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Before becoming a VC, my career began with enterprise sales and marketing. When I was tasked with building the business development strategy for a large financial services organization, I quickly and painfully learnt the important lesson that it is critical to segment a pipeline of prospects before you start the outreach.

Fast forward to today, I get the opportunity to review many new business pipelines, both within our portfolio and of those companies that approach us for investment and I have learnt a few thins that I thought it might be useful to share.

This post introduces my methodology for segmenting your pipeline - the Cephalopod Framework (yup!). The model defines the characteristics of each segment and how you might want to apply a weighting to each category within your pipeline.

Sales is an art and these are just my own personal brush strokes - I would welcome any feedback or comments.

Pipeline Segmentation - Whales

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Whales are large, monolithic companies that will flatten your startup, take forever to close, eat lots of acquisition budget to land, and will consume your business development and project management team’s time. But, if successfully landed, a whale can provide a generational leap for your business from both from a reputation and fiscal performance perspective.

Whales are likely to have had some experience of negotiating with technology vendors and probably have a large procurement team for you to contend with, which means the issuance of RFP’s (sometimes nasty, box-checking exercises). Expect you, your pricing and your business to receive a proctologist’s exam and prepare for your margin to be clobbered. Whales know that they are big and grand prizes for any small company to win and they will behave like it.

They may also want to start with a divisional trial as opposed to a company-wise roll-out, which further extends deployment timelines, the full realization of revenue, and the chance of the partnership fizzling out.

Be prepared to have multiple stakeholders managing or playing a role in your relationship with the Whale and that they may move roles to another division in 18 months time. The politics and employee motivations within large corporates is very different from startup land. Bringing on new technologies may be a stepping stone for that individual to show that she/he is innovative and to ultimately get a promotion in her/his preferred department. Don’t forget that if this person leaves, make sure you stay in touch as you never know what opportunities they may bring in the future.

With people transitioning and leaving this may mean that you will need to build a new relationship every 2 years with the newly-minted project lead. Be prepared for this new person to come with either a different mindset or another preferred vendor within your market — in my experience, this is the dangerous time for your company/whale partnership.

They may also stipulate the creation of bespoke tools and product features so that your software can fit within their legacy architecture. Whilst this can produce useful outcomes for your product feature set, try to avoid this as much as possible as it can build technical debt within your core architecture and also detract from your primary product strategy. If they really want something unique, charge them for it.

Whales will also probably insist upon or need, a full-time dedicated account manager for the relationship. This will be useful from a stakeholder management perspective but can also be expensive and not always a long-term engaging role for the account managers. I have always found that account managers who have some variety in their roles perform better than those who are focused on one customer. Instead of a dedicated person perhaps consider an account team that is largely focused on the Whale but has some flexibility to work for other customers.

If successfully landed, a Whale can provide a generational leap for your business from both from a reputation and fiscal performance perspective. Whales will probably deliver more than $2m in annual recurring revenue, but be prepared for a long on-boarding process, which will have delays and frustrations along the way.


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Orcas are not members of the Fortune 500 but can still be pretty sizable, nationwide companies that can deliver large growth opportunities for your business. They can also still flatten your business with their requirements but are just a tad more friendly.

They may not have quite the experience of dealing with frontier technology vendors and this could transpose itself in a few ways:

  • They may not issue an RFP process and instead deal directly with a handful of similar companies (if any exist) when making a decision (which is often quicker). You may also find that the senior management will be making the purchase decision and not necessarily a procurement team. Be prepared to pitch the CEO.

  • They could expect you to be in the driving seat for the integration of your product/service, which may require an injection of project management from your side of things. This may also help maintain a more healthy margin and sustainable pricing structure.

  • They are usually a strong contender in a market, but not a leader. This means that they have a need for new technologies and offerings to increase their position. They are hungry, sea-going cephalopods.

The likelihood of needing a dedicated account manager is slightly diminished but do not expect this to be a light touch account. If you nail an Orca partnership then they will become a highly valued source of reference, revenue, and support. Treasure these deals more than any others.

There very well may be a similar risk of stakeholder transition within Orcas but I have seen it on a reduced scale mostly because the project leads have a considerable vested interest in the project and the company.

I would anticipate that an Orca would represent approximately $750 - $1m in ARR.


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Dolphins are wonderfully nimble, intelligent, and charming creatures. They are typically small in size, regionally based, and focused on a particular niche.

They can also be new entrants in a market, who are hungry to impress and increase their standing. It is unlikely that there will be a procurement team, nor an RFP, and it will probably be a relatively quick, CEO/Founder decision.

Dolphins can be wonderful, fledgling opportunities for you to test your products and will likely be great advocates for your own company and products. They are friendly mammals.

That being said, due to the occasional fragility of their core business, Dolphins can also churn somewhat frequently and you need to be prepared to have other prospects in the pipeline to fill their vacated spot.

They can also waste your time and consume resource for relatively little amounts of value so you need to be careful about how much time you allocate to them. I would recommend grouping Dolphins into their own industry pods and allocating each pod to account management.

I would expect a Dolphin to represent somewhere between $50k to $300k in ARR.

Pipeline structure

While I would not recommend building a pipeline solely on Dolphins (or Whales, for that matter), I tend to use the following assumptions:

  • One landed Whale is equivalent to three Orcas

  • There are eight Dolphins for every Orca

  • The likelihood to win is a sliding scale from Dolphin to Whale, with the former being 10% after the first meeting and the latter to be at 1%

  • Acquisition costs are often in the lap of the Gods but I would prepare for hefty CPA’s for whales and decreasing for Orcas and Dolphins.

With this in mind, you need to make sure your pipeline is suitably diversified to reflect the potential value, likelihood of winning and the cost of acquisition.

All too often I see pipelines that look like this:

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...when instead I would prefer them to look like this:

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Having a dynamic and sensibly allocated pipeline is important, however without a segmentation strategy and an individual plan of attack for each segment the pipeline is rendered largely useless.

In my startup days, I was introducing a new product into a massive, uninitiated market that had little to no idea that they had a need for products like my own. The potential for time wastage, exhaustion and poor performance was truly daunting. This approach helped me clear the fog of trying to allure lots of Whales, spending too long trying to land Dolphins, and instead allow me to focus more on Orcas and have a diversified portfolio.

Happy hunting!