Originally published on pupsic.ch.
TLDR: The customer a startup targets before $10k MRR (monthly recurring revenue) sets its retention and growth for years, and data on 1,043 companies shows deer hunters compounding while most founders never escape the animal they first chose.
The four animals, and where founders crowd
Kyle Poyar, with ChartMogul, analysed 1,043 SaaS and AI companies by ARPA (average revenue per account): mice under $30 a month, rabbits $30 to $299, deer $300 to $2,999, elephants $3,000 and up. On the way to $10k MRR, 53 per cent hunt rabbits and 34 per cent hunt mice; only 12 per cent start as deer.
Cheap customers churn, and the leak never closes
Median GRR (gross revenue retention) at $10k MRR runs 24.6 per cent for mice and 31.6 per cent for rabbits, against 70.5 per cent for deer. The imprint persists: three years on, mice still post 56.2 per cent NRR (net revenue retention) against 87.4 per cent for deer.
The first price anchors every price after it
The opening price anchors every later decision, in the sense Kahneman and Tversky described, and status-quo bias keeps 70 per cent of companies on the same target customer years later. Deer that stayed deer grew 22 per cent year over year against 2 to 5 per cent elsewhere. Pick the animal whose retention you want to inherit, and price to it before $10k MRR.
References
- Kyle Poyar (Growth Unhinged), Startups become what they hunt. https://www.growthunhinged.com/p/startups-become-what-they-hunt
- Christoph Janz (Point Nine), Five Ways To Build A $100 Million Business. https://christophjanz.blogspot.com/2014/10/five-ways-to-build-100-million-business.html
