It takes a brave and talented team to found a company these days. The failure rate worldwide after five years is over 50 percent, and after 10 years it’s over 70 percent. Yet an elite collection of startups has been able to navigate the challenging path of the venture world to become billion-dollar organizations.
These “unicorn” companies have either disrupted existing markets or have created entirely new markets, thanks to a combination of technological innovation and clever go-to-market strategies.
What is a unicorn Startup?
In the venture capital industry, the term unicorn refers to any startup that reaches a valuation of $1 billion.
The term was first coined by Aileen Lee, founder of Cowboy ventures when she referred to the 39 startups that had a valuation of over $1 billion as unicorns. The term initially was used to lay emphasis on the rarity of such startups. The definition of a unicorn startup has remained unchanged since then. However, the number of unicorns has gone up.
Features of a unicorn startup
To be a unicorn is no easy task and each unicorn today has its own story with a list of features that worked in its favour. These are some pointers that are commonly seen across all the unicorns:
Disruptive innovation: Mostly, all the unicorns have brought a disruption in the field they belong to. Uber, for example, changed the way people commuted. Airbnb changed the way people planned their stay while travelling and Snapchat disrupted the usage of the social media network etc.
The ‘firsts’: It is seen that unicorns are mostly the starters in their industry. They change the way people do things and gradually create a necessity for themselves. They are also seen to keep innovation up and running to stay ahead of competitors which might later boom.
High on tech: Another common trend across unicorns is that their business model runs on tech. Uber got its model accepted by crafting a friendly app. Airbnb made the world seem smaller by making the best of the world wide web.
A recent report suggests that 87% of the unicorns products are software, 7% are hardware and the rest 6% are other products & services.
Consumer-focused: 62% of the unicorns are B2C companies. Its goal is to simplify and make things easy for consumers and be a part of their day-to-day life. Keeping things affordable is another key highlight of these startups. Spotify, for example, made listening to music easier for the world.
Privately owned: Most of the unicorns are privately owned which gets their valuation bigger when an established company invests in them.
According to CB Insights, there are 361 private companies around the world valued at over $1 billion. India has 16 of these companies, taking 4 percent of the overall share. Also, India is just a shade below the UK, which has 19 unicorns with a 5 percent overall share.
Top 10 success stories of Unicorns – Billion-Dollar Digital Startups
When Facebook was launched in 2004, it took only 24 hours to gain over 1000 users. Flash forward to today, Facebook is one of the most valuable and influential companies in the world. Originally developed as a platform for college students to connect, Facebook rapidly grew to become the most popular social media platform for users of all ages and walks of life.
One of the most wildly successful (and profitable) startups, Airbnb was created by Brian Chesky and Joe Gebbia to provide a different kind of lodging experience — one that was less expensive and more accessible. It started with the duo purchasing cots to rent out in their New York dwelling to the $100 billion company it is today that provides homeowners with the opportunity to make supplemental income through short-term lodging.
Pinterest founders Ben Silbermann, Evan Sharp, and Paul Sciarra wanted to create a startup that would appeal to everyone — not just tech-focused Silicon Valley workers. They didn’t stop there; however, the founders continuously improved on Pinterest, basing their changes on the customers they had rather than trying to focus on markets that weren’t using the platform. This strategy created an optimal experience for users and built Pinterest into an $11 billion company.
Joel Gascoigne took his social media content scheduling platform, Buffer, from zero to paying-client status in just seven weeks. Gascoigne initially came upon the idea as a solution to his own problem—he wanted to schedule tweets several times a day without having to set a day and time for each one. He tested the initial concept on his favourite social media platform—Twitter—asking his followers for their thoughts. Today, the platform serves more than 73,000 customers.
The origin story of Robinhood, a stock-trading app worth over $1.3 billion, starts with a lot of rejection and entrepreneurs who just wouldn’t give up. It took founders 75 pitches to find venture capitalists willing to back the app that hadn’t even been fully developed yet. Robinhood is a great example of the power of a great idea and founders that are dedicated to making their idea a success.
Many startups are designed out of a desire to solve a widespread problem; OfferUp is just one example. When founder Nick Huzar simply had too much stuff at his house that he wanted to get rid of, he created an alternative to eBay and Craigslist with OfferUp, a user-friendly app that allows users to buy and sell items easily and safely. In addition, the app includes shipping options, setting it apart from platforms like Craigslist. Today, OfferUp is reportedly worth $1.4 billion.
Another example of an entrepreneur solving a widespread problem with their startup idea, Uber was created by StumbleUpon founders Garrett Camp and Travis Kalanick to address San Francisco’s taxi problem. Uber is worth $75.5 billion today; however, the road to success was not always smooth. By overcoming challenges concerning local government regulations and pricing, Uber is a great example of meeting challenges head-on to create a sustainable, rapidly growing startup model.
By 2009, Finnish college students Kim Dikert, Niklas Hed, and Jarno Väkeväinen had tried 51 business ideas and failed at every one. When one of the founders sketched a rather mean-looking bird, everyone agreed it would make a great game character. Angry Birds was initially a side hustle for the trio, but by focusing on the iPhone market and tapping into the psychology of users, Angry Birds soon became an international phenomenon, garnering 4.5 billion downloads and spawning movies and merchandise.
Today, we know Etsy as the online handicraft store that unites 1.7 million retailers selling 40 million products across 190 countries on one platform. Back in 2005, though, it was nothing more than an idea between three friends. Chris Maguire and Haim Schoppik jumped in to support Robert Kalin’s idea of an online group of sellers to give his own handmade furniture business a space to sell from. Between 2008 and 2012, Etsy weathered many storms, which eventually resulted in Kalin being the only remaining founder. Today, Etsy is the 116th most valuable company in the world (by market cap) and is valued at $12.79 billion.
The story behind the Headspace meditation and mental wellness app is certainly a unique one. Founder Andy Puddicombe spent several years travelling across East Asia, Australia, and Russia. Puddicombe learned the art of meditation during his travels and, upon returning to the US, wanted to find a way to share this with the masses. Although many other meditation apps exist, Headspace has seen phenomenal success in this space by combining elements of freemium features, content creation, gamification, and influencer participation.
Conclusion
Each of the successful startups listed in this article has a unique success story. However, there are several characteristics that most of these companies share. Organizations that foster a customer-centric and mission-driven culture, while offering a world-class product, tend to be successful.
When founding teams create solutions that improve the daily lives of consumers or professionals, customers eagerly recommend the product, causing widespread adoption. Follow these important lessons on your own path to success!
