Startups, it’s time to think like a camel—not like a unicorn
Plot summary
Covid-19 and the economic recession have caused us all to endure difficult conditions for long periods of time in the global markets. This situation is like a strange sea for the traditional startup model in Silicon Valley, which is a startup model aimed at rapid growth and creating “unicorns”. Instead of unicorns, camels are more suitable mascots. Camels can survive for long periods of time with extremely harsh living conditions.
Camel start-up businesses are good examples for businesses in all industries and sectors to follow. They act with three strategies: realizing balanced growth; long-term prospects; and diversify business models.
The world has changed. After the Covid-19 pandemic and the global recession it has caused, business leaders, innovators, entrepreneurs and investors are all preparing for extremely challenging conditions for a long time in global markets. How can startups and innovators of all different sectors survive in such conditions?
The majority are not ready. The current situation is especially difficult for Silicon Valley, where most of the paradigm is raising unicorns — a model for startups worth more than a billion dollars. Traditionally, unicorns were created through rapid growth. The problem now, however, is that this all-cost growth method, which tech unicorns always use, only works in the most aggressive long-term bull markets, with the most optimal conditions.
And now consider what I call the “Borders”: those business ecosystems outside of the Gulf bubble, where startups have little access to start-up capital or human capital, especially in many emerging markets, they are vulnerable to severe and unpredictable macroeconomic shocks. Instead of unicorns, camels are preferable mascots. Camels can survive for long periods without food, withstand the fire-like heat of the desert and adapt to extreme climate changes. They live and proliferate in some of the most inhospitable regions of the Earth.
These startup camels exemplify all industries and sectors: how to survive crises, sustain and thrive in adverse conditions. They implement three strategies: realizing balanced growth, long-term prospects, and diversifying business models.
About the author:
Alex Lazarow is a global venture capitalist and author of “Out Innovate: How Global Entrepreneurs – from Delhi to Detroit – Are Rewriting the Rules of Silicon Valley.” He works with Cathay Innovation, a Kauffman Fellow and lecturer in entrepreneurship at the Middlebury Research Institute.
Balancing instead of burning stages
Camels don’t care about “blitzscaling”—that is, quickly building businesses, prioritizing speed over efficiency, pursuing scale. Camels have ambitions to grow as Silicon Valley businesses, but take a more balanced path. This approach has three main elements.
Affordable from the start
. Entrepreneurs in developing markets do not sell free or subsidized products to sustain customer growth, which leads to high “consumption rates.” Instead, they charge the product value in the first place. Camels understand that price should not be seen as a barrier to growth, it should be viewed as a feature to reflect the position and quality of the product in the market.
Manage costs through the lifecycle of the business
. At the same time, camels manage costs through the life cycle of the business, aligning with the long-term growth curve. Matt Glotzbach, CEO of Quizlet, a company that supports education and online learning, understands this strategy in terms of earned costs and costs, according to people.
“You’ll want to own a business that can survive the ups and downs of the economy,” he explains. Resilience for me is twofold: the first is the economic units of the business to attract customers, and the second is how much will you invest in employees ahead of the revenue curve to drive that growth? This is when we make calculated decisions and expect investments, if we are right, the company will grow significantly and if we are wrong, the consequences will not be too great.
Change of trajectory
. Managing financial deficits throughout a company’s lifecycle helps startups weather difficult conditions over a long period of time. Typical Silicon Valley startups share the same revenue trajectory as “death valley”—graphs that reflect large financial losses before making a profit. The graph of “Frontier” startups is very different. Of course camels cannot avoid growth or risky financing, but the trajectory is extended and the rate of damage will be much lower. In some cases, as with Grubhub, they grow in a controlled manner, simply investing (usually by raising venture capital) every chance they get. After such a breakthrough, sustainability (and often profitability) is preserved. The difference here is that camels can adjust their growth trajectory and return to being a sustainable business.
Camels are born for long distances
Frontier business owners understand that building a company can’t be instantaneous. For many businesses, disruption doesn’t happen overnight, but rather as the company grows. Survival will often be the main strategy. This means that businesses will have time to shape their business model, find a product that fits the market and develop a scalable project. Competition is certainly there, but the task of the race is to survive as long as possible, not to reach the finish line as quickly as possible.
Quizlet has raised $30 million since its last funding round, increasing the company’s total valuation to $1 billion in May of this year. Quizlet didn’t receive any funding until 2015, after 10 years in business, when it raised $12 million in its first round.
It takes a long time to get there, and it has to work on a philosophy of slow but sure. Glotzbach told me that Quizlet’s slow growth saved it from decline. “I truly believe that if Quizlet had raised a large amount of money earlier in its lifecycle, it might not have existed anymore,” he said. “The fact that the company is inflated by high expectations and early capital investment may make it impossible for it to launch business operations fast enough to meet those expectations. Like so many startups, we would probably promise too much but couldn’t deliver on those promises.” The long-term outlook is important for managing the risk-reward trade-off.
Resilience – deep and wide
Entrepreneurs at the “Border” face “strange” challenges, and those “strange” challenges are strengths in difficult times. For compulsory reasons, entrepreneurs often start out in smaller markets—markets that aren’t big enough to grow and sustain businesses on their own—they’re forced to scale globally, targeting multiple markets in the first place. For example, Frontier Car Group, a well-known used car platform, launched in five markets, taking center stage for an entire year. In some countries, the product can be sold, but not in others, and the company has learned many valuable lessons, one of which is to close in the wrong markets. But if a business invests all the resources it has in the wrong civilization in the first place, it will soon decline.
Similarly, in “border” markets where there are no intertwined infrastructures or ecosystems of products and services, entrepreneurs often need to research and build from start to finish. This means that they have to trade a variety of items and products, thereby building an ecosystem of products and services from day one.
When one business slows down, others slow down. Take the case of Guiabolso, a “Personal Finance Management” software platform that helps customers in Brazil understand the financial situation of an individual or organization so that they can better manage their finances (similar to Mint.com in the United States). Unlike his peers in more developed ecosystems, Guiabolso had to build its own banking connections, provide its own credit value information without a robust national database and infrastructure, and launch its own trading platform so that customers could make the most of his new financial knowledge. they.
Of course, entrepreneurs can’t and shouldn’t take this far-reaching strategy as a model. Building an extremely difficult startup that requires too many resources in every way is a recipe for mediocrity. Instead, successful camels focus their resources on self-reinforcing activities (whether they fail or succeed that are beneficial to the business) and self-balancing (when one part of the business naturally hedges against others).
Prioritizing balanced growth, long-term development, as well as strengthening and diversifying resilience, camels can not only survive market shocks, but can also thrive and thrive at all times. In short, camels turn adversity into strength. As we prepare for the challenges ahead, the answer will never be found in Silicon Valley’s bubble, but in the “Frontier” camels, companies that have long had solutions.
Now, as you have read this far, you must be very interested in branding, as well as finding effective solutions for business growth activities. Metta Marketing is delighted if you connect with us, and we are willing to offer a free brand consultation, as a thank you from Metta to you, the person reading this article.
Source: Harvard Business Review
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