Introduction

In venture-funded and PE-owned companies, achieving ambitious yet sustainable growth is crucial. The board of directors, often composed of investors, typically seeks aggressive revenue expansion to maximize their returns. CEOs and CMOs have the same incentives, but sometimes the feasibility, velocity, and approach may differ.

CEOs and CMOs must ensure that these targets are realistic, data-driven, and aligned with operational capabilities. Not doing so, and signing up for unachievable targets can demoralize the team, and lead to burnout. By working together strategically, the CEO and CMO can present a compelling case that balances ambition with feasibility.

Our CMO and I (CEO) once presented a growth plan to investors that laid out 71% annual revenue growth, growing the business from $56M to $95.2M top line. It was an aggressive but achievable plan. One of the investors was adamant that we grow revenue 100% and repeatedly cited his other portfolio companies that had achieved this level of growth. Pointing out that these companies were growing from a smaller base, were in totally different industries, and had dissimilar margin characteristics and LTV did not seem to sway him. The 2-hour debate wandered between theoretical and practical, with the tacit message being that if people just worked harder and smarter we could get there. I naively acquiesced, and the board meeting ended with a new annual goal. To say the ensuing internal conversations did not go well would be an understatement.  To be clear, the investor was well within his duties pushing us. It was the way the conversation was structured that was the problem.

What could I have done differently? I recently spoke with Brian Osborn, a long-time friend and colleague, and a phenomenal marketer. I posed this exact scenario to Brian, and as usual, Brian had a thoughtful response. “In my experience, it's best to take in feedback from investors and then ask to come back with a well-thought-out plan that focuses the debate on the practical rather than the theoretical. The underlying assumption needs to be that everyone is working incredibly hard, and effort is not the issue. Work with the team to conduct a gap analysis on the difference between the proposed forecast and the one the board is asking for.”

Let’s apply Brian’s advice to a genericized example of the situation I was in. Obviously, this is a very simplified example, keeping a lot of variables stable for simplicity’s sake. Below is an example of what a CEO might bring to the board as an annual revenue forecast.

The proposed forecast represents 71% YOY growth. Let’s hold aside CAC, LTV, and balance sheet health, and just look at the initially proposed 2025 revenue growth.

The breakdown of new and repeat customers/buyers to drive this proposed revenue forecast can be seen below:

Let’s go back to the example above and assume the investor is dead set on 100% growth.

In this “Aggressive” growth ask, new and repeat customers/buyers to drive this revenue can be seen below:

The difference between the two forecasts is 1,500 “Potential” New buyers, and $2.6M in revenue (representing the difference between 71% growth and 100% growth). Rather than debate the gross revenue delta or the YoY growth percentage, the conversation needs to be around the incremental “Potential” new buyers/subscribers, what they cost, and what they are worth:

Focusing on what can be done to convert 1,500 Potential Customers/Subscribers, is a discussion that needs exploration and debate. That’s the gap. Brian continued, “Once the gap has been identified, then you need to break down and analyze all the options to close the distance between the initial proposed forecast and the requested number. There will be multiple ways to close that gap. Don’t try and execute all of them or it will yield a suboptimal outcome, and kill your team. Choose the highest impact, most cost-efficient, and most feasible, and assign an owner and commit to executing well on those. Don’t be afraid to look outside the marketing team and see if there is capacity in other departments to help bridge the gap.”

In this hypothetical scenario, we are faced with a shortfall of 1,500 new buyers to close the gap between the proposed 71% growth rate and the requested 100% growth rate. The CEO, the CMO, and any other relevant functional leads need to then quickly analyze and choose vectors to acquire incremental new buyers/subscribers. Let’s say, given the dynamics of our hypothetical business, there are multiple ways to acquire these 1,500 new buyers:

1. Referral program

2. Hire new sales reps

3. Increase trade show presence

4. Increase “Performance Marketing” spend

5. Increased “Brand” spend

6. Online ad creative refresh

7. PR

8. Conversion Funnel improvements

Let’s also say that based on feedback and analysis from the CMO and their team, as well as budget realities and a rapidly increasing CAC for incremental buyers, they rule out new sales reps, trade show spending, and increased Performance and Brand ad spend as viable ways to grow new users. However, focusing resources on a burgeoning referral program, refreshing stale creative, low-cost/high-impact PR, and fixing leakage of qualified buyers from the conversion funnel are discrete, impactful, and low-cost ways to potentially add the necessary incremental new users. Plus the leaders of product and engineering are excited to put focused resources on the mechanics of the conversion funnel. To be conservative, let’s leave the CAC the same, even though it should be lower based on the approaches taken. Thus, we are left with the following approach:

Focusing on these elements leads to an incremental 857 “potential buyers” over and above the baseline forecast. If all other variables stayed constant, this would yield 87% growth (the initial forecast was for 71% growth and the investor ask was 100% growth):

Based on this buyer composition:

Comparing the three scenarios shows an achievable stretch compromise that was signed off on by the internal marketing team, and also included product and engineering given the (hypothetical) restrictions on the marketing budget. This is the debate to then have with the board. Can fixing the conversion funnel generate 857 incremental buyers? “Yes, and here’s why, and here’s who owns it”. Below is the range of what amounts to a base case, a stretch case, and a target case.

Stepping back from the simplified example, we have some general lessons for Investors, CEOs, and CMOs to work together and center discussions around levers and approaches. The above example was drastically simplified and intended to be illustrative of a “gap analysis” and focus of conversation/debate.

1. Aligning Business Strategy with Market Realities

The first step in negotiations is to ensure that the proposed revenue growth target reflects the company’s market potential and operational bandwidth. The CEO and CMO, in concert with the CFO, should collaborate to:

• Analyze Market Trends: Use data-driven insights to showcase demand, competition, and growth rates in the industry.
• Assess Customer Acquisition Metrics: Present customer lifetime value (LTV), acquisition cost (CAC), and conversion rates to justify proposed targets.
• Identify Revenue Drivers: Clearly define the primary revenue streams and their scalability, including pricing strategies, customer retention, channel strategy, conversion funnel, and upsell opportunities.

Real-World Example: When Airbnb was scaling in its early days, the company’s leadership had to negotiate with investors on growth targets that aligned with market adoption. By demonstrating their unique ability to convert hosts into repeat users and leveraging data from key markets, they set achievable yet aggressive goals, balancing investor expectations with operational feasibility.

2. Instead of proposing a single growth target, CEOs and CMOs can offer a tiered approach:

• Base Case: A conservative yet achievable growth rate based on historical performance and current capabilities.
• Target Case: A moderately aggressive target that assumes optimal execution of growth initiatives and clear delineation of what needs to happen to beat the base case.
• Stretch Case: A highly ambitious scenario achievable with additional investment and market tailwinds, with tradeoffs and variables clearly defined.

As illustrated above, the mechanics and tactics to drive incremental buyers and revenue above the “Base Case” need to be called out in order to foster a creative debate on the “gap” that needs to be filled. This will focus the conversation on the feasibility of the Target and the Stretch case.

Real-World Example: Slack, before its acquisition by Salesforce, used a tiered approach to revenue growth when negotiating with investors. They presented their Base Case based on existing enterprise adoption, a Target Case assuming stronger marketing investments, and a Stretch Case factoring in potential viral adoption. This method helped manage expectations while ensuring realistic execution.

3. Addressing Board Expectations with Execution Feasibility

Board members often push for aggressive targets based on valuation expectations. CEOs and CMOs should proactively manage these discussions by:

• Demonstrating Execution Readiness: Present a detailed marketing and sales plan that outlines the required investments in talent, technology, and channels.
• Highlighting Risks and Mitigations: Address potential challenges such as market saturation, competitive threats, or operational constraints.
• Aligning Growth with Budget: Link growth expectations to required funding, showing how additional resources can accelerate expansion.

Real-World Example: Uber’s leadership had to justify its rapid expansion plans across different markets while maintaining financial discipline. By showing how operational investments (e.g., driver incentives, marketing spend) would drive network effects and long-term profitability, they secured board approval for high-growth targets while mitigating risk.

4. Leveraging Data to Drive Credibility

Investors trust numbers over intuition. CEOs and CMOs should bring:

• Historical Performance Metrics: Showcase past successes and learnings.
• Industry Benchmarks: Compare targets with similar companies to validate feasibility.
• Scenario Planning Models: Present projections for different market conditions, allowing the board to see multiple potential outcomes.

Real-World Example: Spotify, when preparing for its direct listing, used deep data analytics to justify its growth projections. By comparing churn rates, customer acquisition costs, and international market trends, they provided a solid foundation for investor confidence.

5. Negotiating Strategic Trade-Offs

If the board demands higher growth, CEOs and CMOs should negotiate for:

• Increased marketing and sales budgets.
• Extended timelines for scaling operations.
• Greater flexibility in experimenting with new revenue channels.

By positioning growth as a function of investment, they can shift the conversation from unrealistic demands to strategic resource allocation.

Real-World Example: Pinterest’s leadership, when negotiating funding rounds before their IPO, had to push back on unrealistic short-term growth demands. Instead, they proposed investing in long-term user engagement strategies, which ultimately led to a more sustainable path to profitability.

Conclusion

Navigating growth target negotiations requires a collaborative effort between the board, the CEO, and the CMO. By aligning strategy with market data, presenting tiered projections, and leveraging execution insights, they can build a persuasive case that satisfies both the board’s ambitions and the company’s long-term sustainability. Debating specific strategies and tactics around a gap analysis in different projections centers the conversation and avoids fruitless debates and demoralizing goals.  Ultimately, a well-balanced negotiation ensures that growth remains aggressive yet achievable, setting the foundation for sustainable success. 

About RevelOne

RevelOne is a specialized go-to-market search & advisory partner that drives Growth through People. Growth strategy and talent strategy are completely intertwined, yet often handled by different people. We staff projects with expertise across both to support our clients in sharpening their growth plans and ensuring they have the right full-time and part-time talent to achieve their specific goals.  

Over the past 10 years, we’ve successfully placed 1,700 people at over 750 clients, including both tech companies and traditional companies looking for modern GTM leaders. Over 50 of these clients are now unicorns.

Our GTM retained search practice focuses on Marketing, Sales, Client Success, and Partnerships/BD permanent hires for all levels, from executives to directors, managers, and team buildouts. We can also source temporary hires – pre-vetted GTM experts – for strategy and execution on interim, part-time, or project-based engagements.

Contact: Have a GTM question, a new hire, or a problem you’d like to solve? Reach out to RevelOne today to discuss: jlevisay@revel-one.com