In saying that, there is a lot that can be learned from successful entrepreneurs that have made it. So, I decided to spend a good chunk of my weekend researching billion dollar tech companies to see if there were any unique patterns or key learnings that I could distill. Here are a few things that I discovered.
Approximate valuation: $2 billion
Every homeowner and renter needs insurance, but many distrust insurance providers. The two concluded that insurance, with its market value of $4.6 trillion, was ripe for disruption.
Unlike fintech competitors Hippo and Jetty, Lemonade doesn’t sell policies backed by established insurers. It took the risk to become a licensed carrier itself, retaining claim liability on its own balance sheet.
This risk has paid off, allowing them to create a social-compact pitch that pays claims fast. Lemonade can’t profit from denying legit claims, and customers making bogus claims are cheating charity, not some greedy insurer.
Lemonade, as a name, is brilliant in its simplicity. Each step along the customer journey? Also simple. Their content? Simple to digest.
Approximate valuation: $141 billion
Reed Hastings (co-founder of Netflix) got laughed out of the room. Fast forward to 2020, Blockbuster is now merely a distant memory after filing for bankruptcy in 2010 while Netflix is currently worth $166B (Feb 2020).
Netflix is one of the best examples of transforming your business to stay ahead of the curve.
When Netflix first launched in 1997 it was purely a website-based movie rental service — this was groundbreaking at the time. It took them 10 years before they introduced their streaming services which changed the entertainment industry forever.
Netflix also shows that it pays to take risks. It took a decade for broadband internet to catch up with the founder’s vision, and Netflix’s decision to switch to “original content” and divert budgets away from licensing film releases was another famously big bet.
Approximate valuation: $35 billion
They presented a final version in 2008 but investors weren’t convinced. Out of 15 angel investors, eight said no and seven ignored them completely. It was 2009 when they finally picked up $600,000 in seed funding and the rest is history.
Airbnb shows how important it is to understand your users and update your product according to their requirements. The company realized early on that receiving payments was crucial for those who are giving out their space on rent, so they promptly added the advance payments feature.
Their focus is on providing more and incremental value to their customers. If you can build a product that adds value while providing your users with an incentive to spread the word, you can create a win-win situation for your business as well as your users.
Industry: Internet software + services
Approximate valuation: $4.7 billion
Canva’s purpose is to democratise graphic design – to create a tool that is imbued with such simplicity, it allows amateurs to do things that previously were only in the domain of experienced design professionals.
Focus is another strong attribute. One of the sole reasons Canva has been a big success is that the founders focused in the early days on finding one highly influential person in their space and getting them to help with their startup.
Avoid trying to meet hundreds of people that aren’t really related to your business or what you need. Concentrate on the few names that can have the most impact instead.
Approximate valuation: $7 billion
Seek started to re-focus, considering what makes a person choose one platform over another, given the way technology has evolved.
Bassat and SEEK’s leadership team realized that if they didn’t innovate they would be in “a lot of trouble.”
“The reality is, today, everyone is either disrupting or being disrupted,” he said. “We always need to be vigilant. There’s always someone coming to take our business from us.”
It’s important to remember that although some of the ideas and technology leveraged by these companies had never been seen before and completely changed the game. The principles and values used by the founders have been around for a very long time. Here are 3 of the main takeaways:
- Consistency: Canva and Netflix are great examples of two companies that took nearly a decade to really hit their stride. That’s over 120 months of riding the emotional rollercoaster that comes with building a company.
- Simplicity: All of the companies I’ve covered in this article have benefitted from simplifying processes, tasks and experiences that were traditionally painful for their customers.
- Be obsessed with your customers: It can be easy for founders to become distracted by vanity metrics and superficial product features. By focusing on your customers’ problems and how you can solve them — your company is more likely to create real value for your customers.
These ideas might not be as exciting as the latest trends or tactics. But they are almost guaranteed to continue to be essential building blocks for the billion dollar companies of the future.
Establishing a unicorn startup is no easy task and it’s not meant to be. You need to become comfortable with the feeling of failure and remind yourself the journey of an entrepreneur is a marathon not a sprint.
Once upon a time, unicorn startups were a rare breed. Today, not so much. Lastly, if you are looking to take the dive into startup land then: be curious, be problem focused, but above all, take action.