Hunting Elephants

What Is Hunting Elephants?

"Hunting elephants" depicts the practice of targeting large companies or customers. Hunting elephants is a buzz term used to depict a strategy of pursuing extremely large customers to sell a decent or service, as well as targeting large companies for acquisition. For example, hunting an elephant can be a startup targeting any semblance of Google (GOOG) or AT&T (T) as a customer. These customers can give large contracts, however they can be hard to catch and require large teams to tackle.

Understanding Hunting Elephants

Hunting elephants is a colloquial term for depicting the practice of targeting large companies as potential clients or acquisition targets. Whether selling a toaster or acquiring a contender, companies can follow one of a number of strategies while choosing where to concentrate limited resources.

According to a sales viewpoint, hunting elephants emphasizes finding venture level customers that will make large purchases. On the off chance that a company can close an "elephant" sale it may see a significant positive impact on its revenues, especially assuming that it can obtain a long term contract.

Startups that are able to close a large client may utilize this information while persuading other large companies that it gives a decent product, as companies are bound to work with another company assuming they realize that other large companies are also doing likewise.

Types of Elephants

Customers

Worth taking note of zeroing in on large, existing companies can be an asset concentrated endeavor. The average revenue per account (ARPA) will be a lot greater for elephants, yet the number of companies that qualify as elephants will be lower than the number of smaller companies. Acquiring clients with low ARPA may be easier than acquiring larger-value customers, however extremely low ARPA clients require a company to have the option to reach a large audience.

Elephants are the highest on the proverbial command hierarchy, acquiring the most incredibly revenue. Meanwhile, there are also deers, rabbits, mice, and flies — each one is smaller and offers lower revenue, however is easier to "land." So while certain companies may target one elephant, they could also decide to spend their time attempting to capture or acquire, for example, 10 deer, 100 rabbits, 1,000 mice, or 10,000 flies to achieve the same revenue.

Acquisitions

Companies hoping to acquire another company also check out at the cost of the acquisition relative to growth potential. The cost of acquisition can be massive, and at times, the perceived value of the target company may be a large different of its earnings. This is much of the time the case for technology companies, as they are many times in the early stages of development however the market may see bunches of potentials.

Warren Buffett is a popular elephant tracker, said to have an "elephant firearm" that he uses to make major acquisitions and purchase target companies.

Example of Hunting Elephants

For software-as-a-service (SaaS) startups hoping to chase elephants, they would target many of the larger technology companies, like Salesforce.com (CRM) or Workday (WDAY). In any case, on the downside, it could take years and thousands of dollars to track down a problem worth settling for elephants — large endeavors.

Features

• Hunting elephants alludes to targeting large companies or customers, either for selling them a decent or service or for acquisitions.
• Elephant customers or acquisitions can give large contracts, however they can be hard to catch or land and require large teams to takedown.
• Warren Buffett is a popular elephant tracker in the investor world and usually alludes to his prospective target companies as "elephants," or big acquisitions.