“Unicorn company.” It’s the latest bit of jargon that’s infected our conversations here in the Bay Area, to the point where both WSJ and Fortune have clever infographics and lists of the top companies. In pitches, entrepreneurs are asked to explain how their new company will become the next unicorn startup, and the tech press routinely debates if a hot new team will build the next unicorn. And yet, this term could not be a more meaningless goal for entrepreneurs.
After all, what’s the definition of a unicorn startup? Just one that reaches $1B in valuation? Who cares? I wish we’d just go back to saying “billion dollar startup” rather than unicorn, to reflect the real nature of the term, not one with a cutesy veneer.
It’s the ultimate vanity metric, because $1B of shareholder value is merely the lagging indicator that we’ve created something useful for the world. This should never, in itself, be the goal of starting up a company. So let’s all stop talking about unicorns. I’m calling peak unicorn. Let’s focus on the inputs for building impactful, lasting companies, where wealth creation is a side effect of doing a great job.
Instead, let’s talk about how to build our forever companies.
Low-attention spans in tech
When I first started out, as a young techie with a low attention-span living in Seattle, I had an irrational admiration for self-described “serial entrepreneurs,” the ones who build and sell a bunch of startups in their careers, even when they are quick flips. The variety of starting up multiple companies seems dreadfully exciting, especially when you are young and lack purpose. However, the more time I spend in the industry, the more my admiration shifts to those who start and run their companies for years, decades, and perhaps their whole lifetimes. Warren Buffett, Richard Branson, Jeff Bezos, Mark Zuckerberg, and others all fall into this camp.
These folks have started and built their forever companies. These companies also happen to be incredibly successful, but more importantly, as entrepreneurs they’ve found their life’s work.
After all, many of us in tech idolize Steve Jobs for his sense for design, and his vision. Some even emulate his fashion. But you know what’s hard to emulate? The fact that he started working on hardware/software products as a teenager, and built on those ideas for the next 40 years of his life, until he ran out of time. How many of us can profess a lifetime of dedication towards our work like that?
Counterbalance
The forever company is an entrepreneur-focused counterbalance to the financially-motivated goal of becoming a unicorn. Hopefully we can build both! Of course we all want our companies to be valuable, and make a big impact, but while a unicorn concerns itself with the output of entrepreneurship, the goal of a forever company starts with the inputs and the right intentions.
This is different than a lifestyle company. Bezos runs Amazon as his forever company, but it’s certainly not just to support his lifestyle, it’s to make a much bigger impact than that. And Amazon took millions in venture capital money on their way to becoming a public company, to fully capture the opportunity. There’s a different kind of problem when the desire for a lifestyle interferes with the “forever” part of the goal. Those who underinvest in their products create the danger for a smarter/bigger/funded competitor to put them out of business, which is a lifestyle company that doesn’t last forever! This distinction is subtle, but important.
I didn’t coin the term. It’s the kind of idea that could only come out of a deep, late-night conversation with my sister and bro-in-law Ada and Sachin, who also work in tech. They mentioned it in passing as a worth goal for themselves, one day, and the term really resonated with me. It’s stuck like few things have, and I hope it sticks with all my readers too.
When forever companies scale, and when they don’t
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