Finding the mythical unicorn is almost impossible.  There are literally hundreds of angel and VC funds that have been created to do just that. They play the numbers game in an effort to fund as many startups as possible so they can land on their billion dollar baby.

Unicorns absolutely fascinate me.  We have entered the age of the billion-dollar startup and very soon the first trillion-dollar corporations may be smiling down on us.  These companies are moving at the speed of light and disrupting entire industries on their way.  It kind of cracks me up, but to be honest if you are not innovating in every singe part of your organization (constantly) you are going to be swept away.  How are these companies growing so fast?  How can a company like Uber grow across the globe over 4 years and literally be so disruptive they have entire countries trying to shut them down? Snapchat… Twitter… AirBnb… Tesla… SpaceX… (add your own one sentence WOW for each of these companies… they are all amazing and redefined old business models.)

At Seed Sumo, our mission is to discover & ignite. One of our goals is to discover and ignite our first billion dollar baby and we truly believe we will find one in the next 3-5 years.  We also believe there is a method to the madness.  To start, we think it is vital to understand the DNA of the recent unicorns and exponentially growing companies so we can recognize patterns as we sort through thousands of applications each year. Does this mean we will only invest in potential billion dollar companies? No, but you can be sure that we are on the hunt and we think we have found the trail.

So far, we have noticed these common traits (with some help from some other brilliant minds mentioned below).

1.  Massive Transformative Purpose

Do you think Elon Musk thinks small?  Think again.  His purpose for Space X is the following: “Enabling people to live on other planets.”  Do you think that might be able to help you as an organization to have a purpose of that magnitude?  Attracting talent?  Getting Press?  These aren’t your normal corporate vision statements.  These are aspirational.  Google’s “MTP” is “Organize the world’s information”.  As defined by Salim Ismail who coined the phrase: A Massive Transformative Purpose (MTP) is the higher, aspirational purpose of the organization, capturing the hearts and minds of those both inside and (especially) outside of the organization.

2.  Powered by the Crowd

The smartest people in the world are now at your fingertips. Idea generation, design, distribution, sales, marketing, etc. are all being leveraged by these unicorn companies.  My favorite quote that pertains to this topic “The world has over a trillion hours a year of free time to commit to shared projects,” Clay Shirky said on a TED talk.  It allows these organizations to be smaller, but they are tapping smarter, more cost effective people, around the clock.

3.  Leverage Existing Assets

Uber taught everyone a valuable lesson here.  Cars are driving around all the time, what if they could make money while driving?  Now we are literally seeing them uproot an entire industry and flip it on its back.  AirBnb is now the largest hotel company in the world and they don’t own a single asset.  Wrapify is an up and coming startup that is leveraging cars for outdoor advertising and is growing at astronomical rates by asking themselves one question: “What if we can leverage the wide open real estate that cars provide for a more potent form of outdoor advertising?”  Now people can make money just driving around.  Probably the ultimate asset being leveraged by a company is Solar City, who is leveraging the Sun and trying to take humans completely off the grid.  They are now building the largest building in the world to supply enough panels to fulfill their goal.

That tiny Red Dot is all the surface area needed.

That tiny Red Dot is all the surface area needed.

 

4.  Algorithms & Automation

Netflix uses algorithms to decide on what shows to put in front of you when you open their platform.  Uber uses them to deliver a service called UberPool, where they calculate two to three people that need rides and determine the absolute best route to use in the most cost effective way.  Facebook uses data to determine what content to put in front of each user.  The biggest difference between unicorns and smaller companies is that the data is automated and most of the time, it’s the heart of the organization.  These algorithms and decisions are all powered by Big Data, and these companies have figured out the best way to leverage and access it.

5.  Real Time Interfaces

The Apple App store is the best example, with 2 million apps and over 100 billion downloads, 9 million developers and over 30 billion in earnings.  To manage this, they have an internal process for vetting apps, a store that is managed using algorithms that decide what apps appear for which category based on downloads, popularity, and keywords.  Google Adwords is ran entirely by user interfaces.  Without an accurate interface that allows a company to run its critical components, it becomes the number one reason why startups end up not being scalable.

6.  Flat Organizations

Have you ever heard the phrase “Too many Indians, Not enough chiefs?”  I haven’t either.  About 20% of the world’s websites are now on the Wordpress platform - making it one of the most important Internet companies in the world.  The firm behind WordPress only employs a couple hundred people, who all work remotely.  Github has a similar structure.  These organizations are self-organizing, non-hierarchical, with decentralized authority which allows them to make quicker, smarter decisions.

7.  Zero Latency

Defined as a firm that can respond to internal and external events as they occur because information is exchanged across departmental or divisional boundaries without any delay.  When completely implemented, the transparency, connectedness and reduced information latency take these companies to new heights literally automatically. This includes file sharing (Dropbox/Drive), task management (Trello), activity streams (Slack), telepresence (Hangouts, Skype), and social objects.  Some of the unicorns are also incorporating virtual worlds, and emotional sensing.

8. Constant Experimentation

It would be arrogant to think that you know everything and all that is left is to flawlessly execute on a brilliant strategy for (fill in the blank). However, this is rarely how it's done in business. AirBnB initially was a bad idea that wasn't being accepted by the market. Twitter's growth rate at one point was less than stellar.

 

growth hacking twitter

Through constant experimentation and high-tempo testing, these companies were able to discover what works. The answer to finding what works is to constantly run experiments so that you can make decisions without emotion and pursue what the market is telling you.

This is just a partial list of what we are seeing in the startup market place today. The more a company leverages these 8 techniques, the greater the odds they have of achieving billion dollar success. What’s really great about the lessons we are learning from today’s giant startups is that they principles can be applied to any business. Even if you don’t go on to create a billion dollar company, your business might still exceed your wildest expectations.

 

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