Unicorns are private-sector startups with a valuation of $1 billion or more. The first appearance of the term unicorn was in 2013, but the number of global organizations reaching this status has increased significantly in recent years. While predicting the success of unicorns is challenging, the traits shared by unicorns tend to differentiate them from other startups.
This post is written to help you understand what unicorns are and how you can make your company into a hyper growth company. Wharton Business School at the University of Pennsylvania has a great course on this topic. I am happy to have taken it. I wrote this blog post as a summary. But nothing beats actually taking the course. It was very insightful.
Lets take a look at 3 unicorns I choose at random:
1. Theranos –
Found on google but here is Theranos’s Crunchbase:
Investors – Larry Ellison, Walgreens, Rupert Murdoch, Tim Draper
Investment type/funds raised – 16 investors, raised $1.4billon from venture capital
Details about the founder – Elizabeth Holmes was the CEO of Theranos, a company infamous for falsifying blood tests and scamming investors out of millions of dollars. Holmes left Stanford University’s School of Engineering in 2003 to build Theranos, an alleged state of the art blood testing company.
Other traits that you believe contributed to their unicorn status – connections, woman owned company, good demo tactics
Investors – Elon Musk, Founders Fund, Alphabet,
Investment type/funds raised – Seed to Series F, $7.7 billion
Details about the founder – Elon Musk – Elon co-founded Tesla and continues to oversee the company’s product strategy
Other traits that you believe contribute(d) to their unicorn status – Strong team, vision from Elon Musk and a lot of money
46 investors large and small –
Andreessen Horowitz, SV Angel, Sequoia Capital, Founders Fund, Peter Thiel, Elon Musk,
Silver Lake Partners, Shopify, Capital Group Private Markets
Investment type/funds raised – Seed to Series F – $2.2 billion
Details about the founder – John Collison, Patrick Collison – John and his brother Patrick Collison started Stripe in 2010 while John was studying physics at Harvard. Their goal was to make accepting payments online simpler and moreinclusive, after learning firsthand how difficult it was.
Other traits that you believe contribute(d) to their unicorn status
Focus on main product and lots of acquistions.
What are some of the commonalities found among them?
Many Acquisitions, Core Product, Ability to raise endless funds.
Are there any key differences?
Theranos which failed had fraud which took down the company.
Why did the organization with former unicorn status fail?
Fraud, there never was a real business model or product. Investor’s believed there was and so they continued to invest large sums.
Some good reads
- (Links to an external site.)Source: “Startup Lessons from Harvard Innovation Labs ‘Unicorns’.” Harvard Innovation Labs. March 18, 2021. https://innovationlabs.harvard.edu/about/news/startup-lessons-from-harvard-innovation-labs-unicorns/.
- (Links to an external site.)Source: Bock, Caroline and Christian Hackober. “Unicorns—what drives multibillion-dollar valuations?” Business Research 13, (2020). 949–984. https://doi.org/10.1007/s40685-020-00120-2
- (Links to an external site.)Source: Eisenmann, Tom. “Why Start-ups Fail.”Harvard Business Review, May-June 2021, https://hbr.org/2021/05/why-start-ups-fail (Links to an external site.).
- (Links to an external site.)Source: Santoro, Phil. “Why Startups Fail | Lessona from 150 Founders.” Wilburlabsi, February 8,2021, https://www.wilburlabs.com/blueprints/why-startups-fail (Links to an external site.).
- (Links to an external site.)Source: Cheldi, Stefano. “The Billion Dollar Wonderland: A Case Study in Struggles and Lackluster Regulation of Unicorn Firms” (Master’s thesis, Utrecht University School of Economics, 2021) https://studenttheses.uu.nl/handle/20.500.12932/146.
Experimentation is key:
Here are some resources to understand the right way to conduct experimentation.
- The Big Book of Experimentation: Brief Case Studies in Business Experimentation (Links to an external site.)
- Source: The Big Book of Experimentation. Optimizely, 2021.
- Source: Thomke, Stefan and Jim Manzi. “The Discipline of Business Experimentation.” Harvard Business Review, December 2014, https://hbr.org/2014/12/the-discipline-of-business-experimentation
- Source: Thomke, Stefan. “Building a Culture of Experimentation.” Harvard Business Review, March-April 2020, https://hbr.org/2020/03/building-a-culture-of-experimentation.
- Source: Corman, Casey. ” Why and How to Experiment the Right Way.” Forbes, September 6, 2017, https://www.forbes.com/sites/forbescommunicationscouncil/2017/09/06/why-and-how-to-experiment-the-right-way/?sh=3eb3ef306308.
Constraints & skip a year
While studying many different Unicorns, one of the VC investors in a unicorn asked their startup how can we skip a year and move growth faster. You need to know your constraints to be able to to hyper grow. These articles help to define those tactics
- Source: Tolbert, Steve. “6 Ways to Make Sure you Deliver Value to your Customers.” Washington Technology, July 17, 2013, https://washingtontechnology.com/opinion/2013/07/6-ways-to-make-sure-you-deliver-value-to-your-customers/342813/
- Source: Golub, Harvey, Jane Henry, John L. Forbis, Nitin T. Mehta, Michael J. Lanning, Edward G. Michaels, and Kenichi Ohmae. “Delivering value to customers.” McKinsey Quarterly, June 1, 2000, https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/delivering-value-to-customers.
- Source: “Risk Analysis and Risk Management.” MindTools, https://www.mindtools.com/pages/article/newTMC_07.htm.
- Source: Maples, Mike. “How to build a breakthrough.” Medium, April 27, 2020, https://medium.com/@m2jr/how-to-build-a-breakthrough-3071b6415b06.
- Source: Bussgang, Jeffrey. “Scaling is Hard. Here’s How Akamai Did It.” Harvard Business Review, August 7, 2012, https://hbr.org/2012/08/scaling-is-hard-heres-how-akam.
Everyone fast growing company needs to understand processes. And these processes need to be tweaked continuously to make sure they still make sense. Processes help companies grow without having to think daily about how business should be conducted. These are the SOP’s the, the standard operating procedures.
- Source: Reainer, David. “CEOs who Focus on ROIC (Return on Invested Capital) Outperform.” Forbes, September 12, 2018, https://www.forbes.com/sites/greatspeculations/2018/09/12/ceos-that-focus-on-roic-outperform/?sh=470a7748567b.
- Source: Delaet, Robbe. “ROIC:Why this is the Best Ratio to Find Attractive Stocks to Invest In.” seeking Alpha, June 27, 2020, https://seekingalpha.com/article/4355948-roic-why-this-is-best-ratio-to-find-attractive-stocks-to-invest-in.
- Source: Ash Maurya, Scaling Lean: Mastering the Key Metrics for Startup Growth. Portfolio, 2016.
- Source: Patel, Neil. “9 Metrics Every Entrepreneurial Company Should Track.” Scale Finance, https://scalefinance.com/9-metrics-every-entrepreneurial-company-should-track/
- Source: Banai, Baz. “A Founder’s Guide to Startup Metrics.” Medium, November 26, 2020, https://medium.com/swlh/startup-metrics-370a07de9ff7.
Culture is King
Culture is like the soul of a company.
Everyone great startup who becomes a unicorn does so by setting the culture from the start. Some great reads
- Source: “The Startup Hiring Guide: Hiring for Rapid Growth from 5 to 50.” Workable. https://resources.workable.com/tutorial/the-startup-hiring-guide-your-playbook-for-rapid-growth
- Source: Robert Richmond, The Culture BluePrint: A Guide to Building the High-Performance Workplace. Culture Hackers, 2015.
- Source: Corkindale, Gill. “The Importance of Organization Design and Structure.” Harvard Business Review, February 11, 2011, https://hbr.org/2011/02/the-importance-of-organization.
- Source: Baron, James N., and Michael T. Hannan. “Organizational Blueprints for Success in High-Tech Start-Ups: Lessons from the Stanford Project on Emerging Companies.” California Management Review 44, no. 3 (April 2002): 8–36. https://doi.org/10.2307/41166130.
- Source: Expert Panel, Forbes Coaches Council. “12 Ways to Scale your Culture as your Company Grows.” Forbes, December 6, 2018, https://www.forbes.com/sites/forbescoachescouncil/2018/12/06/12-ways-to-scale-your-culture-as-your-company-grows/?sh=4354a6c36f30