Although many people can name several unicorn companies like Uber, Airbnb, GitLab, and others, they don't know exactly what the term means and the criteria for becoming one.
In 2013, venture capitalist Aileen Lee coined this term to refer to private companies valued at $1 billion or more. At that time there were only 39 unicorns, but in June 2021, the business world had more than 700 companies of this type, and more are being added to this list. So unicorn is a term that is only used in startups with more than a billion in terms of valuation.
Some popular unicorn companies include Uber, Airbnb, Stripe, Epic Games, Robinhood, Reddit, and GitLab, among others. However, terms such as decacorn are used to refer to companies valued at $10 billion or more and hectocorn for those valued above $100 billion.
The post will review the lessons you can learn from unicorn startups and what differentiates them from other companies.
Every company has its own story of how it became a unicorn. However, all unicorn startups have similar characteristics.
Unicorn companies are characterized by disrupting the sector to which they belong. They are the first in their field and continually innovate to stay ahead of their rivals who enter the space later. Thus, their innovative strategies are what make them unicorn companies. For example, Uber changed the way people travel to work or business, while Airbnb transformed the way people plan their travel activities and much more.
Most unicorn companies are privately held businesses that increase in valuation when another well-established company invests in them. For example, India has a greater number of privately held companies valued above $1 billion.
Most products from unicorn companies are software, then hardware, and a smaller percentage of other products and services. Therefore, these companies operate with a high level of technology.
Almost 62% of these businesses are B2C companies whose main goal is to make things simpler for consumers. Therefore, they are part of their daily lives and have their products and services easily accessible and affordable.
For example, 15% of unicorns are in the fintech space. These companies seek to automate the use and delivery of financial services, 13% are in the e-commerce and marketplaces industries, 10% in AI and robots, while 8% are in the healthcare space . Another part of them is in the Internet space, Edtech, Cybersecurity, Real Estate, AdTech, DevOps, and more.
Unicorns are using technological innovation and world-class market strategies to disrupt existing markets and create new ones. These startups were developed from an idea by a less experienced team and faced challenges similar to those of any other new business.
However, by studying its history, an early-stage entrepreneur can learn important business lessons for building a unicorn startup.
Great business ideas begin when a person tries to solve a personal problem. For example, Airbnb founders Brian Chesky and Joe Gebbia converted their loft into a lodging space and rented it out to generate income. They then built their own website and started the business.
The lesson is that a good business idea is, above all, a solution to a problem you are experiencing in your own life. Airbnb's founders' attempt to make ends meet gave rise to this unicorn company.
WeWork is a privately held company valued at $20 billion and offers private or shared workspaces in 20 cities in the United States and 20 other countries. Therefore, small and medium-sized businesses can easily get an office in areas covered by WeWork.
The company's mission is “Do what you love,” which speaks to its target customer because it is what entrepreneurs appreciate.
Atlassian makes enterprise software, but in 2017 the company spent $425 million to acquire Trello, which is known for creating project management tools.
Acquiring a competitor was a well-calculated strategy because Trello built an exceptional product than Atlassian.
A forward-thinking idea doesn't come easily, but if you do it you'll gain public support like SpaceX.
The unicorn company is valued at $31 billion, and the founder's reusable rocket venture has attracted more public love than his electric car business.
Having an exceptional idea is good, but knowing how to execute it correctly is better. Uber's ride-hailing service introduced a new concept that changed the way business owners commute, but Singapore's Grab seems to have beaten Uber to the punch.
Anthony Tan, the founder of Grab, introduced electronic payment to nations that are lagging in terms of financial infrastructure, while Uber has struggled for years trying to adapt in some parts of the developing world.
The case of Lyft and Uber shows that the market is huge for those with disruptive strategies.
Although Lyft was founded 3 years after Uber and is not a unicorn, the company has grown at a faster pace and is now valued at $21 billion and went public. So don't throw away your business idea because another company was established before yours. As long as there is a problem you want to solve and there is some demand for your products and services, don't let yourself be held back by the other company's first-mover advantage.
The consumer market is large and, therefore, ambitious young entrepreneurs launch themselves without thinking about the competition. Instead of taking that step, an entrepreneur can look for a niche with some customers but little competition.
Desktop Metal, valued at $2 billion, and Rocket Lab, now valued at $1.1 billion, did exactly that. The manufacturer of metal 3D printing systems and the aerospace manufacturer are unicorn startups that had ambitious goals and looked for a niche market for their ideas.
Some entrepreneurs start businesses that make products or offer services that they can use to solve their personal problems. For example, Houzz CEO and co-founder Adi Tatarko and her husband created an online home remodeling platform to solve their redesign problem. Bootstrapping helped them get the right mentors and investors who helped them scale the site.
