High Flying Unicorns
Efoiling Unicorn
Over the past several years I have had the good fortune and privilege to work with several high growth startups. Often referred to as unicorns, these companies achieved meteoric growth. According to Investopedia, a unicorn refers to a privately held startup company with a value of over $1 billion. Achieving unicorn status is a rare feat and Groove Management has had the privilege of working with several of them. The term was coined by Aileen Lee, founder of Cowboy Ventures, when she first wrote about them in her article, “Welcome to the Unicorn Club: Learning from Billion-Dollar Startups”. It is great to have the chance to work with these unique companies, to help them scale and help them navigate the challenges that come with such a growth trajectory. The speed of growth comes with consequences and growing pains. Helping organizations scale through the adolescence phase is an area of strength for Groove Management.
The unicorn pictured on the efoil is a great image for something that appears to defy gravity. Much like the companies that achieve unicorn status, the electric hydrofoil does not look like it should work. It is an amazing piece of watersports technology that leverages lithium ion battery tech, fluid dynamics and aeronautical know how. The Waydoo Flyer One efoil in the photo is the perfect image for highlighting high flying unicorns.
What Enables A Company To Achieve Unicorn Status?
In growing intimately familiar with unicorn status companies, there are some clear commonalities. I would like to point out three in particular.
1) They found stellar product-market fit. What they do and how they do it, solves a problem that other companies have struggled to solve or that these companies have found a way to do better. An example would be Toast’s point of sale solution. Toast enables restaurants to accelerate their use of technology to improve throughput and the overall customer experience. Instead of wait staff having to run orders back to the kitchen, the orders are placed using a tablet or handheld. This expedites the process of getting orders to the kitchen. The net result is a better dining experience for the guest and the ability for restaurants to turn tables faster and with fewer employees. There are several other benefits that Toast has unlocked with the platform. The key was designing a product and service from the ground up that compelled restaurants to embrace technology and to make Toast their technology partner.
The product market fit that unicorns achieve sets them apart from the competition. They are not always the first to market, but they find a disruptive approach to do things better, faster, cheaper or in a way that shifts the entire market. It is the focus on meeting unmet customer needs that unicorn companies excel at.
2) The founders are all in. They eat, sleep and breath the organization. Unicorn founders dedicate all of their energy and focus to making their startup a success. They build their life around the company spending every waking hour at work or thinking about work. Whether the company was founded by a single founder or by co-founders, there is an unstoppable energy and dedication to the company. The founders dedication sets a tone for all the other employees. As the organization grows and hires resources, the founders are clear on the type of culture they want. Core values play an important role in the unicorn companies that I work with. A fun example of a founder defined core value that set the tone, is ClickUps value, Normal F*cking sucks. Zeb Evans, the founder of ClickUp, is eccentric and the Normal F*cking sucks value is meant to help employees to challenge the status quo. In fact ClickUp refers to its six values as “core habits.” Many companies set core values, but they remain words on the website and are never brought to life. At ClickUp calling them core habits, sets an expectation that all employees will live the values.
Founder CEOs are married to their companies and it shows in their unwavering dedication in bringing their ideas to life. This can be of great benefit, but it also comes with challenges. Founder CEOs have difficulty letting go and allowing others to lead, even if they are less skilled than the leaders they have put in place. Product centric founders are often deeply rooted in the product and technology, but they might be deficient in driving go to market strategies (GTM). It is important that they learn to delegate to the CRO or sales leader to drive GTM. This can be a challenge for many founders.
3) They hired an outstanding sales leader. Getting to a billion dollar valuation requires a company to show impressive revenue growth. Whether that is measured by the Rule of 40 or another metric purely tied to ARR, sales growth is the key to gaining unicorn status. Unicorn founders rely heavily on their sales leader to power the growth. Databricks is a great example of a unicorn company which has achieved a valuation of $43 billion. One of the early hires to the company was Ron Gabrisko, its Chief Revenue Officer. He has done an amazing job of scaling his sales organization, verticalizing the GTM function and powering Databricks to a $1.5B revenue run rate. That outstanding growth is a testament to Ron’s sales leadership. Ron who is a former college baseball star knows how to lead a team at scale.
Ron and team taste testing NYC pizza to compare it to Chicago. Of course, NYC pizza wins!
Ali Ghodsi and the other co-founders at Databricks put their trust in Ron, and Ron’s leadership has had a tremendous impact on the company’s success. Ron is a people motivator. He knows how to drive his team to achieve superior results, but also knows how to have fun along the way. It is his balance between an execution focus and his desire to celebrate successes that has enabled Databricks to scale its customer base. Finding a sales leader like Ron is one of the things that unicorn companies tend to have in common. Sales at scale require systems and discipline. A sales leader who can take a company from $1mm to $1.5 billion in sales is a rare find.
While product-market fit, being all in as a founder and having a top notch sales leader are three commonalities I have found in the unicorn companies I work with, they are not the only ingredients that lead to success. Timing, luck, discipline, the right team and the right culture all play an important role. It might be easier to say that the absence of these three ingredients would greatly diminish the likelihood that a company could achieve unicorn status. So next time you see a flying unicorn, take note and try to dissect the success. At Groove Management we have made it our business to help companies dissect their successes.
