Unicorns are often criticized for being high risk and offering little in return for investors. So how do you make the right kind of unicorn?
For the past decade, hunting for unicorns – privately owned startups valued at $ 1 billion or more – has been a passion for many investors and founders and the media. Recently, the unicorn has come under fire for high risk and is potentially offering little in return. We have learned through those years that high valuations can be meaningless; Just because a founder has convinced investors to participate with their cash, it does not mean that they can run a successful and profitable company.
So how do you make the right kind of unicorn? What does it take to build a scalable, successful business even during an economic crisis?
Here are five key strategies to make your startup a success.
1. Help employees see the company as their own
Giving employees the opportunity to share directly in the success of the company through stock options gives them the distinction of ownership. It encourages employees to feel motivated and productive because they actually have a vested interest. The more people think about the company, the more they do what is right for it. When everyone has a skin in the game, you can create a culture based on collective good and end personal interests and agendas that take away from overall company health.
2. Be honest and transparent
Establishing transparency is critical to building a positive company culture and solidifying employee loyalty and engagement. if you Hire smart people and be open and honest with them, they become more invested in the success of the organization. Leaders can act with transparency regarding the affairs of the company, large and small, by keeping employees in the loop. In fact, employees should have access to all company information, including board decks and financials. As boring as a board meeting can be, I encourage our team to engage them and voice their concerns or ideas. This is not only their right, but also their responsibility. I have always believed that when a team member thinks we can do something better – whether within their scope or not – they should say so. A distributed decision making framework is ideal for growing companies because no one at the top or center can see everything.
3. Find the right people to build with you
Companies that I have always admired, maintain a strong culture and continue to attract great talent. It is important to work with people who (and know how) to build something from the ground up. When starting our company, this was our goal, and I always look for people with that mindset.
Some things to consider when hiring:
- For the most important challenges, match talent regardless of hierarchy. While managers are needed to give direction and provide goals to employees, the aim is to employ smart, independent people who are not afraid to push boundaries.
- Hire a group of people with diverse backgrounds who share common values. Most important is a workforce with a diversity of experience, a diversity of thought and a diversity of skills. Bringing a group of different thinking people together will allow your organization to benefit from the benefits that each person brings.
- Rent “10x people.” Some people are able to do 10 times more than others, and this is not because they have 10 times the time at their disposal. This is because they make fewer mistakes. They focus on important pieces of business. Worth it if you can pay a little more to get those 10x people. Hiring very talented individuals allows your organization to maintain a culture of excellence. As a side effect, it allows you to follow a high-revenue, low-spending formula.
4. Make lasting profit at a reasonable pace
While development is important, it should not happen at all costs. A clear, near-term path is required to become cash-positive. Whether you choose to pull that lever or not, having the option of not requiring much outside capital allows you to have a higher valuation.
After going through this process with our company, we have developed some important lessons. Our contemporaries can take a different view, here we know what is.
- A high average selling price is important: we sell to relatively few customers, but we sell a lot to each. This allows us to maintain a higher level of revenue while employing fewer salespersons.
- Profit exceeding deal size is a matter of dollars. It does not matter how big your contract is, it does not matter how much you benefit from the deal. A $ 2 million deal with a 20% gross margin and a $ 500,000 deal with 80% gross margin is the same. What matters is more dollar flows, how big the deal is.
- Hire the right people. As mentioned above, a 10x person may demand a higher salary, but they may be able to work a lot more. A low overheart allows your organization to be agile.
5. Stay focused.
It is important to maintain a sharp focus when building a successful company. To do this, focusing on a large corporation is the only benefit. Often, it means knowing what No To spend time. Make deliberate decisions about the opportunities you pursue, and make sure you understand your customer base.
There is no magic formula that will guarantee this kind of growth given how much my company has experienced so far, and how the founders and investors predict whether an idea will turn into a billion-dollar company into a billion-dollar company. The question of With so many factors, many things remain out of our control. But focus on the aspects of your business that you can do Control, investing in the people who will stand behind your company, and building a culture around trust and transparency can definitely kick your journey to success.