In the entrepreneurial world, the narrative often swings between two extremes: aiming for the stars with venture-scale unicorns or staying grounded with small businesses.

However, Benjamin Hallen and Ed Hallen‘s recent HBR article, Scaling a Midsize Startup, sheds light on a third, often overlooked, segment: the mighty middle. This is where startups target the “blue lakes” of growth—ambitious yet sustainable niches—without capsizing in a “blue ocean” hunting for Unicorns.

At the BDC, we champion these mighty-middle entrepreneurs.

Excessive venture capital (VC) can sometimes lead startups to what we refer as “capsizing”; losing sight of essential profit metrics while paddling furiously after top-line user growth due to oversized cap-raises. This approach often results in startups being swept away by the currents of unsustainable and unprofitable scaling.

The Mighty Middle: A Smarter, Sustainable Path

The Hallen brothers describe the mighty middle as startups that target midsize niches, with feasible paths to valuations in the high single-digit millions to high tens of millions within 5-10 years. These businesses are neither small enough to be confined to local markets nor vast enough to require billions in investment. Instead, they occupy a balanced space where growth is meaningful and attainable.

 

Take, for example, the story of a past BDC client Josh Cairns and his company, Op Central. From humble beginnings, Cairns transformed his digital agency into a SaaS powerhouse, eventually leading to its international acquisition by Ideagen. By focusing on operational consistency and listening to market needs (along with being a BDC client of course), Cairns avoided the pitfalls of excessive VC funding and instead built a sustainable, scalable business that thrived in the mighty middle.

 

Avoiding the Capsize

Why do some startups capsize? We think the answer often lies in the pursuit of rapid, top-line user growth fuelled by excessive VC capital. This approach can lead to a loss of focus on profitability and operational efficiency. Instead, we advocate for a balanced approach where startups maintain control over their growth trajectory, ensuring they paddle efficiently without taking on more water than they can handle.

This mighty middle offers a compelling alternative to the high-risk, high-reward game of unicorn hunting. By targeting sustainable growth and leveraging frameworks like the 7 Levers, entrepreneurs can build robust, profitable businesses that stand the test of time.

 

The 7 Levers Framework: Your Sail for Sustainable Growth

Actually, why just paddle when you can hoist a sail, right?

At the BDC, our 7 Levers Framework is that sail, catching the wind of opportunity and propelling businesses smoothly across blue lakes of growth. (Overdone the metaphor much?)

This framework focuses on crucial areas like traffic, conversion rates, average item price, and customer transactions to drive sustainable growth. By mastering these metrics, businesses can achieve steady, incremental improvements that compound over time, ensuring they not only stay afloat but thrive with the wind at their back.

At the Deakin Business Development Clinic, we’re dedicated to helping mighty-middle entrepreneurs navigate their journey with confidence and clarity.

Let’s make waves in the mighty middle and prove that you don’t need to be a unicorn to make a splash.