So you want to catch a UNI­CORN? It’s the goal of many FOUNDERS. But taming a MAG­I­CAL START-UP can come at a cost, warn ex­perts.


what does it take to be­come the world’s next rare bil­lion-dol­lar com­pany?

It re­ally doesn’t mat­ter to me what­so­ever.” This is what Joshua Reeves, CEO of on­line HR ser­vices com­pany Gusto, said when the com­pany he co-founded smashed the US$1 bil­lion mark. He’s not the only founder who has down­played uni­corn sta­tus. “While it’s nice, [the $1 bil­lion val­u­a­tion] doesn’t change the way we op­er­ate day-to-day,” con­fides Adi Tatarko, CEO of home­in­spi­ra­tion web­site Houzz. “It’s still a roller­coaster ride with a lot of hard work.”

In the start-up world, ‘uni­corn’ is the nick­name given to those rare com­pa­nies that have hit max­i­mum pay-dirt by reach­ing a $1 bil­lion-plus val­u­a­tion. Big money, big in­vestors, big suc­cess: uni­corns seem to have it made. Which is why be­com­ing a uni­corn is what ev­ery founder strives for. Isn’t it?

While few peo­ple would grum­ble about hav­ing a dozen ze­roes to call on, the truth for most uni­corn founders is that a bil­lion-dol­lar bank bal­ance is a by-prod­uct of suc­cess, not an aim in it­self. And hit­ting the big-time doesn’t au­to­mat­i­cally equal Fer­rari com­mutes, two-hour work­days and tak­ing monthly va­ca­tions on a yacht in Ma­jorca.

In fact, if any­thing, getting to uni­corn lev­els means more work, not less. Your mis­sion to ‘catch’ a uni­corn could end in crush­ing dis­ap­point­ment, un­re­al­is­tic ex­pec­ta­tions and burnout, warn ex­perts.

“In Aus­tralia, you would be look­ing at only a small hand­ful [of uni­corns] – that would be the likes of At­las­sian and Cam­paign Mon­i­tor,” says Aus­tralian en­tre­pre­neur Alexan­dra Tse­lios, CEO and founder of opin­ion plat­form The Big Smoke. “How­ever, I don’t think start-ups should be fo­cus­ing on that out­come. In­stead, you should be try­ing to build long-term sus­tain­able com­pa­nies that add value to your cus­tomers and your in­dus­try, rather than val­u­a­tions and VC pitch­ing to a land­scape that of­ten, quite frankly, just doesn’t get it.”

At­las­sian and Cam­paign Mon­i­tor are the ex­cep­tion, not the rule, Alexan­dra ar­gues. At­las­sian is the soft­ware com­pany that was fa­mously fi­nanced with just AU$10,000 in credit card debt by founders Mike Can­nonBrookes and Scott Far­quhar in 2002. In De­cem­ber, 2015, it made its ini­tial pub­lic of­fer­ing (IPO) on the Nas­daq stock ex­change. Its cur­rent mar­ket cap­i­tal­i­sa­tion is just over US$10 bil­lion.

Mean­while, Cam­paign Mon­i­tor be­gan life as a side-hus­tle for Syd­ney founders Ben Richard­son and Dave Greiner back in 2004, when they first es­tab­lished the in­tu­itive email mar­ket­ing plat­form in a garage. In 2017, the com­pany raised US$250 mil­lion from New York ven­ture cap­i­tal firm In­sight Ven­ture Part­ners.

If you do have your sights set on a uni­corn, health-tech is one of our big­gest op­por­tu­ni­ties in Aus­tralia, says Jenny Vandyke, man­ag­ing di­rec­tor of Startup Ade­laide.

“Health, aged care and dis­abil­ity are all fast-grow­ing in­dus­tries,” she says. “We’re see­ing a lot of great prod­ucts com­ing through, like 3D imag­ing with Vox­ieBox, com­puter vi­sion with Life Whis­perer us­ing AI to im­prove IVF suc­cess rates, and vir­tual re­al­ity stroke re­ha­bil­i­ta­tion with Add Life Tech – all Aus­tralian-based start-ups with in­ter­na­tional po­ten­tial.”

In 2017, 57 com­pa­nies were named uni­corns glob­ally and seven ‘lost their horns’, ac­cord­ing to data from ven­ture cap­i­tal tracker PitchBook. The down­turn­ers in­cluded The Hon­est Com­pany and Pros­per, which both saw their val­u­a­tions sink in fund­ing rounds, as well as, which was ac­quired by Ama­zon for ‘only’ US$650 mil­lion.

This leaves 227 ac­tive uni­corns still out there, ac­cord­ing to PitchBook’s data. It’s ex­pected that, in 2018, new­com­ers will re­place the rel­e­gated. >

It’s STILL a ROLLER­COASTER ride with a LOT of HARD work.

Ac­cord­ing to the Crunch­base Uni­corn Leaderboard, the ma­jor­ity of en­trants to the bil­lion-dol­lar-val­u­a­tion list come from ei­ther the United States or China. Four new uni­corns are ex­pected to be ‘born’ in 2018, and Aus­tralia has al­ready pro­duced one – Canva. How­ever, busi­ness mar­ket­ing con­sul­tant and men­tor Jill Brennan from Har­bren Mar­ket­ing sug­gests that we could ben­e­fit more by try­ing to learn from them, not try­ing to em­u­late them.

“Uni­corns are phe­nomenons that ben­e­fited from a con­flu­ence of right time, right place, right peo­ple to pull it to­gether, and the tech­nol­ogy to make it all hap­pen,” she says. “And while I don’t think it’s worth the av­er­age busi­ness owner try­ing to im­i­tate these busi­nesses and ex­pect­ing that kind of world dom­i­na­tion, there are key lessons that can be drawn from how they op­er­ate.” Her ad­vice: it’s cru­cial to put your cus­tomers in the driver’s seat. “One thing that a busi­ness of any size can learn from these su­per­novas is the way cus­tomers, and what they want, are wo­ven into the way they op­er­ate,” Jill says. “They are re­spon­sive to, and rely on, cus­tomers hav­ing a voice. This ef­fec­tively makes them busi­nesses by the peo­ple and for the peo­ple.”

Busi­nesses can also fall into the trap of fo­cus­ing on their prod­uct or ser­vice with­out pay­ing due at­ten­tion to the prob­lem they’re ac­tively solv­ing for their tar­get mar­ket.

“Face­book helps peo­ple con­nect, no mat­ter where they are phys­i­cally lo­cated. This has proven to be very pop­u­lar and sticky with around 1.7 bil­lion ac­tive users in the sec­ond quar­ter of 2016,” says Jill.

I don’t think it’s WORTH the AV­ER­AGE busi­ness owner ex­pect­ing that kind of WORLD dom­i­na­tion.

“But what Face­book makes money from, and what they’re re­ally sell­ing, is ac­cess to those users. By be­ing clear about what they’re sell­ing, the fo­cus stays on what will make their of­fer more ap­peal­ing and en­hance it fur­ther.”

And if af­ter all is said and done, you still have your eye on the uni­corn prize?

“Well, I think you’ve got to be care­ful what you wish for,” warns Jenny. “As founders, it’s im­por­tant as a team to be clear on what suc­cess looks like – what kind of life do you want to live? Deep down, not ev­ery founder re­ally wants to run a bil­lion-dol­lar com­pany. Not ev­ery start-up has what it takes to be­come a uni­corn, and that’s okay. If, for ev­ery At­las­sian, we cre­ate ten $100 mil­lion start-ups, and a hun­dred $10 mil­lion dol­lar start-ups, that’s a lot of jobs and a lot of fuel for the econ­omy – with faster re­turns and lower risk.”


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