The building block of a million dollar Annual Recurring Revenue (ARR)

August 2017 when I was contemplating joining Alore, my boss (then future boss) Vikas Jha invited me over to our Bangalore office. We were mostly discussing ideas all week and he had me work on some minor assignments, all the while observing how I work. (I didn’t really have an interview).

3rd or 4th day, randomly while sipping his Diet coke he asked me “D, do you know the golden number of Startup Growth? “

I was a bit confused.

Thought he was throwing me a trick question and after thinking over it, I replied “ The milestone of $1 million ARR ?”

Vikas smiled, put his Diet Coke can down and said “ There, but not there. It’s actually 83.3”.

As I stood further confused, he pulled out a post-it note and wrote this:

$83.3X 1000 X 12 = $ 1 million ARR

I was stumped by the simplicity of breaking down the complexity of a million dollar ARR.

Just find a 1000 people who can pay $83.3 every month. Not easy I know, but the goal becomes less daunting right?

Recently I got reminded of this learning again while it was being discussed in a Facebook group.

Thought I’d share the summary of it, in case it helps make the goal sound less intimidating and in reach for someone who’s reading this.