Celebrate the non-unicorns

not a unicornAustin Carr has a great profile of Jack Dorsey and Square. It goes into the fact that Square has not lived upto the hype and is now searching for a business model and it’s big hit.

One of the interesting points Carr makes in the post is about the perils of not going big. He writes:

Next to the graveyard of overhyped startups, there is a purgatory where companies like Groupon and Zynga toil–successful but not relevant, almost (or barely) profitable yet inconsequential. These are firms that, despite their promise, were never quite able to escape the clutches of mediocrity. Does Square now face the same fate?

In other words, it’s all about going big. This perhaps only makes sense for Jack Dorsey who as one of the founders of Twitter must level up in his next endeavor.

But I think this type of thinking is ultimately destructive in the sense that solid cos can be forced to “go big” even if it may not be the right fit. Note: I realize saying that Zynga and Groupon are solid companies is suspect so humor me a bit.

I understand very well that the VC model is predicated on these types of outliers, but again, I’m left wondering if there is a financing model that focuses on great companies who are not either aspiring to be unicorns or who’d like to retain optionality, ie maybe go big but build a solid biz in the interim.

As the cost to build tech companies decreases, I remain convinced that a new model will emerge (perhaps revenue-based financing or platforms like ProductHunt?) that will serve this large untapped segment which VC is not addressing.

Of course, we may have to deprogram folks who’ve heard the lifestyle business mantra, but IMO, there will be immense amountsof value created in these sustainable singles, doubles and triples.

2 Thoughts on “Celebrate the non-unicorns

  1. Pingback: What Can We Learn From Square's Growth - Maybe Nothing

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