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Aspire to be like a cockroach, start-ups told

Apocalypse

Investors are quickly waking from the unicorn dream to the reality of a start-up world where only the ‘cockroaches’ will survive, StartCon manager Cheryl Mack told Dynamic Business.

Held at Sydney’s Royal Randwick Racecourse on 26 to 27 November, the 2016 StartCon conference features an international line-up including Elena Verna (Survey Monkey), Nate Moch (Zillow), Annabell Satterfield (BitTorrent) and Sean Ellis (Growth Hackers).  The theme this year is a bold one: “Bonfire of the unicorns”.

According to Mack, it’s a striking image that serves as a warning: over-valued unicorns are unsustainable; instead, tech start-ups need to embrace an approach that lets them survive and thrive in the tough economic times ahead.

“Anyone who’s paid attention to the news knows Silicon Valley has a $585 billion-dollar ‘unicorn’ problem – the tech start-ups with valuations exceeding one billion dollars are struggling to find exits,” she said.

“The reality is, in the event that a unicorn is able to exit, it won’t be anywhere near their most recent valuation. That’s the problem with these hyped-up valuations: companies can’t possibly retain them in the long-run, which makes them unsustainable. If a unicorn has to hold a down round and goes public at a lower valuation, it hurts the founders, investors and employees.

“Marc Benioff and countless other investors have warned the age of the unicorns is over, and the smart venture capitalists are writing off unicorns. They’re looking to invest in companies that are more sustainable, that are going to be able to survive in any environment, and that are able to get to cash-flow quickly without requiring a ton of capital to grow. On top of investors pulling back on investing in new companies, there’s uncertainty in the global stock market. The next six to twelve months will be tough for start-ups.”

“A majority of the world’s unicorns are in the United States where the dream is dying fastest. This represents a huge opportunity for Australian start-ups in tech and other industries, which are a little behind Silicon Valley. They can look to the States and learn from the mistakes of those unicorns and focus on revenue growth, funding that growth without relying on capital and creating a sustainable business model that can scale quickly.  These are the start-ups that are going to survive. VCs are calling these start-ups ‘cockroaches’ because cockroaches are tough, they can survive and thrive in any environment – even the apocalypse. Today’s entrepreneurs should want their start-ups to resemble cockroaches, not unicorns.”