The language of business clichés has evolved quickly since the advent of high-tech, high-growth startups. The days of “betting on the right horse” have given way to the hunt for the elusive “unicorn” – in Silicon Valley parlance, the next overnight success with a billion-dollar valuation.
In the last few years, unicorns have seemed a lot more common than their fabled namesakes: Uber, Airbnb and Snapchat are household names. Founding a wildly successful company sounds pretty straightforward, almost automatic under the right conditions. Unicorn fever has taken hold of a significant portion of the entrepreneurial community, but the realities of starting and growing a business keep spoiling the fun.
In truth, the odds of waking up one day with a billion-dollar business at your fingertips are still incredibly low. One of the dangers of the unicorn-hunting mentality is that it has allowed entrepreneurs to act with less discipline as they raise money and develop their business ideas. Burn rates remain high, founders treat venture and angel funding as a given and – pardon the expression – entrepreneurs often put the cart before the horse when it comes to their companies’ success.
There is obviously some essential irrationality baked into entrepreneurship; the will to create something out of nothing and grow a startup without tried-and-true business infrastructure or corporate experience requires some magical thinking. But even though entrepreneurs need to embrace the chaos of the startup world to a certain extent, that doesn’t mean they should not also be circumspect when it comes to modeling and implementing growth strategies.
Investors helped fuel unicorn fever for a time, and coastal VCs and angels are still throwing money after companies in hopes of finding the next unicorn to some extent. But many savvy investors are preaching caution to the companies they’re funding, with mixed results. Billion-dollar dreams are hard to leave behind; there’s a reason people still buy lottery tickets.
Practically speaking, and at the risk of sounding like a broken record, we recommend strongly that entrepreneurs approach their ventures strategically, frugally and with a series of well-considered contingency plans. Part of that process includes choosing and working with the right professional services providers. The legal profession, like many professions, suffers from a rather glacial sense of progress, but in this case our more conservative approach can be useful for startups that might be feeling the urgency of unicorn fever. It isn’t time to put us out to pasture quite yet.