Do These 4 Things to Become the Unicorn of Your Industry
It’s the stuff of legends. Launching a unicorn — a privately owned startup with a market valuation or estimated valuation of $1 billion or more — may seem as likely as catching a glimpse of the mythical creature. Do unicorns simply emerge from the thousands of entrepreneurs in some Darwinian-like journey or is there a pattern to be found? How does a company ascend to the financial heights of Facebook, Uber and Pinterest and then remain there much like Amazon and Google have? And are today’s unicorns really different than many companies that “started up” years ago as small businesses and just happened to become huge? The fact is, business unicorns aren’t all that rare: At least 24 companies joined the Crunchbase Unicorn Leaderboard in the first five months of 2017. And in the last few years the number of unicorns has shown strong growth, according to StartupGrind, a global community for entrepreneurs.
In that case, is there a common formula these high-flying companies apply to earn their place in rarified air within their respective industries?
My answer is yes. I believe today’s unicorns have patterns that are consistent to brands that made it big in previous decades. It’s just that today’s unicorns get immediate media and social attention, while the unicorns of previous years (Wal-Mart, Nike, Procter & Gamble, to name a few) grew in relative obscurity. Having spent time in a number of industries including a few in Silicon Valley, here are a few observations worth thinking about that I believe tie to any business trying to grow at an accelerated rate.
Develop a meaningful, ownable value proposition.
Above all else, entrepreneurs aspiring to unicorn-like success develop a powerful value proposition that not only differentiates their company from competitors in the marketplace, but is also easy for their target customer base and audiences to understand. A value proposition is the benefit you provide to the people who pay for your product or service. Every brand should have a benefit that the company believes is important to the marketplace and scalable to the size it thinks it can become. This benefit should be meaningful to those who part with their money, or should solve a problem people don’t know they have. For example, a couple of decades ago no one was asking for a portable computer or phones that could take photos.
Relentlessly evolve your value proposition.
What ends up killing many successful startups is their inability to pivot in response to change. The law of the marketplace is that companies must adapt or face extinction. This means that your value proposition should grow and expand to reflect developments both within and apart from your organization. Remember, if you’re going to stay ahead of industry trends, you must always be innovating. And unicorn-like ideas need unicorn-like execution. This requires truly consistent focus to ensure your ideas evolve and have every chance to take off.
Focus on your key customer group.
To disrupt a market, find the customer group that will lead the charge to your value proposition. Yes, easier said than done, but very important. Ensure your value proposition is crystal clear and sharply defined so your lead group of users become a dedicated following. Then listen to them and research how they react to new ideas and competition. Not only will they drive more sales, but they will tell others.
You have a 60 to 70 percent probability of selling to existing customers, but only 5 percent to 20 percent odds of selling to prospects. On top of that, they are 50 percent more likely to try your new products and spend 31 percent more than new customers. So, don’t spend valuable time and effort trying to reach many disparate groups.
When determining whether or not to move proactively, ask yourself does it align with your mission statement? Is it within budget or merit additional investment? Will it resonate among your core audience?
Recognize failure and move on.
We’ve all heard the stories about dogged determination and trying again and again. I’m all for that, but only when I can see that the idea has marketplace power and the flaw is in the execution. In 2008, for the first time in about 30 years, the percentage of new businesses created was less than the percentage of businesses that closed down. And the downward decline has continued since. When people say “The customer just isn’t getting it,” the issue might very well be that you don’t have unicorn-like execution and you should go back to the drawing board. Or, it might be that you don’t have a unicorn idea. Failing is inevitable. If you fail, be as objective as possible and learn from the disappointment. Embracing the true reason for a failure sooner than later saves you time, money and the energy required to be truly resilient.
No company gets it right every time and there’s no “one-size-fits-all” template for becoming a unicorn, and then an enduring, growing unicorn. Becoming a billion-dollar company will remain a rare feat, with good reason, and even the most valuable products or services don’t always make magic. In my view, staying focused on the target customer, objectively looking at your ideas and execution and evolving at speed with resilience, tenacity and perspective provide you with the best chances of success.
Mike Linton Chief Marketing Officer, Farmers Group, Inc