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Every beginning of a new year, one wonders what if we, individually and also as a business community could augment our new years’ resolutions with a higher-order aspiration to evolve our state of “being,” “relating” and “doing” in order to better serve greater humanity? What would that look like in transition?
This year, in particular, the number of articles presented on Times, Economist, WSJ, etc. really made experts in our communities reflect back and discuss on the one big year in business at length. We considered in many occasions what may help the community to overcome absentminded behaviorism we so willingly seem to practice in the eco-system.
Allow me to bring you into the circle...
It has been about seven years since venture capitalist Aileen Lee coined the term “unicorn” to describe a number of privately held startup companies with an estimated worth exit of $1 billion or more. It is now reported that the number of companies supported is 10 times bigger than the number of venture-supported companies back in the day. How is this even possible when so many of these unicorns are crashing and burning? Should there not be key learnings for leaders of 21st century in the events that happened in 2019? Many of us think so...
The Curse of Absent Mindedness in Business
The original concept of “unicorn” analysis was born with a great curiosity and intention to discover how many $1 billion plus exists happened a year, how these companies were funded, by whom, where did the start-up idea owners went to school, etc. Since such valuations were so rare, there was a genuine desire to know more about them, understand their DNA to potentially “mimic” their behaviors and tendencies elsewhere.
This is a pretty common way of looking at possibilities, asking the right questions to uncover data and to draw trends out of aggregation in business. Unfortunately, though many times, in business, this sort of one-way data processing overlooks one key human tendency in analysis: confirmation bias.
Many of us, as human beings are often hungry for recognition, instant gratification and believe the universe has something grand in plan for us that when presented with an opportunity of unexpected gain, we become easily blinded-sided by the possibility.
That’s exactly what has been happening with many venture capitalists around the world as with a number of Silicon Valley drops-outs during the paradigm shift in 2019. As the startup boom intensified, capital flowed into private companies at an incredible pace, fake leaders started blossoming.
Take a look at the chart below from Visual Capitalists summarizing the landscape in early 2019 and you’ll quickly recognize several of the listed unicorn companies.
Top Ten Unicorn Companies by Visual Capitalist
If you have been staying on top of where the capital is gathered and flowing in the system, you should also be surprised by a few names listed.
Lyft, for example, lost almost 40% of its IPO price since; Uber is almost 30% — not to mention a majority of its early seeders are underwater and WeWork couldn’t even get to the IPO filing as its numbers fabricated demonstrated such red flags for its investors.
In many closed and public domains, the fabricated lies, dishonorable relationships and monotony have been written and talked about. Our Forbes editor, Vicky Valet, for example, listed a number of unicorn CEOs including Patrick Bryne of Overstock.com and Adam Neumann of WeWork in her article 13 Biggest Career Clashes of 2019 recently.
If one cares to understand the details behind these stories, it is easy to see that often investors are getting glitter eyes by the high-profile IPOs portrayed (and in many cases are not fully wetted) in pursue of excitement. Public market investors are being infatuated by magnetic start-up personalities (turns out in many cases, these personas do not have the knowledge, skill or experience to run their founded companies) and the start-up personas walk around with inflated egos as a result of the red carpet rolled in front of them for no particular reason.
In fact, in listing her learnings by the unicorn analysis formed, Aileen Lee, herself lists how difficult it is for a start-up to be.
She writes in TechCrunch of November 2013:
“4 unicorns were born per year in the past decade”; majority fall in “four business models of consumer e-commerce, consumer audience, SAAS and enterprise software”; It takes “seven plus years on average before liquidity event” and “inexperienced, 20 something year old is an outlier” – that most require well-educated, experienced founders.
So, what is exactly happening in business?
Absent-mindedness pursue of heroism, excitement, short-term gain and the desire to be named the world’s next “Steve Jobs” is taking a large amount of energy and resources away from what’s truly needed to make the world a better place.
Can We Learn from These Realities?
There are a lot of ways to be successful as a business and not one of them I know as an organizational psychologist requires you to be a unicorn.
The biggest difference one can point out between a sustainable growth company and a unicorn is their emphasis on the consumer, not the competition or cash opportunity. As Jeff Bezos once pointed out “There are multiple ways to be externally focused that are very successful. One can be customer-focused or competitor-focused. Some people are internally focused, and if they reach critical mass, they can tip the whole company.” The future of a growth company is significantly tiered by its core purpose and unbreakable focus around providing a differentiated value to its stakeholder community. Use discipline and unleash of human potential as a catalyst for creativity in serving your key communities.
An enduring, human-focused culture matters most next to a core business purpose. All of the unicorns that tanked during or pre-IPO process are reported to have toxic work environments with a number of uncovered lawsuits due to settlements and numerous disparate processes and policies in practice. The impact of an organizations’ new hires and the values demonstrated inside its eco-system is critical to the company’s sustainable existence. Tap into the intelligence of your people’s emotions and look to build environments in which people are expanded for their capacities, not shrunk.
Sustainable growth happens in bounds and leaps, not in quick turns. One of the key differentiators we see with enduring companies (demonstrating YOY successes) that they are able to delineate between short term results and how getting quick turn in may actually hurt the potential of longer-term gains. This is indeed one of the toughest aspects of being an entrepreneur to remain a witness to your choices while focusing on the opportunity of longer-term value. At the same time, this is the biggest sign of maturity, the ability to be walk in your own shoes.
Last but not least, presence is needed to remain simply focused with necessary flexibility required to drive on a specific vision. We find when leaders are not simply deterministic, they tend to lose perspective on the core purpose and when they are rigid about their strategies, they lose perspective on their prioritized roadmap. Neither is good and an exercise of judgment is required throughout the journey. Embrace your vulnerability to overcome your desire to be perfect. The focus on perfection triggers absenteeism and disjoint from the outside world. There is great vitality and satisfaction in presence.
In one of his notebooks Leonardo da Vinci wrote about the mystical unicorns: “The unicorn, through its intemperance and not knowing how to control itself, for the love it bears to fair maidens forgets its ferocity and wildness; and laying aside all fear it will go up to a seated damsel and go to sleep in her lap, and thus the hunters take it.”
If you ask the business thinkers on the topic they will tell you: Knowing why, what and when is enough is always more sustainable for the longer haul.
