Gazelle Companies—What Are They?
According to the original technical definition, a gazelle firm is a high-growth company with a minimum 20% yearly sales increase for four years, starting from a $100,000 revenue base.
Its sales have more than quadrupled in four years due to solid expansion. Gazelle firms, defined by rapid sales growth, can range in size from tiny to big organizations but are often smaller. Gazelles are public corporations, so investors may exchange shares.
Gazelle Company Operations
In his 1987 book, Job Creation in America: How Our Smallest Enterprises Put the Most People to Work, author and economist David Birch popularized the notion of gazelle enterprises to a larger audience. Birch said that gazelles comprised only 4% of U.S. enterprises and created 70% of new employment.
Birch observed that gazelle firms created more jobs than Fortune 500 “elephants” and Main Street “mice” (small businesses). After five years, most gazelle firms struggle to continue rapid growth, slowing employment creation.
Modern business uses gazelles to refer to any fast-growing company, loosening their Birchian meaning. Recent studies and practical observations show that gazelles create jobs in open, entrepreneurial economies like the U.S. Many work in technology, while others are in food and beverage, retail, fashion, and other growing areas.
Example: Gazelle Companies
Gazelles can run, slow down, or devour giant cats. Gazelle firms such as Apple (AAPL), Meta (previously Facebook), and Amazon (AMZN) are unchallenged by competition. Perhaps they are too big to buy. Or their size removed actual business competition. Businesses mature naturally, so staying in business as they develop is hard.
Big predatory cats may notice other gazelles’ fast, showy field moves. More giant cats may acquire smaller ones or enter their markets to disrupt the landscape with their current infrastructure. Meta acquired Instagram, for instance. Whatsapp and Oculus suffered the same fate.
- Gazelle companies are new, fast-growing businesses with $100,000 in base revenues and four years of sustained growth.
- Gazelle enterprises are generally in technology, retail, clothing, or food and beverage.
- Gazelles in highly competitive areas saw sales drop below 20% into the single digits.
- Gazelle firms create jobs and are one of the top economic job creators.