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Unicorns Really Do Exist!

I spent the last few creating a unicorn.

What? Read on, because I’m about to convince you that unicorns really do exist.

Imagine creating a startup that investors value at more than $1 billion. That’s a unicorn. Now imagine that there are hundreds of unicorns roaming the technology forest. And almost all of these are Transformation Age babies. In 2013, Cowboy Ventures founder, Aileen Lee, coined a term for these babies: unicorns. The rise of the unicorn has occurred rapidly and without much warning, and it’s changing what we thought we knew for sure about creating value in early stage companies.

Jason Green, a venture capitalist at Emergence Capital Partners whose investments include Yammer, which sold to Microsoft for $1.2 billion, says, “It used to be that unicorns were these mythical creatures, now there are herds of unicorns.”

Proponents of the unicorn boom posit that this time—here we go again—is different. Many of the billion-dollar startups, they argue, have the actual customers and revenue that companies of the dotcom days lacked. Hmm…are unicorns real enough to exist several years from now?

Not content to run with the pack—or “blessing,” as a group of unicorns is sometimes known—venture capitalists have begun targeting even bigger game. They’re now hunting startups with the potential to rapidly reach a $10 billion valuation—or, as Green calls them, “decacorns.” Think Google, Facebook, and Uber. But there are many more.

Unicorns are proof that some management teams are climbing to near the top of the Value Ladder (the main construct used in my forthcoming book: Time Really Is Money) in just a few years, or less. Let’s do some quick math to see how they get there. Suppose a five-person management team each successfully spends 1,500 hours per year for 3 years on $50,000 per hour activities. This generates a market value of more than $1 billion. Ha!

Not For the Faint of Heart

Creating a business unicorn is about as difficult as seeing the mythical version in the wild. I don’t even suggest that you try. But if you’re crazy enough to be reading these MidasMoments, you’re probably loony enough to want to create extreme value in a short period of time. So here is what I experienced:

  1. You’ll need to transform or create an industry: unicorns are borne from transformative ideas. Don’t think you can get there via incremental thinking.
  2. It’s all about business models: all unicorns seem to adopt radically different business models than currently in existence.
  3. Get ready for capital calls: as a founder, you will be forced to bet more than you can lose, and then get diluted more than you thought possible.
  4. Expect to fail a dozen times during the process: nothing will go as planned. It’s shocking to me that anyone hangs in there long enough to create a unicorn.
  5. Everyone will say it can’t be done: even half your partners will bail on you along the way. Don’t even get me started when it comes to family.

Of course once the unicorn is birthed people will say that you’re a visionary genius. But you’ll know that they have no idea how or why you even picked the fight.

The most amazing thing is that, by the end of creating the mega-startup, you’ll be so whipped that you’ll have darn near nothing left for the real fight of growing the unicorn into something real.

No one will understand that either.

– Rob

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