Are we too focused on becoming a unicorn as the end-goal, rather than a milestone on the journey?
Last week Elizabeth Holmes, the Theranos founder was convicted of fraud. Theranos was a unicorn, promising to disrupt the medical industry and revolutionise lab testing by producing multiple fast blood-testing with just one drop of blood at a fraction of the cost. The technological breakthrough that Holmes and former company president Ramesh Balwani touted was never demonstrated, and the assertions amounted to outright deceit.
In 2015, it had a $10bn valuation but after revelations of fraud and burning $900m investor funds, it failed and 800 people lost their jobs.
So let’s take a step back from the unicorn hype and convey a more realistic view of what enables a sustainable tech startup:
💰Startup valuation: Blend the founders ambition with the sober adult supervision of investors.
🤑Attract investors: A startup is a bet on a business model attaining the scale beyond which the unit economics start making sense. The lack of due diligence on Theranos, speaks volumes.
📈Growth strategy: Focus on building your architecture in an intelligent way, without over taxing your cash or endangering your roadmap.
📊Set and hit your (proper) metrics: Facts, proof, transparency and evidence have to be delivered to prove you are on the road to deliver the dream.
⚠️Know business risks: Your strategy is not to wish and dream of becoming a big fish, but to pick a small pond, engage with the smallest viable audience and gain the reputation and trust you need to move to bigger audiences.
👁Have a vision and purpose, but don’t hallucinate: The unicorn world is filled with the idolatry of winners, constantly promoted on Instagram, creating a high many then chase. Time should be an ally, not an enemy.
🎇Blitzscaling doesn’t work: The blind folly! It’s a do-or-die approach. Cash-burning firms may find themselves stranded when the tide goes out. Don’t raise investor funds and ignore customer revenue.
⛔️Leadership red flags: The vacuum of leadership, transparency and governance in Theranos undermined the fragile startup culture that investors tolerate and accept. It resulted in a calculated and deliberate fraud.
Mindset drives behaviour, behaviour drives culture, culture drives business outcomes. Don’t let lies become your strategy, you’ll be buried under them.
Enjoy your week!