In this article, we’ll explore what T2D3 or triple, triple, double, double means in finance, how it was introduced by SaaS (or software as service companies), and how it can help increase overall revenue growth over multiple fiscal years. Finally, we’ll walk you through the seven phases of growth that have provided giant SaaS firms like Salesforce, Zendesk, ServiceNow, Marketo, and more with vital strategies to rapidly attain values over $1 billion.
What Does Triple Triple Double Double Double Mean?
The finance term “triple, triple, double, double, double” (T2D3) means precisely what it states. Take the growth of any business venture, whether it be a unicorn startup, SaaS company, or any alternative along those lines, add exponential growth and you’ve got the basis of T2D3. To put it simply, this phrase outlines the monetary growth of a company that triples its ARR (or Accounting Rate of Return) for the upcoming two years, then doubles that rate for the next three years to come.
Where Was T2D3 Derived?
T2D3 was coined by Neeraj Agrawal, a partner at the SaaS firm, Battery Ventures. This method focuses specifically on increasing a software-as-service firm’s revenue growth three times for each of the initial two fiscal years, then doubling that amount for each following three financial years as we stated above. Neeraj breaks down the process into 7 key phases for the strategy structure to be most efficient and has helped many startups, unicorns, and SaaS companies rapidly rise and exceed values of over $1B in a 5-year time span.
How SaaS and T2D3 Go Hand in Hand
As the nature of subscription-based products maintains a consistent base of repeat customers, software-as-service management and the triple-double system produce a perfect fit. The creator of the 7-step process intentionally coined the phrase for SaaS purposes. T2D3 is a flexible formula for creating what’s known as a “unicorn” in the tech world.
To optimize results throughout each phase we recommend that enterprises already have these resources secured:
- 1-2 million (USD) ARR as your starting “base”
- A wide, loyal, and consistent customer base
- A carefully chosen, reliable co-founder
- A trustworthy and valuable financial or capital partner
- A solid foundation and consistent company culture
What is a Unicorn?
In modern business culture, a privately owned startup that quickly rose to values of $1 billion or greater is considered to be a unicorn. Although this definition may shift in the years to come, unicorns are regularly referred to as wildcards or startups that were not projected to be such huge successes before their launch date. Made popular by Aileen Lee, a true unicorn or even a unicorn investor is usually a venture capitalist or private investor in search of “the next big thing.” Some of the most popular, triumphant unicorns are Robinhood, Instacart, SpaceX, and Canva. Human Resources also uses the term to describe a person with abundant knowledge and experience in their niche but is well overqualified for the desired role.
The Path to $1 Billion:
The triple, triple, double, double, double method has helped various firms reach exponential growth within the first 5 years of their creation. Several billion-dollar companies like ServiceNow, Zendesk, and Marketo have all used the T2D3 strategy to gain the success and market evaluation they currently have today.
Step 1: Understand Your Customers and Your Product-Market Fit
Do you have a substantial base of repeat customers? Do you know your target market like the back of your hand? If so, it might be a great time to think about doing the T2D3 method. Additionally, we’d like to note that it’s pertinent to analyze if you’re on track with your product-market fit. Although there’s no concrete way of knowing, understanding your value propositions and what consumer need you’re addressing within your market can help you gain the confidence that there is a need for your product or service. Although there’s no way of concretely knowing if you have the perfect product-market fit, understanding your product and service offerings can aid in better serving your target market. This can also help you and your team gain confidence that you’re fulfilling the needs of your target audience.
Step 2: ARR Reaches $2 Million
Within this phase, we often see founders scrambling to close new deals, secure long-term sales contracts, and perfect the secret sauce – or perfecting your funneling strategies and pitch. On average we see companies take two to three years to complete phase two. We’d also like to note that this is a great stage to take the time to find the ideal, model customer(s) as you scale and grow.
Step 3: ARR Reaches $6 Million
In this phase, ARR or accounting recurring revenue reaches triple the ARR of phase two at (ideally) $6 million. Here we see founders take various approaches, one being growing your sales team and pushing sales, hard. This of course would be aligned with reaching the coveted $1 billion, but startups can often be victim to burnout or not creating a good foundation while rapidly expanding. Alternatively, founders can be responsible for handling all deals and closings. This can be just as effective, however, it can also be extraordinarily time-consuming. To assure all valuable time is well spent, founders should examine average earnings for each deal personally closed. It’s a crucial step towards ensuring you’re still well on your way to reaching the infamous goal of “startup unicorn.”
Step 4: ARR Reaches $18 Million
In phase 4, we once again see three times the growth as the name suggests. At this stage, your firm has likely gained sufficient traction and that momentum is what will lead you to your goal. We highly suggest that you start to set your sights (if you haven’t already) on bigger companies, hire a team to manage sales, or add to your pre-existing sales team (if your founders aren’t the ones personally closing deals.) We also suggest that you start developing the framework to hire new management, re-evaluate as necessary, then expand your foundation even further. Intrepid also suggests that you begin to solidify your plan for the last few stages of growth to expand on an international level.
Step 5: ARR Reaches $36 Million
To no surprise, the fifth stage focuses on sales and expansion. In step 4 we recommended that you start building out your sales team. In this step, it’s crucial to solidify your team for expansion, including hiring several new managers who can supervise the growth and guarantee all stages of your product and customer life cycle are well cared for. For SaaS businesses in specific, we emphasize the importance of this stage as it’s crucial if you’d like to bring your startup to the international level.
Step 6: ARR Reaches $72 Million
Although the other steps specifically honed in on monetary growth through sales and international expansion, stage 6 boasts the new challenge of having to make difficult operational decisions. Such as, how to further optimize and streamline your internal and external processes, and how to become the most efficient within your specialized niche. Like stages 4 and 5, start to think about how you can attract the attention of larger entities and their need for your product and service. This will also help with international expansion.
Step 7: ARR Reaches $144 Million
The last stage is all about IPO. Gaining traction through a high valuation (ideally $1 billion) will attract valuable investors and empower the exponential growth of your SaaS firm. At any stage in the T2D3 cycle, Intrepid has the tools to help your operation grow considerably and aid you in creating your own unicorn.