Great analogy! Elephants=Enterprises. Rabbits=Consumers. Deer=Small & Midsize Businesses.
The problem of servicing customers of greatly varying size is not just one of scale. It means that you're in a different business.
I have avoided enterprises because great software doesn't matter. You're playing a different game. I've also avoided the consumer market because it's also a different animal. Scaling and capitalization are at least as important as the application itself.
The small and mid-market has always been my sweet spot. They have money to spend and needs sophisticated enough to warrant great software.
I never thought about the animal/customer size model, but it paints a much clearer picture of the dilemma. Thanks, OP.
Rabbits != Consumers, he says rabbit hunters are 37signals and outright.com which seem to be aimed at micro and small business. To an extent small business fall into deer, but I'd guess only the 30+, hence the 'deer can change your t&c' which isn't worth it for a really small business.
Unfortunately he says absolutely nothing about deer apart from waxing lyrical about how they're great. Given that he only gives examples of elephants and rabbits, one wonders if he's yet to find the pain of working with deer?
Having worked in a company that targeted the 'deer' it's not as easy as he makes it sound, generally you start having to customise your product per customer and also implementation is non-trivial meaning consultants & some sort of training, which is a major hinderence to scalability and you still need to get past the board which means a face-to-face sales force. They'll also be at the size where they might have their own IT guys and man a lot of them are incompetent & usually a barrier to sale ('mmm, I'm not sure whether that's compatible with our special gerzambi-thingy' - i.e. more work for me? no thanks).
I can put this in really concrete terms based on how we broke this down, and why this article really resounded with me:
The US economic census (a great market research resource) breaks things down into groups of: 0-4 employees, 5-9, 10-19, 20-99, 100-499, 500+
The sweet spot seems to be the 20-99 group both in terms of the number of them and their operation budgets (i.e. they exist), probably have some basically technically competent people on board, and don't expect (and aren't willing to pay for) a high degree of customization.
"Rabits" (sites in the 0-9 employees) often don't have any money to spend and are a crapshoot as to whether or not they have even moderate tech teams. A good half of them require extensive hand-holding with the prospect of pulling in a few bucks a month. So in general, we'll set up accounts for sites in that size, but don't do much support.
"Elephants" tend to also require a lot of hand-holding -- not because they don't have good tech teams, but because they have specialized requirements. They also typically have slow decision making processes, usually involving several meetings, conference calls, etc. and the really big sites, especially when dealing with a small startup, are usually more interested in buying your company than buying your product.
I just need a post now on how to catch these deer. I don't think bringing my 30'06 into a boardroom is likely to win me any sales. Seriously though, I'd love to see some posts on how to target and then win over those deer-sized companies.
1. A small business has problems and knows that there must be a solution, but doesn't know what's possible or where to turn.
2. You make contact. Through a personal introduction by a friend, relative, or business associate. Or at an industry event (their industry, not yours). Or at a chamber of commerce event. Or any local business event. Or by mailing them a postcard, flyer, or letter using a purchased list or phone book. Or in a restaurant, bar, or party. Or from a flyer or business card that someone else gave them. Or from an ad you ran in their trade publication. Or from a search that landed them on your website. Or... (you get the idea, it could be anything).
3. You meet and listen. I cannot stress this enough. This is 100% about their problem, not your solution or anything else.
4. If you have a way of addressing their problem, do it. It may be software you've already written, a service, or (quite likely) a prototype you mock up to show them how to attact their problem.
5. They love the fact that someone has finally actually listened the them about their problem and addressed it. Your solution is a good first step, but it still needs a, b, and c.
6. You quickly add a, b, and c to your prototype and show them.
One possibility that I didn't see mentioned is what to do when you accidentally snare an elephant. Do you hold on to it, or set it free because it's too big for one person to manage?
I have/had (don't really devote much time to it these days) a small company making niche electronic hardware. One day I got a message from $BIG_TRUCKING_COMPANY that wanted a unit for evaluation because they were rolling out a fuel management application to all of their trucks and that was my market. I was able to sell the single unit (what, me give away an eval :-) and provided what I thought was excellent support to their software guys, but never made another sale to them even after my followups.
I've wondered a few times if it was better that way. I mean, I could have made a ton of cash selling them many more boxes, but working for a large co. myself, I understand the hoops they make suppliers jump through. Perhaps I was best off having made the single $200 sale to them and sticking to my smaller customers that didn't mind dealing with a 1-man shop?
Completely disagree, partly because we made this mistake. It's important to figure out what the characteristics of the companies in your market's sweet-spot are, and in our case, as the article points out "elephants" can be a big distraction, even if landing one seems more emotive.
I disagree with his assessment on rabbits. I get his point, but his example doesn't stand: He went elephant hunting and then blamed the rabbits for running away.
His piece on conquering markets that already have rabbit hunters in them is more accurate. That's the key right there though: if you want to hunt rabbits, a good evaluator of success will be that you're the only person hunting these particular rabbits, or you're hunting rabbits in a unique way that is more effective. Hunting rabbits can only be done with "blue ocean" style strategies.
Analogies. Don't go for the white shark, don't go for Paedocypris Progenetica, go for the Tuna.
Unless a startup has identified a problem, dreamed up a solution and talked to potential customers prior to writing the first line of code, then it is very hard to know which market will respond to your product.
Google was in the Elephant Market (trying to sell enterprise search appliances I believe), I am also sure there was someone calling Deers, ultimately one guy said "Fuck it, let's just put it on the web" then rabbits came through running.
I believe until startups know exactly who is willing to open their waller, they should follow the Ron Conway Way: "Spray and Pray". Most likely you have a product that could easily be tailored to several markets. Your best shot would be to make a few variations of your homepage (landing pages) and product screenshots, and try to pitch to different bloggers/end users per market. Which ever groups responds better (Deer or Rabbit or Turtle), you should focus more time with them.
The problem of servicing customers of greatly varying size is not just one of scale. It means that you're in a different business.
I have avoided enterprises because great software doesn't matter. You're playing a different game. I've also avoided the consumer market because it's also a different animal. Scaling and capitalization are at least as important as the application itself.
The small and mid-market has always been my sweet spot. They have money to spend and needs sophisticated enough to warrant great software.
I never thought about the animal/customer size model, but it paints a much clearer picture of the dilemma. Thanks, OP.