Introduction to ARR

• By
• Bobby Pinero

  Bobby Pinero

  15+ years of corporate finance experience, currently co-founder at Equals and board member at Intercom.

  

Over the last decade, we’ve seen an explosion in subscription-based businesses—from music to TV and even food delivery. We’ve seen the rise of self-serve and PLG as a motion for selling software. And we’ve seen the proliferation of Stripe, ETL, and data warehousing tools to support it all. Yet, after many attempts by startup after startup, ARR reporting is still a f****ing nightmare. Pardon the language, but that’s how most people who’ve dealt with it describe it.

Talk to any startup finance hire, and you’ll hear the same story. They spend the first several months on the job cobbling ARR together and then spend years holding it together in a brittle system that needs a never-ending supply of duct tape as the company scales.

Out-of-the-box solutions that sit on top of your billing data don’t work either. They fail for a variety of reasons, including:

1. They’re too rigid to create the reporting your business needs. Weak.
2. They require you to adapt your systems to fit their reporting. Lame.
3. Changes you make to your business break everything. Frustrating.

It sounds painful because it is painful.

Of course, you can BYO (bring/build your own). We prefer the get-it-all-into-a-data-warehouse-and-transform approach, but it’s really hard if you’ve never done it before. While Finance teams own ARR reporting, many don’t know SQL and have no idea how to structure a table, let alone set up a resilient system. It’s a recipe for a hot mess.

This book will help you avoid making that mess yourself. It’s written for the first finance or data hires at early-stage SaaS companies. The people who know why ARR reporting is so fundamental but need to learn what great looks like. People who want to adopt best practices for setting up systems so reporting on ARR is easy, scalable, and resilient to changes in their business.

It’s also valuable reading for anyone inheriting an existing mess of ARR reporting. Godspeed. Finally, for founders and CEOs, this book makes a great gift for your friends in finance. Leave a copy waiting for them on their desk (or email inbox). Heck, you might even want to read it before their first day.