Learn how startups can join the billion-dollar club by taking a page from the book of successful unicorns.
In the startup world, a unicorn refers to any startup with a valuation of over US$1 billion. Companies like Airbnb and Netflix fall under the unicorn category. As of 2021, there are 650 unicorns in the world with a cumulative valuation of US$2,173 billion.
However, not every startup becomes a unicorn. There is only a 0.00006% chance that a startup will become a unicorn. While the chances of becoming a unicorn might seem slim, it isn’t impossible. Here’s a look at what sets a unicorn apart from other startups that you can adopt in your startup endeavors.
Characteristics of a unicorn
Most unicorns have the following characteristics in common:
Unique problem-solving abilities
For your startup to see unicorn-level success, it must be dedicated to creating something truly innovative to tackle existing problems in the market.
Startups like Uber or Xiaomi have reached unicorn status by closely studying their target market and coming up with a one-size-fits-all solution. The ride-sharing company, Uber, was the first to notice the market’s need for a ride-sharing app. The company also made it easy for customers to get updates on where the cab is and to hold the driver accountable through its rating system.
Xiaomi, on the other hand, understands the need for cheaper smartphones with the same specifications as high-end devices. To do that, Xiaomi negotiates with its suppliers to lower component costs by keeping its products on the shelf for a much longer time (about 18-24 months) than other smartphone companies. Hence, Xiaomi is able to sell their phones for much lower prices.
Around 62% of all unicorns are business-to-consumer (B2C) companies. A key feature of their business models is that they provide consumers with goods and services at affordable prices. For example, website builder Squarespace and workplace solutions company WeWork have both succeeded in becoming unicorns by providing affordable solutions to their customers.
Squarespace charges its users anywhere from US$12-US$40 for hosting their websites. Within that price range, it offers its users over 113 website templates as well as built-in SEO tools to choose from, making it a great deal for its customers. WeWork has integrated consumer experience within their co-working spaces. It offers lounges, kitchens and other common areas where employees of the client companies can interact with one another.
The central business model of most unicorns is based on technology. 13% of all unicorns are in the FinTech space and 10% are in artificial intelligence (AI) and robots. Be it through cloud computing or customer relationship management systems, tech makes a startup function in a much more efficient way. Tech also helps startups grow and scale their businesses by facilitating effective functioning within limited resources.
Currency exchange platform Coinbase is a great example of the effective use of technology among unicorns. The platform uses 61 technologies for its website. The website encourages users to trade crypto with a simple, clean and well-suited user experience for crypto asset retail investors.
Lessons to learn from unicorns
When trying to build a scalable business, it is important to remember that investors don’t simply fund companies for their unique ideas but also the performance of their teams. Having the right people, tools and data separates unicorns from other startups.
A startup’s core team must actively track the financial viability of their company’s products. They should be able to forecast growth patterns for 6-18 months. This shows the investors that the organization is serious about achieving its goals.
Probably one of the key takeaways from unicorns is that there is no real secret to success. While the characteristics previously mentioned might set you up for a smooth ride in the startup space, there are many ways to become a unicorn, and choosing to tackle things your way could also prove effective. A strong foundation and a team that supports growth are the footholds you need to scale your business and make it reach its maximum potential.
Header image courtesy of Freepik