By Frances McLaughlin
Let’s talk about unicorns. Not the mythical creature, of course, but something just as special – a privately held technology company that has a valuation of $1 billion or more. A company that Aileen Lee, founder of Cowboy Ventures and the term itself, describes as the “winner of all winners”. Examples of such companies include Uber, Airbnb, SpaceX, Snapchat, and Spotify. While the number of unicorns has increased to 117 worldwide, the achievement is still quite rare. The overwhelming majority of startups do not achieve unicorn status, yet many of them still achieve great success.
If you are an entrepreneur looking to build your own business, but have doubts that you might not reach the realm of the unicorn, have no fear. Your company could be a racehorse, a workhorse, or even a wild mustang. They each have pros and cons, but they all have potential for unbridled success.
1. The Unicorn
Let’s say your business is the next unicorn. After all, a small fraction of startups is expected to earn that title. You may be that one. Unicorns, such as Uber and Airbnb, have ubiquitous brand recognition. They are quick to scale and generate large revenue streams and valuation. A year ago, I had never even heard of Uber, but now I use it almost every time I need a ride somewhere.
While unicorns are extremely profitable, they have downsides, too. Some unicorns have their 15 minutes of fame, and then something better comes along and steals their customers. Other unicorns undergo unsustainable growth and become so large they cannot endure. Andrew Ross Sorkin describes this phenomenon as “bubble territory.” As mysterious and desirable as unicorns may be, even they have their own pitfalls.
2. The Racehorse
Your business might not have a propensity for unicorn status, but maybe it’s built for speed. You might be a racehorse. Companies like General Assembly and King Digital Entertainment (developer of popular Facebook game Candy Crush Saga) fit this title. Constantly building, measuring, and learning, these companies follow data-driven projections in order to keep improving.
While racehorses have many advantageous traits, there are disadvantages to watch out for, one of which includes the potential to expand too quickly. In addition, these companies always have to maintain pace with the marketplace’s demands and keep an eye on its competitors. If you want to build a business that competes neck and neck, now is your time to break out of the gates and defy the odds.
3. The Workhorse
Perhaps you’re the type of entrepreneur who builds a business that is both effective and dependable – one that seldom disappoints its loyal customers. Perhaps you’re a workhorse. Big businesses like biopharmaceutical company AbbVie Inc., as well as your small neighborhood landscaping business, are examples of true workhorses. These companies obey a proven business model. Always predictable and reliable, the workhorse uses its fortitude to haul the weight of a demanding consumer.
While the workhorse is recognized for its strengths, it does have weaknesses, like any entrepreneur. Workhorse businesses have to break into an already calcified market. Moreover, with a maturing industry comes shrinking profit margins. Nonetheless, workhorses can innovate a mature industry and capture a wider audience. For example, Snap-On is a designer and manufacturer of tools used widely in the transportation industry. They believe that their customers’ time should not be spent shopping for tools, so they bring the tools to their customers. This type of innovation has made them much more than a power tool company. With enough determination and creativity, you can break through anything standing in between you and success. Harness your horsepower and start your business today.
4. The Wild Mustang
Last but not least, we have the wild mustang – the entrepreneur who is tired of conforming and has a craving for independence. Freelance web developers and local craft brewers embody the criteria of the mustang. They have the freedom to choose their path and how they travel it. They have total control of every aspect of their business. For instance, Small Town Brewery used nostalgic flavors to create Not Your Father’s Root Beer, an alcoholic version of an old-time favorite soft drink. Another tasty example is Ben and Jerry’s Ice Cream. It was founded by two guys who abandoned their formal education and ended up turning a small-town Vermont store into a global enterprise. Mustangs are often ahead of their time – their ideas are different and not always accepted with ease by the public, like Peapod’s online grocery shopping and delivery service.
As appealing as freedom sounds, it comes at a price. If you decide to pursue this route, you may have a lack of support, which will make it difficult to get your business off the ground. Don’t let this challenge deter you from taking the road less traveled – let it motivate you to overcome.
You might be the next unicorn. Even if you’re not, you might be a competitive racehorse with your eye on the prize. How about a powerful workhorse that gets the job done every time? Or an independent mustang that roams off the reservation? Whatever type of entrepreneur you may be, saddle up and get started!
Are you ready to saddle up and get started? We want to help you get a strong start right out of the gate. The Startup Roadmap is a business tool we designed to get entrepreneurs on the right track from the get-go. For a limited time, you can get a complimentary eCopy of The Startup Roadmap: 21 Steps to Profitability by clicking this link. If you prefer the print edition, you can purchase it directly from Amazon for $9.99.
Ed McLaughlin is currently co-writing the book, The Purpose Is Profit: The Truth about Starting and Building Your Own Business, with Wyn Lydecker and Paul McLaughlin.
Copyright © 2015 by Ed McLaughlin All rights reserved.