---
title: "Which Customer Segments are Healthiest During the Downturn?"
description: "Explore how different SaaS customer segments perform during economic downturns, revealing trends in growth rates across enterprises, mid-market, and SMBs."
categories: ["financials","strategy","startups"]
keywords: ["Theory Ventures","Tomasz Tunguz","SaaS growth","enterprise software","mid-market companies","SMB performance","economic downturn","customer segmentation"]
ai_summary: "Explore how different SaaS customer segments perform during economic downturns, revealing trends in growth rates across enterprises, mid-market, and SMBs."
date: 2023-02-21
lastmod: 2026-07-23
canonical_url: https://www.tomtunguz.com/growth-patterns-public-software/
author: "Tomasz Tunguz"
---

In [CloudFlare's latest earnings report](https://tomtunguz.com/cloudflare-earnings-2023q1/), the management team highlighted the strength of enterprise buyers within their customer base.

I wondered if this were broadly true. Do public software companies with largely enterprise customer bases benefit from superior growth to their peers with mid-market or SMB focuses?

![chart showing relative growth rates of software companies by buyer size](https://res.cloudinary.com/dzawgnnlr/image/upload/j3bdiqaz4z4ht3wugek9.png)

Enterprise & Mid-Market public companies have seen a relatively constant decline in growth rates through the last six years. SMB businesses benefited from a post-Covid surge when the US re-opened - a phenomenon that seems to abate with time. 

![image](https://res.cloudinary.com/dzawgnnlr/image/upload/gzdpzjoirx7qbrcp7vxm.png)

Product-Led companies continue to outpace Sales-Led Companies in growth. However, PLG suffered a 9 percentage point drop in growth rate in Q2.![image](https://res.cloudinary.com/dzawgnnlr/image/upload/f02uyv17gq6opoqxfic7.png)

Segmenting the population by growth rate yields the same conclusion. Low growth is < 15%, Medium growth is 15 - 30%, High growth is 30%+. The behavior across buyer sizes parallels each other. 

The data so far suggests the economic slowdown has struck across the industry similarly. Variations will surely emerge between competitors as a result of differences in product, execution, or strategy. But no one is immune. Something to consider for 2023 planning.