This past decade was the era of the unicorn. It seemed like every article was touting some new startup as “the next big thing.” Investors were scouring the earth for the next Unicorn and business leaders desperately aspired to have their companies crowned as such.
Alex Lazarow’s book, “Out-Innovate,” makes the case that Unicorns are not imbued with the long-term value or staying power to justify all the hoopla. Unicorns that can’t make the transition past that first disruptive innovation will go the way of the dodo bird. You can’t find dodos in the wild or a zoo. You’re just as likely to spot a unicorn.
The business qualities that seemed important before now seem superfluous, catalyzed by the emergence of COVID-19. Durability, lean productivity, strong partnerships, predictable revenue…these are the characteristics of a camel, not a unicorn, and suddenly they seem to matter most.
In the world of technology startups, unicorns are companies that possess a rare type of value proposition. These are generally venture-backed companies with valuations over $1 billion dollars. Yet the private market often lacks any independent estimates of value, and valuation is often not tied to anything tangible. These companies tend to be asset-light, highly specialized market makers, and due to the more risk-tolerant investment culture of Silicon Valley, that’s where you’ll find 90% of these unicorn companies.
Although the return on investment on unicorn companies is high, it’s very difficult to predict which of these companies will succeed. There’s a very fine line between a highly successful startup and a total failure, but you won’t know what side of that binary such companies will land on without significant investment.
The latest investment trends indicate that the venture landscape is shifting. No one has limitless capital to spend on insolvent companies with poor business plans and no track record of success.
Camels are organizations that can survive a drought and take advantage of opportunities. These companies are resilient and use constraints to their advantage. They build sticky, full-stack solutions for their customers including the infrastructure that their products or services rely on.
Seldom based in Silicon Valley, these companies often form in smaller markets with limited financial assistance and their growth rate is slow. Camel companies have a proven track record of success, strong relationships, and they can manage adversity. During challenging times, they not only survive but come out of the desert stronger and thriving.
That’s the kind of company investors are looking for and executives want theirs to become. To start with, companies ought to consider a new model and strategy by borrowing from what the “camels” have always known.
While Silicon Valley startups recognize that failure is a real possibility, durable companies create a long-term and proven business plan from inception. They manage costs and maintain transparency with investors and customers by charging for the value they create. They are not concerned with the hyper-growth of many venture capital markets, focusing instead on building organizational-wide resilience. These organizations may also have diversified revenue streams, which gives them multiple legs to stand on in rough times.
The COVID-19 crisis will continue to separate the unicorns from the camels. Companies that can’t innovate, evolve, and find new ways to delight their customers may not make it through the Coronavirus economic dessert. Camels will thrive. Camels will be better positioned to outperform their peers.
At 10Pearls, we have experience with unicorns and camels but our approach is optimized to support products and partnerships that will last – helping companies manage cost, do more with less, conserve energy, and execute with speed.
Sure, we help our clients develop unique category defining capabilities. But more importantly, we help them maximize the value of their budget so they can navigate the desert like a camel and survive even in arid conditions. At 10Pearls, our business isn’t at risk because of COVID-19 because we have always focused on building long-term relationships with our customers and making a positive social impact as we continue our growth.
We suggest you do the same if you’re not already. We find that forming strong partnerships with customers and effectively managing your goals and objectives are among the keys to lasting success, and the foundation by which we can continue to support our customers and deliver innovative and cost-saving digital solutions.