In business, a unicorn is a privately-owned startup company with a valuation of over $1 billion. This term was coined in 2013 by venture capitalist Aileen Lee who compared the statistical rarity of very successful business ventures to the mystical creature. At that time, there were only 39 unicorn startups. Fast forward to today, we count more than 700 unicorns around the world according to CB insight. Among them, the largest startups include Bytedance, Stripe, SpaceX, Grab, Revolut, and Lalamove.
What makes a unicorn startup?
Entrepreneurs regularly wonder what sectors are likely to produce unicorn companies. Of course, there is no exact answer for this as innovation and new technologies are emerging in different sectors every day. Meanwhile, we can still look for a pattern by examining the current leading sectors:
Fintech is the first category on the map, representing 17% of all unicorns. It is followed by internet software & services (16%), e-commerce and direct-to-consumer (12%), and lastly artificial intelligence (8%).
While the sectors in the unicorn club are diverse, these startups have a few things in common:
- They use a cutting edge technology
- They are consumer-oriented (most of them)
- They have a fast-growing strategy
- They are privately owned
Once a company has gone public (IPO) or has been acquired it is no longer considered a Unicorn. (e.g. Google, Facebook, Apple, etc.)
This blog will review our top 9 lessons that you can learn from unicorn startups to help grow and set your business apart from others.
Identify a problem and solve it
Don’t brainstorm startup ideas, solve a problem. As cliche as this first advice may sound, it is a core notion that every startup founder needs to know.
Identifying a simple problem can give many opportunities for great solutions. For example, the founders of Airbnb Joe Gebbia and Brian Chesky rented out their loft as a source of income. They then built their own website and began the business. As simple as trying to make ends meet can land you a spot in the unicorn club.
“If we tried to think of a good idea, we wouldn’t have been able to think of a good idea at all. You just need to have a solution for a problem in your own life.”
— Brian Chesky, Airbnb
Build something that customers truly love
When a customer likes a product, they will use it — and most likely continue using it. When a customer loves a product, they will become their brand ambassador. For something they find very useful in their day-to-day life, or even depend on, they will start talking about it to their families and friends. People who really love a product will make it go viral, so make sure to take advantage of the network effect.
“When customers love your product, they become ambassadors. There’s nothing better than someone using your app every day and trying to get their friends and family to do the same.”
– Tom Padula, Senior Product Manager at SiriusXM
In continuation with this, create a product you would personally want to use. Some entrepreneurs started a business with a product or service that they needed to solve their own personal woes. They noticed that there wasn’t a solution to an issue they faced head-on, so they created a solution for others they think are likely to encounter the same issue in the future.
Make UX easy and seamless
Today is a fast-paced world, and consumers are looking for a frictionless shopping experience more than ever. An easy-to-use interface and user experience allow users to quickly adapt and “get” the product.
The same thing can be said for internal operations of a startup: hiring, onboarding, L&D, and other processes must always evolve and be seamless in order to allow fast growth.
“If you can take all the friction out of the experience, people will sign on. And that will make their lives better.”
— Kenneth Lin, Credit Karma
Make well-calculated moves
Having an exceptional idea is great but knowing how to execute it correctly is even better. For example, Uber was the first to introduce its new ride service concept in new emerging markets, but Grab from Singapore beat Uber in the game.
Before making any decision, make sure it goes in hand with your mission and objectives. Always have a well-prepared strategy. For instance, before considering expanding, make sure to do thorough research and understand the problems of new markets.
“Be stubborn on vision but flexible on details.”
– Jeff Bezos, Amazon
Maximize growth, not profit
Exponential growth is a distinct characteristic of startups. When investors decide on funding a startup, traction is the first thing they look at, closely followed by projected revenue and growth. These projections need to be backed by hard data, like a sales pipeline forecasting growth over the next quarters.
- Make sure to have traction for exponential growth
- Always have a pipeline full of new leads, including potential beta testers and customers.
- A clear vision for the future of the company and product (and a plan for how to get there)
With this said, a niche market can be your forte. The consumer market is large, and with that, many ambitious young entrepreneurs jump in without thinking of the competition. To build a thriving startup, finding a way to provide your business with a competitive advantage should be your first objective. Identifying a niche market with low competition can be a great entry point for your business to tap into.
Recognize when to change course
Have the ability to adapt and iterate quickly. When something doesn’t seem to work, iterate, iterate and iterate until it does. Constant growth must be your first objective when running a startup.
“I think it’s very important to have a feedback loop, where you’re constantly thinking about what you’ve done and how you could be doing it better.”
— Elon Musk, SpaceX
Demand for new technology is everywhere
An idea doesn’t need to create and fit a new market. Many entrepreneurs often get lost in the mindset of creating something entirely new to be disruptive. Taking on an existing market and finding a way to make it better is equally innovative.
“I don’t want to disrupt anything. We never conceive of our products as disruptive. We don’t look at something and say ‘let’s disrupt that.’ It’s always about how we can evolve this and make this better.”
— Evan Spiegel, Snapchat
Don’t be afraid to enter a market with an established head leader
It is important to realize that a market can accommodate more than one disruptor. As long as there is a problem and an existing demand for your product or service, don’t be stopped by the first-mover advantage that the other company is experiencing. A bit of competition will help keep the sector dynamic and the creative juice flowing.
The key here is to have a distinct positioning that sets you apart from others and a strong (and highly marketable) value proposition.
Believe in your success!
The last takeaway is to dream big! Like the old saying “If you believe in it, it will happen”. Once you believe in yourself, you can risk curiosity, be ambitious and take action. With confidence, you can make the most out of your abilities.
Take the time to celebrate the small successes and keep going. Jumpstarting a startup is known to be tricky, but not impossible. You will face many challenges, so you need to be ready and think of every failure as a lesson learned that will bring you closer to your success.
“If you’re not absolutely determined to solve a problem or see something through, it might not make sense to keep going. You have to find a way to keep going.”
— Logan Green, Lyft
To conclude, there is no exact recipe for success. Each startup has its own unique way to climb the ladder of success. What’s important is to stack the odds of success on your side.
Key lessons to retain from unicorns:
- Find a simple solution to an existing problem
- Build something that customers love
- Make UX easy and seamless
- Make well-calculated moves
- Maximize growth, not profit
- Recognize when to change course
- Don’t be afraid to enter a market with an established leader
- Demand for new technology is everywhere
- Believe in your success!
Learning the road to success and the ups and downs of unicorn startups is a great way to get a heads-up and pointers for your own success story. Nevertheless, what truly matters are the actions you are willing to take to build your business.
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