually achieving that vision.
And so I'm simultaneously feeling really excited about the end goal vision and really convicted that that is a reality we can build, while also feeling really nervous and anxious and hesitant that I'm actually making the right decision for the company.
And so over the next few quarters we'll get to see whether or not I have what it takes to build a billion dollar company.
