Unicorn Startups

unicorn

A Unicorn

What exactly is a unicorn startup? A unicorn startup is a technology company with a private valuation of $1 Billion or more.

According to Fortune there are over 150 unicorn startups today. Some of them we may use on a daily basis which include: Uber, Airbnb, Snapchat, Pinterest, and Spotify.

Here are Some Tips on Creating a Unicorn Startup

  • Aim to build a big, impactful company that is profitable from the beginning.
  • Expect to invest 7 years or more before a liquidity event.
  • Consider starting a consumer oriented company in e-commerce, software-as-a-service, or an Internet off Things business.
  • Offer compelling products that are easy to adopt.
  • Invest some of your cash in improving your product.
  • Avoid costly overhead.
  • The best time to start could after the launch of a new technology platform and/or during an economic downturn.
  • Be the most efficient, agile, and revolutionary in the market of your choosing.
  • Get to at least $100 million in annual revenue.
  • Remember that cash flow is king.
  • Understand your users and what THEY want.
  • Enter a winner-take-all market
  • Try to build a monopoly.
    • Frame your market as a union of many big markets
  • Understand liquidity preferences, participation, ratchets, and preferred shares.
  • Grow more than 40% month over month.
  • Solve a fundamental problem.
  • Do your research before closing a round, make a waterfall spreadsheet that shows what you and your stakeholders would get in a range of exits-low, medium, and high.
    • In a low exit, no one is happy.
    • In a medium exit, you can be penniless or make a “life-changing” amount.
    • In a high exit, everyone is happy.
  • The outcome should matter more to you than the investors.
  • Keep as much ownership as possible.
  • Look at what people are trying to do and do it in a way that doesn’t suck.
  • Pay attention to the terms, not just the valuation.
  • You can either start with a small market and expand from there or go all out and sell to a big market.
  • The biggest key is to sell your company for more than you raised or take your PROFITABLE company for a profit.
  • Understand the motivations of other people while understanding your own motivations.
  • Hire good, hard-working people from the beginning.
  • Recruit and retain an extraordinary team.
  • Surround yourself with people you would want to work with for the next 7 years.
  • With hiring, aim for quality over quantity.
  • Find a co-founder that is strong at your weaknesses and complements you.
  • Have a revenue model from the beginning.
  • Make at least a 20X multiple on private capital raised.
  • Have clear product visions.
  • Make something customers actually want, not what you think they want.
  • Spend as little money as possible.
  • Offer better technology than your potential customers are using now.
  • Acquire users for less than the revenue each user brings.
  • Marketing Example
    • Free app that collects e-mail addresses
    • Host free webinar that is sent to e-mail lists
    • Launch eBook
    • Word of mouth
    • Offer free giveaways
  • Imagine ways in which we will seem backwards to those in the future.
  • Get helpful mentors.
  • Have metrics in place that can track your progress effectively.
  • Don’t be afraid of pivoting.
  • Find a working business model as fast as you can.
  • Most companies fail because they run out of cash, keep track of cash and be working ahead of time if you need financing.
  • At the beginning, it is okay to say “yes” to almost every opportunity. When you are profitable, learn how to say “no” to any opportunity that doesn’t fit within your core business.
  • Ask and listen to advice, but make your own decisions.
  • Work harder when things are going well to get ahead.
  • Never lose momentum, keep pushing forward.
  • Make sure you are building a product/service that can scale.
    • Not dependent on hours worked.
  • Rapidly prototype, test in market quickly.
  • Have excellent customer support.
  • Take time in building an amazing user experience.
  • Learn and evolve everyday.
  • Getting Started
    • Solve a problem either you are having or someone you know is having
    • Test and adapt quickly to the market
    • Create a prototype and test it
    • Pre-sell your prototype to the people who have that problem
    • Scale and expand
  • Consider bootstrapping until you are profitable.
  • As Founder and CEO set the example in everything including salary.
  • Know your life’s mission and your company’s mission, look for alignment.
  • Learn the art of delegation and how to give employee’s an adequate amount of responsibility.
  • Make sure your customer’s lifetime value(CLV) > your customer’s acquisition cost(CAC).
  • Try to empower people instead of making them obsolete.
  • If you are selling seven figure products/services, don’t have salesmen.
  • If you are selling products/services in the $10,000-$100,000 range, create a process where salespeople can move the product to a large audience.
  • For low priced products, have mass appeal plus marketing and advertising.
  • A viral product
    • Has functionality that encourages customers to share to their friends
    • Try to get one distribution channel that works
  • Use technology as a complement to humans, not a complete replacement.

 

There you have it, tips on how to create a unicorn startup. One more thing to think about:

We all have a limited time on this Earth, why not take the chance of creating something that may change millions of people lives?

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