Main image of article Seizing Opportunities at Companies Poised for Breakout Growth
Professionals who have enjoyed successful careers in technology know that timing is everything. Join a company on a breakout trajectory, and you stand to gain opportunities for promotions, achievement, technical exploration and financial growth. The tricky part is being able to identify a company that is on the verge of breakout growth. While there’s no way to know for sure, we asked investors and advisors how they identify companies entering the breakout stage of development.

Revenue Run Rate of $20 million to $300 million

Revenue and projected growth are critical predictors of long-term success, according to Andy Rachleff, CEO of Wealthfront, which publishes an annual list of private, mid-size companies with momentum. Companies that are poised for hyper-growth have a revenue run rate of between $20 million and $300 million by year’s end and are projected to grow in excess of 50 percent for at least the next three or four years, Rachleff said. As further proof of this, consulting giant McKinsey says that these so-called “super growers”—companies whose growth was greater than 60 percent when they reached $100 million in revenues—were eight times more likely to reach $1 billion in revenues than those growing less than 20 percent. Better still, companies that have achieved critical mass are often more willing to hire generalist tech newcomers who require initial mentoring and training, which increases your chances of landing a position. Since most high-growth companies are private, make sure to ask about revenue and forecasted growth rate before you accept an offer. Proceed with caution if management seems reluctant to disclose at least some financial information; they might not tell you exact dollar figures (after all, they’re private, and you haven’t accepted the position yet), but they should give you a good idea of trajectory.

Dynamic Leadership

It takes dynamic and charismatic leadership to pursue a high-growth strategy, advised Jay Turo, an angel investor as well as the CEO and co-founder of Growthink. Again, McKinsey agrees with this idea. Based on the firm’s analysis of 5,560 executives at 47 companies, leaders at top-performing companies (in terms of revenue growth) scored high in competencies such as market insight, customer impact and strategic orientation.

High Market Potential

Firms in brand-new industries such as blockchain or machine learning could be candidates for breakout status; they have potential to generate new organic growth for both the short- and long-term. (They are also acquisition targets.) “Look for companies that are growing faster than the rate of growth for the overall economy and industry,” Turo noted.

Great Market Receptivity

Market receptivity and timing are other important factors in achieving breakout growth. Buyers of goods and services in both the B2B and the B2C markets ignore what they don’t care about; and though not impossible, pursuing a non-enthusiastic market can be an uphill battle. It’s unlikely that a company will be able to sustain robust growth rates without great market receptivity. So when it comes to identifying companies on the verge of breakout growth, product market fit is more important than leadership. “When a great management team meets a great market, great things happen,” Rachleff said.

Unit Economic Profitability

In order to achieve sustainable success, companies must grow revenues andmake a profit. “Some experts contend that having bad unit economics doesn’t really matter, but I disagree,” Rachleff said. “Selling a product at very low margins can lead to rapid revenue growth, but it doesn’t necessarily denote a great long-term business.”

Exciting Branding

If you look at companies that have achieved breakout growth such as Slack, Dropbox, Lyft and Airbnb, they have one thing in common: carefully designed and exciting branding. “New companies can survive a lot of things, but you can’t achieve breakout growth with mediocre branding,” Turo said.