As per the original definition, a Gazelle Company is the one that has a high-growth and has been increasing the revenue at least by 20% on an annual Basis for a consecutive four years or more, starting with the basic revenue of at least $1 million.
The swift growth pace simply means that the company doubled its revenue over a period of time. Generally, gazelle companies get characterized by quick sales growth instead of their size; thus, they can range anywhere from a small to a large enterprise. However, a majority of gazelle companies are smaller in size. Also, several gazelle firms are publicly traded.
An Economist and author – David Birch – first developed the notion of gazelle companies in a few of his studies on employment and introduced this concept to the audience in 1987 through his book – Job Creation in America: How Our Smallest Companies Put the Most People to Work.
As per the theory of Birch, small companies tend to create more jobs in the Economy. He noted that the pace of creating jobs by the gazelle companies was more than that of the names listed in the Fortune 500 and Main Street.
However, this pace eventually slowed down as most of the gazelle companies struggled to maintain their growth beyond the period of five years. Thus, in the landscape of recent businesses, a gazelle is any fast-growing company.
What still holds true is that these companies are the most job creators for entrepreneurial and open economies. While there is a variety of gazelle companies that operate in the technology sector; some also are from apparel, retail, beverage, and other growing industries.
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Some gazelle companies continue bounding along, some lose the pace and slow down while some get eaten up by the competitors. Gazelles like Amazon, Facebook, and Apple seem like they are not going to stop anytime sooner.
Perhaps the reason could be because they have outgrown the initial years and have become extremely large to get acquired. Or, their size has eradicated the true competition for them. However, the natural process of maturation that these three companies go through has made it quite difficult to stay in the gazelles’ league, considering that they keep growing in size.
Other gazelle companies, with flashy and rapid strides, may attract the attention of larger organizations. These huge organizations can either end up acquiring the small-scale companies or enter their industry and claim market share by using existing infrastructure.
In such a scenario, the social media giant and the messaging app – Instagram and WhatsApp – makes a good example as they were acquired by Facebook.
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