Reaching your first million in annual recurring revenue is a significant milestone, but it’s often just the beginning of a new set of challenges.
The path from $1M to $10M ARR is where many promising startups hit an invisible wall.
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Mid-Stage Growth Challenges
In the past 6 months, I’ve spoken to over 50 founders doing $1M-$10M ARR. 99% of them feel STUCK.
The transition from early-stage scrappiness to scale-ready operations isn’t just about doing more of what got you here—it requires fundamental shifts in how you think about your product, customers, and business model.
Here are the 6 biggest mistakes they’re making that prevent them from unlocking growth to $10M ARR:
Same but Better
It’s easy to get early traction when you’re a little bit better than the incumbent. To reach scale, you need to be 10x better than what people are already using to get them to switch.
Incremental improvements might win you early adopters, but they won’t drive the massive customer acquisition needed for serious scale.
The switching costs—both financial and operational—are too high for most customers to move for marginal gains.
Messaging Isn’t Clear Enough
Crystal-clear messaging helps everything. Unclear messaging hurts everything. A decent product with subpar messaging can get to a few million ARR.
You have to tighten it up to get to $10M.
When your messaging is muddy, every aspect of your business suffers. Sales cycles lengthen, conversion rates drop, and even your best customers struggle to refer you effectively.
The companies that break through to $10M+ have messaging so clear that prospects immediately understand the value proposition.
Don’t Know Ideal Customer
Taking money from anyone and everyone is often what you have to do in the beginning. Honing in on an ideal customer and building for them will often get you unstuck.
The “spray and pray” approach that worked in the early days becomes a liability at scale.
Without a clear ideal customer profile, your product roadmap becomes scattered, your marketing becomes ineffective, and your sales team wastes time on prospects who will never become great customers.
Understanding Unit Economics
If you don’t know what’s working and what’s not, you don’t know what to scale and what to pull back on.
Many startups do everything in the beginning and stall out because they have no idea what was is actually working and what isn’t.
The experimental phase of early-stage growth often creates a patchwork of initiatives without clear attribution.
When you can’t identify which channels, campaigns, or customer segments are actually driving profitable growth, scaling becomes a guessing game rather than a data-driven process.
No Word-of-Mouth
If you have word-of-mouth, everything you do will work. If you don’t have word-of-mouth, nothing you do will work.
Some startups capture initial excitement but fail to deliver on promises made and lose this critical tailwind.
Word-of-mouth is the ultimate growth multiplier. It reduces customer acquisition costs, shortens sales cycles, and brings in higher-quality customers.
Without it, every customer feels like you’re pushing a boulder up a hill.
Churn is Abysmal
RB2B is guilty as charged. We’re working every day on a total reinvention, and if you also have abysmal churn at mid-single-digit ARR, you should tirelessly improve your product too.
High churn at this stage isn’t just a retention problem—it’s a fundamental product-market fit issue that needs immediate attention.
No amount of marketing or sales optimization can overcome a leaky bucket.
The Path Forward
Startups are hard. My life for the last 12 years has been getting stuck, then unstuck again.
In fact, I’m stuck right now!
The good news is that no matter how stuck you feel:
- There are thousands of founders who are stuck right there with you.
- No matter how stuck you are, you can get unstuck—it’s in your hands.
I’m here to tell you: don’t get defeated. The rewards for blowing past $10M ARR are unimaginable.
Remember, feeling stuck is part of the process. The key is using that feeling as a signal to step back, reassess, and make the bold moves that will unlock your next phase of growth.
The $10M milestone isn’t just a revenue target—it’s proof that you’ve built something truly scalable and valuable.
Keep building.