Finding Your Soul While Hunting 'Whales'
Most young companies dream of catching their “whale.” The leviathan reference means those large Fortune 500 clients, massive in size and budget. But, as the legendary Nantucket whalers knew, harpooning a whale means that your ship, er, business, is in for a wild ride -- with no anchor, no sails and little control.
Whales are no doubt alluring. They can guarantee substantial revenue for your company and become marquee clients that help raise future capital. But, at the same time, whales are dangerous beasts to pursue. They eat up large amounts of resources -- both during the hunt and after. And, worse, the business of pursuing them can become subject to their whims, derailing well-thought out road maps and product plans.
So, companies are wise to think carefully: They need to determine whether the rewards of catching that whale outweigh the risks, because landing a giant customer early in a company’s life cycle will fundamentally affect its business.
Take for instance, a large West Coast client my own company pursued. One of its customers, in turn, was a well-known technology company. We already had a maps feature built into our solution, and it worked well. But our client wanted us to integrate that customer’s mapping technology into our platform. In fact, the client insisted on this. We thought that that mapping technology was inferior. But, to win the whale, we acquiesced.
Again, because we wanted that deal, we committed several other features the client wanted, even though those features weren’t part of our core product. To pull all of this off, several of our engineers -- already in short supply -- put off some key projects to ensure we met our deadlines. In the end, to satisfy the whale, we created a customized solution that violated that basic business rule: Build it once, sell it a hundred times.
And in the end, we became like Ahab: The whale nearly consumed us. It steered programming resources away from our main strategic asset for over a year. And we had to play catch-up with our original product road map. Had we not finally caught our whale, we might have been a different company today.
But business is a voyage. And the whale showed us that we can be adept at differentiating quickly and accurately for our customers. Since that first giant customer, we’ve been lucky to bring in other large clients. We’ve learned to better manage their expectations, to staff up accordingly and to meet deadlines. Well, for most of them, anyway.
The whale also gave us substantial revenues that helped cement our reputation as a fast-growing healthcare company.
To us, the short-term losses of time and resources we sacrificed were worth it for the lasting loyalty we have received from that whale client. Other organizations may value the independence to build products and be beholden to no one. Or they may value the convenience and efficiency that comes with servicing clients in cookie cutter fashion.
Either way, every company should make the decision to pursue whales a thoughtful one. Most that I’ve seen have done it in a knee-jerk fashion -- assuming that winning a big customer is almost always a good thing. And, from a revenue and cash flow point of view, it certainly is. But, nearly always, those whales dictate the company’s product focus or, at least, alter it to fit their needs.
It‘s a tough trade-off, with no single right answer. No matter which path a company chooses to follow, the quest toward profitability ultimately has more to do with the soul of that company rather than the size of its customer.
Rothschild launched Vitals in 2008 after personally experiencing the complexity of finding a qualified physician for his knee surgery. For the company's first seven years, he served as CEO, growing Vitals.com to over 10 million monthly visitors and a 65 percent compounded annual revenue growth rate. He now serves as chairman.Prior to Vitals, Rothschild started more than a half-dozen businesses, including Raspberry Red Marketing, NetWorks, Tuff Rhino, Awards.com and Time Warner Viewer’s Edge. Has an MBA, with honors, from Columbia University and an MA (Phi Beta Kappa, summa cum laude) from Queens College in New York.