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The Dolphin Strategy in This Time

The Dolphin Strategy l The Recurring Revenue Conference
The Dolphin Strategy l The Recurring Revenue Conference

Commentary by Peter Cowen, Managing Director, Sutton Capital Partners.

September 1, 2023

The Dolphin Strategy is very valid anytime, but particularly so in this environment. While this article from David Cummings is from November 2022, the points he makes have become even more relevant in the past 9 months (the top 10% of SaaS businesses across the world have seen growth accelerate in the first half of 2023).

By intentionally showing you can get to breakeven, even at the expense of growth rate, it both validates your company’s viability as well as shows leadership skills in managing a changing environment.

This strategy is appropriate for companies that have shown strong growth while being unprofitable and separates those whose survival is contingent on next round funding versus a solid business.

The other unspoken benefit is that during the breakneck growth and funding pace in early Covid, there was a lot of fast hiring and inefficiency. This approach enables your company to be leaner, weed out less effective employees, and optimally prepare for the next growth phase.

Think Dolphin Strategy for More Measured SaaS Growth

By David Cummings Entrepreneurship November 12, 2022

Todd Gardner has an excellent post titled “Use the Dolphin Strategy for Efficient SaaS Growth (with Lowered Risk)” where he shares a strategy many entrepreneurs, SaaS or otherwise, would do well to consider, especially in uncertain times. Much like dolphins can stay underwater for long periods of time, they do need to come up for air regularly before heading back down. For investor-backed entrepreneurs, venture or debt financed, the default approach is losing money perpetually until the sale of the company. Instead of constantly losing money — being underwater — the entrepreneur would achieve a quarter of profitability — coming up for air — every 18-24 months. This is profoundly different from today’s standard playbook of growing as fast as the growth metrics and capital markets allow.

Here Are A Few Quick Thoughts On The Dolphin Strategy

Less capital will be burned and, correspondingly, the business won’t grow as fast

If capital markets change quickly, as they have this calendar year, the business will always be on a plan to control their destiny — profitability — and isn’t as subject to market timing. Employees actively looking for a more measured approach to the startup playbook will appreciate this while others that want the go-big-or-go-home approach will be repelled. Profitability, even if only for a quarter on occasion, provides clarity to future investors and acquirers, especially private equity, what the business actually looks like when operated for cash flows, even if operating income is modest.

The dolphin strategy will appeal to entrepreneurs that already have a capital efficient lens to their style and want to take it one step further and demonstrate real sustainability in their business model. Unfortunately, the dolphin strategy doesn’t work as well for smaller startups as it requires some level of scale and predictability — at least a few million in recurring revenue — to work unless the startup is super lean.

Entrepreneurs would do well to understand the dolphin strategy for more measured SaaS growth and consider it for their business.

The Recurring Revenue Conference

Don’t miss Peter Cowen’s talk “The State of SaaS” at the Recurring Revenue Conference November 9th, 2023 in Culver City, CA. Get your early bird tickets before September 11! Registration and for more info at:

Commentary above by Peter Cowen, Sutton Capital Partners, Managing Director, LinkedIn

Article above written by Cummings, D (2022, November 12). Think Dolphin Strategy for More Measured SaaS Growth. Link


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