Introduction
I was hungry to prove myself in my first Head of Sales role. So when I smelled a million-dollar deal, I locked in like a pit bull’s jaw. I still remember the wave of celebratory Slack emojis when the DocuSign came through. Little did we know, a million-dollar check can come with a million headaches.
Mo ACV, Mo Problems
Chasing big deals when you’re a tiny startup might seem like the best way to gain traction, but focusing on repeatable medium-sized lands creates a much stronger foundation for growth. Why?
Resource Drain
Large enterprise deals monopolize the time of your sales and engineering teams. Suddenly, instead of shipping features that benefit all customers, everyone is scrambling to build custom integrations that might only help one. Plus, if one thing kills the soul of a 10x engineer, it’s focusing solely on building boring enterprise features when they can be shipping core differentiators that other fast-growing startups can quickly adopt.
Long Sales Cycles
Enterprise organizations typically take 6–12 months to buy—even if you do everything right. That’s an eternity for an early-stage startup that needs fast feedback loops and more immediate validation across a broader pool of customers. This also leads to much higher risk because you can do everything right and still end up with a goose egg. In the time it takes to get a single enterprise to sign, you could have closed multiple mid-market deals—each giving you valuable feedback and references.
Risk of “One-Off” Features
Big customers often have esoteric requests that don’t translate to the rest of your market. It’s tempting to tell yourself that your pipeline will burst with new opportunities if you build this super-bespoke feature. But more often than not, that’s not how it plays out. Even worse, after spending so much time on a custom solution, the sunk cost fallacy kicks in, and you’re tempted to find other customers with that exact problem instead of staying true to your ICP.
Why Smaller Deals Drive Faster Growth
Let’s say you opt to close ten $100k deals instead of that million-dollar whale. Suddenly, you’re working with customers who (a) share common use cases and (b) offer diverse feedback. This allows you to feed off their energy and iterate much faster, leading to more solid features for your Ideal Customer Profile. Here are three ways smaller deals can actually accelerate your early growth:
Easier Path to True Hypergrowth
It’s not just about hitting $1M ARR; it’s about what happens next. Once you’re at $1M, everyone—especially your VCs—will be watching how quickly you can go from $1M to $100M. You have a better shot at scaling that jump when it’s spread across multiple accounts instead of hoping your single million-dollar logo will expand aggressively in Year Two.
Balanced Pipeline and Team Focus
When you’re not dominated by one whale account, you can avoid turning your product roadmap into a single-customer wish list. Instead, you keep your organization agile, channel resources into multiple strategic customers, and mitigate the risk of any single deal jeopardizing your quarter.
Sales Team + Broader Company Alignment
Let’s be honest: sales teams often aim for the biggest commission possible. That’s great—until that one colossal deal becomes next year’s liability when it doesn’t expand. By encouraging multiple, right-sized wins early on, you give your reps (and the company) a steadier foundation for sustainable growth, rather than a Hail Mary pass that can easily fall incomplete.
Cloudflare and Fastly → Cloudflare vs. Fastly: The Power of Starting Small
- Cloudflare started with smaller customers, building a product that scaled upmarket. Today, its stock is up 850% since IPO.
- Fastly went whale hunting from day one, concentrating revenue in a few demanding customers. Their stock is down 66% since IPO.
While stock prices have many drivers, Cloudflare’s diversified, repeatable wins built a stronger flywheel—a lesson for every startup chasing “the big one.”
Picking the Right Early Customers
So, how do you actually pick early customers that won’t turn into the dreaded enterprise time vortex?
- Focus on Pain & Vision Alignment
Aim for those who have a burning issue your product can solve. These folks will be willing to implement your solution quickly and will give the most honest feedback. If you find yourself doing acrobatics just to manufacture urgency for people who barely have the problem, it’s time to move on. You want genuine, urgent pain—nothing less. - Go After Repeatable Use Cases
Target a narrow segment where each new client’s feedback or feature requests benefit everyone else in that segment. This is how you get to product-market fit. While we’re on the topic, there are too many definitions of PMF to count, including silly ones like “hitting $1m ARR.” I can unequivocally say that closing one million-dollar deal doesn’t equate to product-market fit. There are no shortcuts in this game. - Prioritize True Champions
Smaller or mid-market customers are more likely to do case studies, speak at your events, or provide valuable references. Major enterprises often have strict policies that limit public endorsements—so you lose that multiplier effect.
Conclusion
We all obsess about million-dollar deals. They make us feel validated. Board members love them because it validates their thesis. CEOs love them because it signals they can move upmarket. And reps love them because big deals mean big bucks. But chasing million-dollar deals can be akin to chasing a mirage.
Instead, focus on landing multiple right-sized deals. By doing so, you spread out risk, gather broader customer insights, and keep your product moving forward for the entire market—not just one demanding client. When you look back, you’ll see that the most successful early customers were the ones who helped you shape a solution that lots of people want, not just one.
Growth Compound 