THROW AWAY THE UNICORNS; KEEP THE CAMELS.
Why new companies and startups outside the Silicon Valley protective bubble should throw away the notion of Unicorn startups and focus on becoming a Camel; and what the Valley’s founders can learn from this change.
I know that high valuations are a dream, and a great one at that. But is it the right one? Shouldn’t the way to go about a business is to focus on maintaining slow growth and lasting long especially during these trying times we are living in? Both are possible, but it is important to distinguish between the 2 ideas.
The idea of the Unicorn is not new in any way new in the local or international market, it is any founder and his starting team’s dream to become a recognized entity valued at a mind-bending $1 billion; whether to cash out at the IPO stage or to be acquired by some larger entity; both being quite mouth-watering options and is one of the reasons the idea of the startup has exploded quite viciously over the past few years in Silicon Valley and subsequently frontier and emerging markets.
The notion of Unicorn has become so ubiquitous that founders and investors alike have focused mainly on cultivating them as their primary and sole objective no matter the applied method; which naturally means that the Golden Rule in Silicon Valley is too pump funds and cash into “Growth at all costs” companies.
Let’s make things clear, this model works and works well, especially in high-flying and lucrative locations such as Silicon Valley where capital is easy to acquire, find, and raise, where consumers all over the local region are ready to indulge themselves in new ideas and products, – no matter how maniac they sound at first (think Airbnb) – investors are practically raining down on founders, and there are minimal social and legal costs associated with filing for bankruptcies.
Unicorns are speedy, efficient, and majestic creatures that transfix people and put them in awe and make them think: “I could have totally thought of that.” But one idea that people seem to forget is that they are also fictional.
In Silicon Valley, not enough attention is given to catastrophic failures that had valuations through the roof and ended up with ridiculous rescue valuations nearing their IPO date; examples such as WeWork and Adam Neumann come to mind. WeWork and its other Unicorn counterparts were focused too much on sprinting and going full-throttle with no regard for future plans.
Is there another alternative to the unicorn model, however? Yes, the Camel.
When we think of the camel, we think resiliency, commitment, determination, focus, and most importantly sustainability. Camels have a seemingly unrealistic capacity to thrive even at the harshest, wildest, most brutal conditions on earth months on end as to survive another day and keep pushing onwards. Camels are also capable of sprinting when the time calls for running to get out of danger or take advantage of a presented opportunity.
Most importantly, Camels are real.
What happens when there is no safety net for founders, when capital is hard to come by, and investors and consumers alike are always skeptical of new products or services? This is when startups and founders should gear up to become Camels instead of unicorns, especially in emerging and frontier markets like most of us exist in.
Camels (in the entrepreneurial sense) focus mainly on sustainability, they are 2 sides of the same coin, being profitable, and also being good for society. Camels know exactly when to spend money and sprint, and when to take a step back in the arms of sustainability again. Primarily, Camels know how to thrive in all situations because they plan for the worst-case scenarios, which is even something that companies in secure markets like Silicon Valley can learn from. Camels focus on the customer, especially in markets where low judicial regress for customers who are wronged exists, attempting to build the best brand image within the community.
While this sounds quite dream-like and unattainable due to how our minds have been molded over the years into believing that the Silicon Valley model is the best out there; it’s quite achievable and should be adopted especially in times of crisis such as the one we’re facing now.
How can you turn your business from a unicorn mindset into a camel mindset?
TRANSFORMING FROM UNICORN-MINDED TO CAMEL-MINDED
To put things into perspective, here are 7 steps in no particular order that can help shift the balance in your favor.
Step #1: Look at Measured Growth
Instead of allowing your main focus to be constantly looking at accelerated growth in the shortest time-span possible, take the time to evaluate the measured growth of your company by allowing yourself and your team to change courses as to become less capital intensive, or even focus on healthier markets that would adopt your idea right away which will make you last longer in the game and attract even more investors as you go by.
Step #2: Getting the Best Talent Onboard
Instead of performing drastic cuts right away, perhaps focus instead on performing a hiring freeze to begin with. Camels are known to have great mitigation of labor market inflexibility by re-balancing human capital across a broader range of activities.
All the great companies that have ever existed focused primarily on getting the right talent first and then looking at the exact strategy that the company should take. Ask Jim Collins.
Therefore, all new hires should be justified clearly and specifically; as Jason Fried of Basecamp once put it: “There are few excuses to not be profitable as a startup. A big part of this is managing your cost structure.
Step #3: Marry Your Investors
Investors are essentially like marriages, they need to stay healthy, they need be a give and take relationship and not just one-sided, and they need to be long-lasting and not just for a short period of time.
Focus on dealing with investors that have the highest potential of strategic partnerships where they can help with selling your ideas and building relationships with other clients instead of just focusing on the numbers.
Step #4: Do not Subsidize
Camels are known to price fairly for their product or service. The price reflects the quality of the deliverable and is not just a means to get rich off the idea. It is important to understand that founders are building a business and not a hobby.
Step #5: Think Long-Term for Once
It’s time to let go of the shiny short-term gains and focus on the long-term view because in most cases for new companies, breakthroughs usually happen at the later stage of the life cycle. Again, it is important to restate that this game is not a sprint but a marathon.
However, this does not mean that companies should avoid growth, but to not adopt a do or die mentality like Silicon Valley to avoid the usual harsh dip in cash flows.
Step #6: Take Only What You Need
The beauty of being a Camel is that you have the freedom of deciding when, from where, and how much to raise since they are already sustaining themselves with the money they are making. Therefore, Camels raise only when needing to raise funds which allows them to keep an even larger portion of the pie for the longest period possible.
Step #7: Diversify
Companies in Silicon Valley are like mosquitoes, they are hyper-focused on one specific problem, one specific product-mix, and one specific market.
Camels do not need to be like that. Camels diversify all the above aspects to remain sustainable and spread the risk as much as possible.
*Note: this diversification should not be taken too far since companies that do this run the risk of becoming too mediocre at a wide range of things.
There you have it, how to turn your company from a unicorn-focused entity to a camel-focused one. At the end of the day, chance plays a major role in determining which company is successful and which is not, so it’s all about lasting the longest in the game until the beautiful lady luck hits you with a great opportunity that would launch you to the highest points possible.
MY FAVORITE QUOTE
“Gratitude will unlock all other virtues and is something you can get better at.” – Kevin Kelly
A.I. Territory Manager Marwan Eleskandarani on What Companies are going through during this pandemic. Synapse is a data science and AI company based in Egypt. Synapse Analytics
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