Whale Hunting – the Allure and the Devastation

“Towards thee I roll, thou all-destroying but unconquering whale; to the last I grapple with thee; from hell’s heart I stab at thee; for hate’s sake I spit my last breath at thee. Sink all coffins and all hearses to one common pool! and since neither can be mine, let me then tow to pieces, while still chasing thee, though tied to thee, thou damned whale! Thus, I give up the spear!”
– Moby Dick, Herman Melville

Whale Hunting has disappeared from much of the world as a commercial activity, driven by new sources of oil, a limited market for blubber, and concern about a species which risked being all but eliminated.  That being said, whale hunting is live and well in enterprise software sales.   And it is adequately named.

In traditional whale hunting, a voyage could be made or broken based on the ability to find, hunt, catch, and kill a small handful of whales without them first destroying you and your ship.   The risks were high, as you could come back empty handed or you could be damaged by the whale even as it is ultimately landed.  Even worse, you could find it, hunt it and ultimately be killed by the whale – stove-in, as they say, and quickly headed to the bottom.   In software, whales are the big deals which are 10x or 20x the average deal or even larger.   Whales can make a quarter, a year, or a company.  Almost every company we invest in has had whales on the horizon and some have even landed.   It is in the nature of the entrepreneur to seek and exploit the opportunity to jump ahead of plan and to put a company on a higher plane through one or a few deals.   When in the chase, we rarely think about the risks and the opportunity costs of whale hunting.

Here are the challenges with a sales model which focuses on a whale hunting approach –

• When you don’t land the whale, what do you have?   A failed quarter?  A shortage of cash?  A crisis?   It is so enticing to pursue one deal which can make your quarter versus ten or fifteen deals.   The difference is that one is a binary outcome and the other is a matter of degrees.   If you need 15 deals to make a quarter and you land 10, it is a mediocre quarter, growth may have slowed, but you still have ten new customers with the opportunity to up-sell, and with a bigger base of revenue to cover costs.   If you don’t land the whale, you have nothing.    Worse, often the whale is a long, slow process.   The deal you thought was going to happen this quarter pushes to the next quarter and finally is decided two quarters later.   Even if you win the deal in the end, you killed three quarters while winning a single “make the quarter” deal.
• Hunting is in our blood; it drives adrenaline, and makes us wake up in the middle of the night.   Process makes people sleepy and is not exciting.  It is not in our blood.    But process, especially the sales and lead generation process, leads to repeatable sales, repeatable growth, high value, and great exits.  When the focus on the CEO and the VP- Sales is on the whale hunt, process is left behind and the company and its sales process does not mature.   Everyone wants to be the whale hunter but the local fisherman feeds the family every day.
• CEOs tell me – it is ok, we are hunting some whales but we have most of the team focused on the core repeatable opportunities.   Really.   It comes down to resources, time over task, and attention.  The whales get the resources and the attention.   Once you are in the hunt, it is hard not to throw as many resources as possible into trying to win.   That is in our nature.
• Spearing the whale is not the end of the story.   Large game-changing customers make requests for enhancements or changes, have expectations, and have SLAs which can stretch an organization beyond a breaking point or take an organization far off direction in terms of roadmap or other areas of focus.   Many whales have killed organizations after being caught.

At Osage we believe that building a scalable, repeatable lead generation and sales process if the greatest way to build value in technology companies focused on the enterprise customer.   Often, this takes a culture shift from the early whale hunting which got the company to its first million of revenue and its first institutional investment.   While we are not averse to big deals, we are averse to big deal focused, non-repeatable processes.    For us, adrenaline  gets flowing when revenue increases meaningfully year over year, when the metrics on lead generation and lead conversion move in the positive direction, or when retention and up-selling inside existing customers are meaningfully improved.   I will take ten $100k deals over a $1M deal any day because I understand how ten becomes 20, which becomes 40, and also how I might tweak pricing over time as we gain traction in the market.   The $1.0M one-off deal is hard to model and is dangerous even when hooked.   And sometimes . . . small fish become really big fish.   Selling a $100k deal into a Fortune 50 account and having the opportunity to expand horizontally and vertically may not be a whale, but it is a heck of a big and profitable fish.   Processes for account management as well as pricing and contract structures that enable easy but profitable growth are the drivers for hooking the big ones – it is all about lifetime value, not the initial sale.

When I think of fishing, I like to think of the scenes from “A River Runs Through It”, where fly fishing and the motion of casting have evolved from craft to art and where one anticipates the jump of the fish before the fish realizes it is jumping.   Translated to sales this means perfecting the process and understanding the target customer – proven formulas that work.   Let’s leave the whales for others willing to risk more and walk away with less.