TeamBurr Blog

The Break-out Year:  5 years to $1 billion

I’ve had this chart for years.  I first made it back in 2004 to validate some aggressive assumptions I was seeing in a business plan I was reviewing for Westlake Venture Partners.    The interesting fact is you can find similar rapid revenue growth trends in most successful technology growth companies.  I recently added Cisco Systems to the list. I had to dig hard to find their S1 filing which was filed before the SEC was keeping digital records, and guess what, even though it’s growth started in the late 1980’s, and they are a hardware company while all the others here are some form of software, you’ll see the same consistent trend.

The overall thesis here is not to say that all tech companies can do this, but rather to say that it is achievable (perhaps not reasonable) if a company makes the growth assumption of going from $1M to $1B in 5 years.  That said, you better be really darn special to make that claim and odds are you are not (as was the case with company business plan that got me started on this little analysis).    

As an entrepreneur you should dream big, you have to dream big but don’t ever count on this kind of growth.  This kind of growth is an outcome of stellar planning, solid management and a special kind of luck and timing that all Venture Capitalists would love to bottle if they could.

About the numbers

These companies all took a different number of years to reach what I call their “Break-out Year” but from the Break-out Year the revenue growth is very similar.  What defines the Break-out Year is growth that is massive as % of revenue over the prior year.  The median growth rate here is 1300%.  Google, as with many things is a success anomaly at 8600%.  I included Facebook even though their Break-out year is below normal at 400% their overall revenue growth is still phenomenal and they achieved over $1B in revenue in less than 5 years.   Note:  As a qualifier I did not consider years where the back to back revenue was less than $1M (this eliminates the law of small numbers, going from $50k to 700k in revenue is big growth percentage but not an indicator of success).

Also, to be clear, the years 1 thru 5 on the chart are not the companies first 5 years of revenue, it is their 5 consecutive years of revenue starting with the year just prior to their Break-out Year.