Thread by @WadeLowe_co

@MichaelMartocci @swaguphq We’re meeting this morning to build out the revenue model for the next few years. You can follow along here if you’re so inclined. Thanks for the inspiration @michaelsayman for your recent build in public projects. Ok. Let’s go.

In 2020 we built out a sales headcount / capacity plan because we didn’t have enough historical data to incorporate a top down plan. At this point there is very little that will meaningfully change where we land in 2021. We’re on track for 175% growth following a year of 240%.

Now the focus is on 2022 and beyond. This is where it gets fun. We have enough historical in some areas but not enough in others so we get to create the future as we go.

There are five primary inputs - Traffic, Channels / Partnerships, Outbound, Repeat / Strategic and SwagUp Select. For now we’ll focus on inbound traffic, leads, conversion, CAC and AOV.

This is traffic by month from Jan 2020 through April 2021. Now we extrapolate that out through Dec. 2023 based on historical BUT with no additional investment so their is tremendous upside in deliberately investing in additional traffic.

On average 93% of traffic is new and 3.95% converts to leads. The key will be to continue to drive increase and traffic AND increase in conversion. Most of the time those things diverge but great business do both simultaneously.

High level the model now suggests we need to double lead count by Dec of 2022. Great. That doesn’t happen by accident so the question becomes how. It’s important to understand what the objective is so we’ll assign an owner (VP of Marketing) to producing this result.

We’re now going to break out organic vs. paid. We know that for every dollar we spend we get x amount of new visitors but we need to understand for every dollar we spend how many paid visitors do we get so we can model out an increase in spend = what % increase traffic.

That was fun. Michael is way more proficient with excel than I am so I just read off 16 months of data to him and he’s dropping in the the model. For every 4 dollars of spend we get a new visitor. We know what conversion to leads is + conversion to deal + AOV so now we forecast.

Good news bad news, and this is where it gets tricky....we’re understaffed so by adding more marketing spend and leads they will hit the floor so conversion will drop. This has to align with a hiring model and ramp schedule. Luxury problems.

Fun. Fun. Depending on assumption and drivers (primarily focused effort on aggressive spend vs. conservative spend) we get to ARR target in 18 months or 30 months from now. With more aggressive growth comes trade offs and risks, especially since we haven’t raised outside capital.

Good news is all signs point to up and to the right. The pic here represents current trend (conservative) vs a more aggressive approach. This is lead data. The easy answer is “of course” use the aggressive model. The easy answers are rarely the right answer.

What this doesn’t account for is seasonality so now we need to build in “discounts” for all Q1’s as they’re always lighter. We now have an underlying understanding of the assumptions but we need to account for seasonality. That’s next.

Here are the basic assumptions. Current data based on historical. Any of which we can now change and will cascade changes through the entire model.

So now we have traffic, leads, new deals, AOV new deals, new customers. Where this gets super interesting is building in retention and repeat. Repeat deals is a % of total customers aggregate. As we increase new customers those turn in to repeat.

The total aggregate customer count increases and repeat is a % of that number and we start to get a compounding affect. Now we’re there in 16 months. End of session 1. #tothemoon