Why most startups should be deer hunters - targeting mid-market customers over enterprise deals

Why Most Startups Should Be Deer Hunters (Not Elephant Hunters)

December 6, 2025 - By John Mecke

The counterintuitive case for chasing 1,000 mid-market customers instead of 50 enterprise logos

There’s a seductive myth in SaaS that bigger customers equal bigger success. Land a Fortune 500 logo. Close a seven-figure deal. Pop the champagne.

I’ve watched this movie before—and I know how it ends.

After 30+ years in enterprise software, including leading acquisitions totaling over $300 million at companies like KnowledgeWare, Sterling Software, Inovis, Easylink, and Stonebranch, I’ve seen the wreckage left behind when startups chase elephants too early. The 18-month sales cycles that drain runway. The “strategic” deals that never close. The single customer that represents 40% of revenue—until they don’t.

The founders who build durable, valuable companies? They hunt deer.

The Framework That Changed How I Think About Customer Segmentation

In 2009, Mark Suster published what David Cummings called “one of the five most important startup blog posts of the year.” The title was simple: Most Startups Should Be Deer Hunters.

Suster’s framework breaks down like this:

Rabbits — Small deals, high volume. Not much meat, and they can get away quickly. Think $1K ACV customers who churn before you learn their names.

Deer — Mid-market sweet spot. Enough meat to be worthwhile, and once you knock one down, it’s not getting away. These are the $10K-$100K ACV customers who value your product, pay fair prices, and don’t demand you rebuild your roadmap for them.

Elephants — Enterprise giants. Difficult and expensive to capture. And if you’re lucky enough to get one? It might be too much for your team to handle.

Suster’s insight was deceptively simple: when you’re a startup, it’s far easier to cut your teeth on companies that are easy to serve, not as demanding, yet can afford to pay fair prices. If their demands are too high, you can move on to the next customer. They allow you to stay focused on your strategy without compromise.

That’s why most early-stage companies should be deer hunters.

The Math That VCs Don’t Want to Discuss

Here’s what nobody tells you about the enterprise sales dream: the math rarely works in your favor.

Tomasz Tunguz, now at Theory Ventures, has spent years analyzing hundreds of SaaS companies. His conclusion challenges the conventional wisdom that enterprise is the path to premium valuations.

Tunguz found that startups targeting small to medium businesses benefit from several distinct advantages: shorter sales cycles, lower customer acquisition costs, and faster product iteration. His data showed mid-market revenue multiples (5.9x) rival enterprise multiples (6.5x) when scaled through volume.

But here’s the kicker: mid-market sales reps close 3-4x more deals annually than their enterprise counterparts.

Let that sink in. The same sales investment generates three to four times the customer relationships, three to four times the feedback loops, and three to four times the expansion opportunities.

Tunguz puts it bluntly: “Startups that initially target small to medium businesses benefit from several key advantages. First, these businesses are faster to revenue. Simpler products satisfy SMBs, so startups can begin to charge smaller customers much sooner. Second, these businesses tend to be more capital efficient. Cost of customer acquisition is lower… early revenue means small customers finance the product development for larger customers with their payments.”

Read that last line again. Your mid-market customers fund your eventual enterprise push. They’re not a compromise—they’re a strategy.

The $2 Billion Proof Point

If the theory sounds nice but you want proof, look no further than HubSpot.

Brian Halligan and Dharmesh Shah built HubSpot into a $2B+ ARR juggernaut not by chasing Fortune 500 logos, but by relentlessly serving the mid-market. Their “inbound marketing” philosophy wasn’t just a marketing strategy—it was a customer acquisition philosophy that rejected the enterprise sales grind.

Halligan has been explicit about this choice. Rather than pursuing a handful of massive enterprise contracts, HubSpot focused on volume: thousands of growing businesses paying meaningful but not massive amounts.

The logic is elegant. Mid-market customers provide faster feedback loops, enabling rapid product-market fit iteration. They churn less than SMB (they’re invested enough to stick around) but don’t demand the white-glove treatment of enterprise. And critically, they multiply through word-of-mouth and referrals in ways that enterprise customers never do.

HubSpot proved you could build a category-defining company—one that went public and continues to compound—without a massive enterprise sales team. Pure mid-market volume.

The Hidden Danger of Your Biggest Customer

Perhaps no one articulates the risk of elephant hunting more clearly than Jason Fried and David Heinemeier Hansson, the founders of 37signals (Basecamp).

Their perspective, shared on The Rework Podcast, is characteristically blunt: “While many think having a largest customer is an asset, it’s actually a company’s biggest weakness.”

DHH elaborates on the strategic trap: “What are you going to be? Are you going to be for small, medium sized businesses? You can sell to them in a very different way. They don’t have the expectations that you’re at their beck and call. They don’t have the expectations that Jason or I will be their personal concierge.”

Fried shared a cautionary tale from Basecamp’s own experience—a moment when they landed a customer paying far more than anyone had before. His reaction? Not celebration. Dread.

“Here’s a customer that’s paying us way more than any customer has ever paid us… and now I need to be on the beck and call. There’s an issue. You have some feedback, I got to be here… I just went, oh, this is what it feels like to run an enterprise company. This is what it feels like not to be able to say no.”

That inability to say no is the real cost of elephant hunting. It’s not just the long sales cycles or the complex procurement processes. It’s the slow erosion of your product vision, your company culture, and your strategic autonomy.

The Investor Perspective: Why Customer Concentration Kills Deals

I’ve sat on both sides of the M&A table, and I can tell you exactly when investor enthusiasm dies: the moment they see customer concentration.

Dave Kellogg, former CEO of Host Analytics, quantifies the threshold: “When a single customer represents more than 10% of your ARR, most institutional investors start raising eyebrows. Above 20%, and many will walk away regardless of your growth rate.”

This isn’t arbitrary caution. Customer concentration represents existential risk. One budget cut, one reorganization, one champion who leaves—and your revenue cliff arrives without warning.

When you’re hunting deer, concentration risk is nearly impossible. With 500 or 1,000 customers, no single account can sink you. Your revenue base is antifragile. Investors love this. Acquirers love this even more.

In my experience advising early-stage SaaS companies on exit strategies, the companies that command premium multiples aren’t the ones with the impressive logo slides. They’re the ones with diversified, predictable revenue streams. A thousand mid-market customers sleeping soundly beats fifty enterprise accounts keeping you up at night.

The 1,000 Customer Portfolio vs. The 50 Customer Gamble

Let me make this concrete with numbers I’ve seen play out repeatedly.

Scenario A: Elephant Hunting

50 enterprise customers
$200K ACV average
$10M ARR
Top 5 customers = 40% of revenue
12-18 month sales cycles
Dedicated CSM per account
Custom feature requests driving roadmap
One churned customer = 8% revenue hit

Scenario B: Deer Hunting

1,000 mid-market customers
$10K ACV average
$10M ARR
Top 5 customers = 3% of revenue
30-60 day sales cycles
Scaled customer success model
Product-driven roadmap
One churned customer = 0.1% revenue hit

Same ARR. Radically different risk profiles, operational complexity, and strategic flexibility.

Jason Lemkin of SaaStr has studied this pattern across thousands of companies. In his AMA sessions, he notes: “The simplistic answer to all of this is 100, 1000, 10000. In Enterprise, it’s often around 100 customers, mid-market is about 1000, and in SMB, you’re lucky to get to 10,000 customers without hitting significant headwinds.”

His advice to founders: “Go broad with mid-market first; enterprises come via gravity.”

That last phrase is critical. When you build a product that thousands of mid-market companies love, enterprise eventually finds you. They see their portfolio companies using your tool. They hear about you at conferences. They come inbound, on your terms, when you’re ready.

But if you chase enterprise first? Mid-market never comes. Your product is too complex, your pricing too opaque, your sales motion too high-touch.

When Elephant Hunting Makes Sense

I’m not arguing that enterprise is always wrong. For some companies—particularly those in highly regulated industries, infrastructure plays, or markets where only large organizations have the problem you solve—enterprise is the only viable path.

But even then, Christoph Janz of Point Nine Capital offers a warning. After studying 74 SaaS unicorns in his updated analysis, he found a troubling pattern: “One of the biggest reasons why SaaS companies can’t find ways to grow beyond a certain scale is that they are hunting deer from an ACV perspective, but it takes elephant-type effort to acquire these customers.”

The failure mode isn’t choosing enterprise. It’s the mismatch between your ACV and your cost to acquire and serve. If you’re pricing like a deer hunter but selling like an elephant hunter, you’re bleeding out slowly.

The Strategic Imperative for Early-Stage Founders

Here’s my advice to the pre-seed and seed-stage CEOs I work with:

Start with deer. Build your product, refine your positioning, and develop your playbook with customers who give you fast feedback and fair economics. Let them fund your growth and prove your model.

Resist the siren song of the big logo. That Fortune 500 pilot sounds exciting until you’re six months into a procurement process that requires three security reviews, a custom SOC 2 audit, and a “small” integration that consumes your entire engineering team.

Build for the mid-market that enterprise will eventually want. The best enterprise products started as mid-market solutions that scaled up—not enterprise tools that tried to scale down.

Watch your concentration metrics religiously. If any customer approaches 10% of revenue, that’s a yellow flag. If they pass 20%, you’ve already lost strategic control.

The founders who internalize this framework—who embrace deer hunting as strategy, not compromise—build companies that are more valuable, more resilient, and frankly more enjoyable to run.

The Deer Hunter’s Advantage

Mark Suster was right in 2009, and he’s even more right today. In a world of longer enterprise sales cycles, tighter IT budgets, and increasing procurement complexity, the deer hunter’s advantages have only compounded.

You’ll close more deals. You’ll iterate faster. You’ll sleep better. And when it’s time to raise—or exit—you’ll command the premium that comes from predictable, diversified revenue.

The elephants will still be there when you’re ready. But by then, you’ll be hunting them from a position of strength—with a proven product, a profitable business, and a thousand happy customers proving your value every day.

That’s not settling for less. That’s building something that lasts.

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John Mecke is the Managing Director of DevelopmentCorporate LLC, an M&A advisory and strategic consulting firm specializing in early-stage SaaS companies. With over 30 years of enterprise software experience, he helps pre-seed and seed-stage CEOs with competitive intelligence, market research, and acquisition strategies.