The Worry With Wedding Whales
For the software start-up, finding product-market fit and achieving a scalable customer acquisition process are the be-all, end-all. It’s hard to imagine having solved for these two major hurdles without feeling like the hardest battles are behind you.
Of course, then comes the growth race, which itself brings challenges as the leadership team grows, creating newfound struggles to pick a lane as perspectives diversify.
While that phase of a company’s lifecycle is worth books unto itself, there’s one particular activity therein that seems to occur with enough frequency that it has become conspicuous to me: whale hunting.
True Places Never Are
Consider an email start-up we’ll call “Ishmail”.
Ishmail is killing it. Ishmail has found product-market fit. Ishmail has scaled from dozens total to dozens per department. Ishmail could be cash-flow positive in seconds. Ishmail could be a lifestyle company for years.
And, most importantly, Ishmail is beloved by, and now under immense pressure from, its investors.
With the act of scaling through people and process underway, Ishmail must now find ways to succeed exponentially. Multiplying recurring revenue or marketshare, whatever the key metric, is now the month-over-month tablestakes for existence.
So what does Ishmail do?
Ishmail’s Sales team can expand to new regions. Its Marketing team can target new lead sources. Its Account Management team can pursue growth of existing accounts.
But what of the product itself? Ishmail’s Product team now faces an existential dilemma. What’s next?
Product can help grow the business by adding net new product features—features to qualify leads previously disqualified or convert opportunities previously lost.
Alternatively, Product can expand the company portfolio with net new products—products that extend the company’s reach into adjacent markets or create new markets.
Product could help the business move up or down market by expanding the target customer of your existing products. This often necessitates new features—sometimes, entirely new products.
Truth Hath No Confines
These are product-oriented solutions, though. And as many a founder will point out to us, Product isn’t thinking holistically: it’s only considering customer revenue.
For Ishmail, as with any start-up, raising customer revenue is only one financial metric to push: raising capital is another—and the tactics required for each are often different and sometimes opposed.
The desire to raise capital oft leads to this post’s raison d’être.
What if Ishmail were to attract a big-named customer and treat them like a partner? What if it can land a whale who it can use as publicity to generate demand? Marketing is a cost, but partnership? Partnership is a revenue opportunity!
This is quite often a tactic that many founders lean on, and for some fortunate, and many unfortunate, this has proven effective in the past. The classic Unidesk and Dell example comes to mind. This tactic can also go very , very wrong.
Be it a partnership or a customer relationship, wedding a whale can bring with it a significant set of challenges. Like an ugly introvert wed to a beautiful extravert, the start-up can too easily fall prey to its insecurity.
The resulting kneejerk can do incredible damage as the start-up veers its product roadmap to keep its partner or customer happy at the expense of everyone else, top customers and talent alike.
That said, such a tactic can also lead to massive success—if our fair Ishmail can manage its Moby Dick, of course. But that’s no easy task.
And such is the worry with wedding whales.