What is T2D3?
T2D3, or Triple, Triple, Double, Double, Double, is a growth strategy pattern commonly adopted by SaaS businesses.
Detailed Explanation
T2D3 stands for ‘Triple, Triple, Double, Double, Double,’ outlining a pattern of revenue growth for SaaS companies. The model suggests a company should triple its revenue for two consecutive years, then double it for the next three years. For example, a SaaS company with a revenue of $1M aims to reach $3M by the end of the next year, then $9M by the end of the second year. Thereafter, it aims to double the revenue for the next three years: $18M, $36M, and $72M respectively. This creates an exponential growth trajectory. This growth can be significantly influenced by factors such as the Churn Rate and the Customer Acquisition Cost (CAC), which directly impact the Monthly Recurring Revenue (MRR).
Learn more: Understanding T2D3: The Cheats to a Sustainable Growth Formula
Why It Matters
In the SaaS industry, rapid and scalable growth is key. T2D3 provides a roadmap for such growth, enabling businesses to set clear targets and track progress over time. It provides a sense of how quickly successful SaaS companies can grow, guiding CEOs and CMOs on pacing their expansion. It’s important to note that the Lifetime Value (LTV) of a customer plays a crucial role in this growth model, as it helps determine the profitability of the SaaS business in the long run.
Potential Misunderstandings
T2D3 is not a guaranteed success formula; it’s a growth model based on successful SaaS companies. Businesses may face challenges in maintaining this growth rate, particularly during the ‘double’ years.
Frequently Asked Questions
- What is the origin of T2D3?
The concept of T2D3 was popularized by venture capital firm Bessemer Venture Partners. They observed this pattern in successful SaaS companies and used it as a benchmark for SaaS growth. - Is T2D3 applicable to all SaaS businesses?
Not necessarily. T2D3 is an ideal growth rate. It requires careful planning, investment, and market conditions to achieve. It might not be feasible for all SaaS companies.