How to build a Unicorn Startup?
(I thought she was referring to the Unicorn doll that my niece plays with, and I said)
Me: it is a mythical animal similar to a horse with a horn on its forehead.
Mother: (gave a puzzled look and said), I am referring to this newspaper article that says there are over 20 Startups that entered the Unicorn club this year.
Me: oh… they are privately owned startup companies that are valued at over $1 billion i.e approximately Rs 7400 crores.
(my mother had her eyebrows raised with bit of a shock on her face, she seemed not to have believed what she just heard)
Mother: you are not joking?
Me: why should I?
Mother: So, India has 20+ startup companies worth over Rs 7400 Crores?
Me: yes, so far only in 2021 and from a valuation perspective
Mother: and we still think India is a poor country.
Me: hmm… I think it depends through which lens are we looking? If we watch movies like ‘Slumdog millionaire’ then obviously foreigners will think India is full of slums!
Mother: anyways, how do they build a unicorn company?
Me: If I knew then do you think I would be helping you to sell mangoes?
Mother: (gave a sarcastic) ha haa haaaa…. Ok, smart boy, I wanted to know how is that these companies having young people as founders are doing business in today’s world?
Me: One of my mentors used to say, we can look at the business world as everything has changed or nothing much has changed.
Mother: what do you mean?
Me: 100 years back, let us say if you were in a small village growing mangoes, do you think you could have sold it directly to a customer in a nearby city? Or in some other state?
Mother: no, I could have only sold to a middleman or sell in a nearby market.
Me: agree. Now, in this example, we have you the farmer – the middlemen – the customer.
Me: who do you think is most likely to make more profit and money?
Mother: obviously the middlemen.
Me: again, I agree. Now, in so-called today’s world, we still have a farmer – middlemen – the customer?
Me: it is obvious that it is still the middlemen who are making more profit and money compared to the farmer.
Me: successful middlemen will effectively use three things…
Mother: what are they?
Me: I love your curiosity. They are OPM – OPA – OPT
Mother: do you care to elaborate?
Me: OPM – Other People’s Money
OPA – Other People’s Assets
OPT – Other People’s Time
Mother: so, as a farmer, I spend money on my farm to maintain it. Is this the money in the OPM that the middlemen are using?
Me: hmm… kind off but it is mainly the bank loans and money raised from investors.
Mother: the farm is in my name so it is our asset. Is this the OPA you are referring to?
Me: yes, I remember one of my mentors saying, “control is more powerful than ownership”. Anyways, please continue…
Mother: I go to the farm at least once a week and during the mango season twice or thrice a week spending time to make sure it is taken care of. So, the middlemen are also using my time i.e OPT.
Me: hmm… I know it is not a nice feeling once you start realizing this and start looking from this perspective.
Mother: so those middlemen do not own any asset, they do not care about how much effort we put in in our farm, they do not even guarantee regular business, they are not to be seen in these Covid situations, on top of that they negotiate till the last rupee.
Me: oops… sorry to say, yes. I hope you can sleep well tonight.
Mother: let them approach me in the next season, I will teach them a lesson.
Me: hmm…. good luck with that. Ma, from their perspective you are just another farmer. In other words, another number in their vendor list. Sorry, I had to say this!
Mother: ya… true.
Me: anyways, coming back to the unicorn discussion – the majority of the Unicorns are in a way – middlemen.
Instead of dealing with farmers, they deal with manufacturers, producers, various asset owners.
Amazon – middlemen
Flipkart – middlemen
Ola – middlemen
Uber – middlemen
Oyo – middlemen
Swiggy – middlemen
Meesho – middlemen
BigBasket – middlemen
We can go on with this list.
I am not saying by being a middleman we can build a Unicorn startup but it definitely enhances the chances of becoming one.
I am not suggesting we should not be a manufacturer or a farmer or own assets. My intention in communicating this message is to look out (observe) for opportunities to slightly change our business model if relevant to B2C if we are only focusing on B2B.
If you are a business owner, please ask yourself:
Do you have all eggs in one basket?
Do you have one or two clients who are giving 80% business?
If yes, then what is your plan-b, plan-c?
Remember, “There is nothing new under the sun, it is all about how it is spun.” – anonymous.