We’ve Got This Whole Unicorn Thing All Wrong!

We’ve Got This Whole Unicorn Thing All Wrong!

Good morning, All,

Tim O’Reilly wrote an excellent column recently entitled, We’ve Got This Whole Unicorn Thing All Wrong! With all due respect to Cowboy Ventures’ Aileen Lee, who first referred to emerging companies with billion dollar valuations, such as Uber and Airbnb, as unicorns, with the ever-expanding roster of them of late, we personally have to agree with O’Reilly in his revised definition – as technologies that changes human behavior – rather than as companies that have achieved a wildly inflated valuation that may or may not have any actual justification in the real world. The mark of a true unicorn, in O’Reilly’s definition, is that elicits an a-ha moment: the first iPhones, Siri and self-driving cars are good examples. Unicorns are things that changed human behavior, and for the record, O’Reilly includes Uber/Lyft in this category, as they did accomplish this: people were suddenly summoning cars via an app.

The outliers aren’t always readily apparent – Yahoo! was thought to be wildly overvalued when it IPO’d: no revenue model, and the same was said of Facebook – and the currently-accepted unicorns aren’t always necessarily that: Dropbox is certainly having its problems these days (The case against Dropbox looks stronger with each passing day) and “Steve Jobs famously told Houston (while trying to acquire it) that his company was a feature and not a product. As Dropbox rocketed to 400 million users, Jobs’ viewpoint was easy to dismiss. But as its rivals caught up, and Dropbox began casting about for its next act, Jobs has come to look more prescient.”

Speaking of unicorns.

And lest we forget, when Yahoo! showed up, the web itself was something of an outlier. CD-ROMs and CD-I were the technology du jour.

Kelly Hoey suggested back in April of this year that it was time to change the definition of unicorns, and for the record, while there some 80 back then, the number is now up to 147, in under six months. What’s missing from the Techcrunch leaderboard is the number of failed unicorns. Fab comes to mind and we wonder how long it will be before jets.com joins that illustrious list.

Aileen Lee certainly pointed out a phenomenon, but considering their growing numbers, her definition now seems something of a misnomer. Remember: the currently-accepted definition of unicorns is based on money raised/market perception rather than actual sales. In other words, there’s a difference between O’Reilly’s unicorns and what may turn out to be the irrelevants in the living room. As with most things in the tech industry, time and tides change. We side squarely with O’Reilly at this juncture, who does have a knack for spotting trends, having been generally credited with coining, or at least popularizing, the term ‘Web 2.0,’ and if you’re looking to come up with something revolutionary or disruptive, there’s your yardstick. Are you building something that addresses a need and will change a behavior, or is it a nice-to-have? That’s the difference between a unicorn and a company and/or feature. Apologies for referencing this once again, but true unicorns are companies and technologies that genuinely change things (and have to wonder if this would have made it through the Apple adblockers): that change a behavior or the way we interact with the world – think Facebook. As for the billion dollar valuations, again, only time will tell if they’re the real thing, or just more impostors that’ll be washed out with the tides. Onward and forward.

 

A special shoutout this week to Kelly Hoey, who is celebrating her 50th birthday with a benefit roast.

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