Monday, August 12, 2019

Are There Too Many Unicorn Startup Companies? - NPR

Are There Too Many Unicorn Startup Companies? - NPR


Are There Too Many Unicorn Startup Companies? - NPR

Posted: 12 Aug 2019 02:00 AM PDT

A customer tests an eyebrow pencil in the mirror at the New York City flagship store for the beauty startup Glossier. It's one of the latest companies to become a unicorn, with a market value of $1 billion as of March. Amy Scott/NPR hide caption

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Amy Scott/NPR

A customer tests an eyebrow pencil in the mirror at the New York City flagship store for the beauty startup Glossier. It's one of the latest companies to become a unicorn, with a market value of $1 billion as of March.

Amy Scott/NPR

In the world of startups, unicorns are companies that are said to possess a rare kind of entrepreneurial magic. They're privately held ventures worth $1 billion or more. Uber and Spotify were unicorns. DoorDash and Airbnb are still described that way.

But as investment in Silicon Valley has boomed in recent years, there are far more $1 billion-plus startups than ever. So the question arises: Has the term unicorn lost its special meaning?

Aileen Lee was the first to call hot startups unicorns. In 2013, she was struggling to find a simple way to describe companies younger than 10 years old but worth more than $1 billion. There were only 39 of them. She decided to describe them as the Unicorn Club. Since then the club has grown to 484 members, according to TechCrunch.

Lee said in an email to NPR that she wanted a name that would "capture the sentiment that was much shorter and easier to read."

"I substituted 'megahit', 'homerun', and 'unicorn' into the piece and unicorn just captured the sentiment I was looking to convey so well," wrote Lee, who runs the venture capital firm Cowboy Ventures. "That it's a very rare, somewhat magical occurrence and something special."

She published her findings on success rates of these startups in a TechCrunch report.

And the unicorn took off.

The term became synonymous with startup success among financial analysts and investors as well as trade and business media.

Some of the early members of this club are Groupon, Twitter, Pinterest and Zulily. Now, unicorns range from Airbnb, Rent the Runway and Juul to software and Web service companies like Infor and Stripe.

As these companies mature, most are going public or getting acquired by other firms. After that, the unicorns shed the magical title. This year, former unicorns Uber, Lyft, Pinterest and Slack all gave up their horn to start selling shares on the stock market.

But with more unicorns emerging every year, is the $1 billion mark still special?

Lee said she still believes in unicorn magic.

"There are thousands of startups born every year and despite the best intentions of founders and team members, only a tiny fraction grow to become worth over a billion dollars over time," she wrote.

The number of unicorns has been rising in part because of an influx of both startups and investors. After the recession caused a sharp decline in startups and other new businesses, a slew of all kinds of new businesses entered the market, according to a report by the Kauffman Foundation, and many of them were startups.

Carl Doty, vice president of emerging technology research at Forrester Research, says a very large number of startups were founded as the economy recovered. Thus, a spike in the number of unicorns. Many of them are just now hitting a $1 billion market value.

"The number of startups overall exploded, so we're going to see more and more unicorns, as time goes on. And frankly, more investors too," Doty says.

A customer applies lip balm at the beauty startup Glossier's flagship store. Amy Scott/NPR hide caption

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Amy Scott/NPR

A customer applies lip balm at the beauty startup Glossier's flagship store.

Amy Scott/NPR

The success stories of so many startups have led to more investments by venture capital firms. Sunil Rajaraman with Foundation Capital says investors want to make sure they're part of the next big thing, especially as unicorns like Slack and Lyft shed their status by going public.

"With the big exits, I think the fear is only going to get larger that we don't want to miss the next three or four of these," Rajaraman says.

Plus, it's getting easier for startups to ramp up and grow more quickly. That's thanks to former unicorns, like Facebook, Google and Amazon, which have established affordable cloud services and Web platforms that allow younger unicorns to run their businesses, Lee wrote.

Former unicorn Lyft uses Google Maps to steer drivers right. Pinterest relies on Google image searches to reach new users. And most tech startups can't reach mobile phone users without Google or Apple granting them access to app stores.

Other unicorns

Companies that reach the magical threshold often offer a niche service or a product that appeals to a specific group of people.

Lee found in her report that most of the successful unicorns were consumer-oriented, followed by companies that provide services for other companies.

Customers wait to go inside Glossier's flagship store in New York City on July 14. Amy Scott/NPR hide caption

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Amy Scott/NPR

Customers wait to go inside Glossier's flagship store in New York City on July 14.

Amy Scott/NPR

The online beauty product shop Glossier is one of the latest unicorns, with a market value of $1.2 billion. The company developed its makeup and skin care products based on online customer feedback.

On a recent Sunday afternoon in New York City, hundreds of people lined up outside Glossier's flagship store, waiting to experience the well-lit mirrors and tables full of beauty products. Customers are encouraged to take Instagram-able selfies while trying on makeup.

Another new unicorn is Impossible Foods, a company taking advantage of the new health-and-environmental-conscious wave among millennials by selling plant-based food that imitates meat. The company hit a $2 billion valuation in May and recently starting selling the Impossible Whopper at some Burger Kings in the U.S.

In the late 1990s, investors threw their money at many unprofitable Web-based startups, creating the dot-com bubble. Some analysts have compared the onslaught of unicorns to the tech boom that saw that bubble burst.

Indeed, some of the unicorns may be overvalued, according to a 2017 report by the National Bureau of Economic Research.

Keith Wright, an instructor at Villanova University's business school in Pennsylvania, warned in a 2018 CNBC article that these unicorn startups would likely meet the same fate as the dot-com companies.

"In case you missed it, the peak in the tech unicorn bubble already has been reached," Wright wrote. "And it's going to be all downhill from here."

But Rajaraman says he doesn't think these startups will suffer a similar fate because many are taking longer to mature and are seeing profits before going public.

"The difference I see between the dot-com boom and now, is these companies are actually generating really good revenue and growing," he says. "Venture capitalists are realizing returns."

How One Startup Can Revolutionize An Entire Industry - Forbes

Posted: 12 Aug 2019 12:37 PM PDT

As the founder and CEO of a maintenance software startup, my primary focus is standing out in a space filled with many players and much competition. Ultimately, I've come to believe that the best way for any startup to climb atop the leaderboard is to incite an industry-wide revolution. 

Most companies tend to look at solving the same problem through the exact same lens. After a while, that lens becomes so default that innovators lose sight of the fundamental issues experienced by their industry. They forget how to grow from the ground up.

When I conceptualized my approach to asset management software, I knew I needed to strongly differentiate myself from hundreds of competitors. I started by homing in on the common denominator shared by existing systems. At that time, every piece of management software was desktop-based, so I didn't strive to build more desktop software with additional features or increased speed and efficiency. Instead, I took an entirely different approach and developed the first mobile maintenance application.

I attribute the continued growth of my company to the fact that we didn't attempt to improve what our competitors were already doing. In theory, taking this approach would have meant trying to innovate from roughly point 100 to point 101. Instead, we went back to the drawing board and decided to innovate from point 0 to point 1. We did this by asking ourselves, "What are the fundamental issues our industry continues to face?"

The answer was that desktop maintenance software was neither designed nor optimized for the end user. Maintenance technicians are a huge component of today's growing deskless workforce. Because their jobs are field-based, they're not readily able to utilize desktop software. Mobilization facilitates increased ease, speed and efficiency that would likely never be achieved with desktop software. As counterintuitive as it might seem, by starting at square one instead of building on the status quo, we were able to expedite the value of our product.

I believe any startup can revolutionize any industry by taking a similar approach. Here are a few key concepts founders should keep in mind. 

Choose your battle. 

You don't have to build a completely revolutionary product to incite a revolution. Some of the most groundbreaking products are innovative in fundamental ways. Most of these simple yet life-changing innovations revolutionize efficiency and the user experience. These changes can be immediately implementable, both from a developer perspective and especially a user perspective, because the user doesn't have to learn anything new and may actually need to take fewer steps to have a better experience. 

You might not need to build a product that solves all of your industry's problems. Sometimes, it's better to focus on one niche pain point that your particular team can best address. Whether it's improving overall customer experience or solving issues inherent to a particular use case, choose what you do best and focus completely and comprehensively on that one thing. Once you've tackled that area better than your competitors, you then might consider widening your horizon and scope. 

Build a community. 

Revolutionizing an industry is ultimately about the people who use your product and the community you build. Of course, it's vital to have an amazing product, but you must also build a strong following of people who believe in your product and the impact it has on their lives. 

This begins with targeting and tuning into your precise user demographic by gaining as much insight into their lives as possible. Intimately understanding your user base means knowing exactly how they use your product as well as the role your product plays in supporting their personal and professional identities. People want to feel as though they're a part of something bigger than themselves, and revolutions are built on satisfying this fundamental need. 

Startups need to clearly define the "why" – or the purpose – behind their products. More often than not, your users are the only people who can answer your "why." Going back to the drawing board on a problem that needs a better solution means gaining a superior understanding of your customers' pain points. They may be completely different than what you and your competitors might otherwise assume. 

Change the way people think.

Since people drive movements, a revolutionary idea is one that changes the way people think. Truly revolutionizing an industry is not just about building a successful company. It's about changing the perception of everyone in that industry – from business competitors to your user base – because changes in perception are what ultimately drive changes in behavior. 

Market movements, not features.

These changes directly tie into marketing. A lot of marketing is completely focused on product features. It's all about selling a product and not selling the vision of the company behind the product. Marketing should instead focus on answering the question "How is this company going to change the world?" Feature-based marketing is self-limiting because features are always being updated. But movement-based marketing that encapsulates a company's unique vision should rarely – if ever – have an expiration date. Instead, its impact compounds over time. 

Be willing to take steps backward in order to move forward.

Driving a revolution requires a willingness to scrap conventional knowledge and industry standards. Prioritizing long-term success often takes embracing short-term setbacks. Progress is often a process of elimination and innovation is simply a course of figuring things out. This trajectory is often messy, imperfect and nonlinear, but founders who remember that the biggest barrier to discovering novel solutions is clinging to the status quo stand the best chance at not only standing apart from their competitors but actually making a difference for their customers. 

Sequoia leads $40M investment in mobile messaging startup Attentive - TechCrunch

Posted: 12 Aug 2019 10:00 AM PDT

Attentive, a startup helping retailers personalize their mobile messages, is announcing that it has raised $40 million in Series B funding.

The startup was founded by Brian Long and Andrew Jones, who sold their previous startup TapCommerce to Twitter. When they announced Attentive's $13 million Series A last year, Long told me the startup is all about helping retailers find better ways to communicate with customers, particularly as it's harder for their individual apps to stand out.

Attentive's first product allowed for what it calls "two-tap" sign-up, where users can tap on a promotion link from a brand's website, creating a pre-populated text that opts them in to for SMS messages from that retailer.

Since then, it's built a broader suite of messaging tools, with support for cart abandonment reminders, A/B testing, subscriber segmentation and other features that allow retailers to get smarter and more targeted in their messaging strategy.

The startup says mobile messages sent through its platform are seeing click-through rates of more than 30%, and that it now works with more than 400 customers, including Sephora, Urban Outfitters, Coach, CB2 and Jack in the Box.

The Series B was led by Sequoia, with participation from new investors IVP and High Alpha, as well as previous backers Bain Capital Ventures, Eniac Ventures and NextView Ventures. The plan for the new funding is to grow the entire team, especially sales and engineering.

"CRM is changing," Long said in a statement. "Businesses can't build a relationship with the modern consumer through email alone. Email performance, as measured by how many subscribers click-through on a message, is down 45% over the last five years. Rather than continuing to shout one-way messages at consumers, smart brands will stay relevant by embracing personalized, real-time, two-way communication channels."

BuzzFeed’s former CTO joins digital health startup Ro - TechCrunch

Posted: 12 Aug 2019 09:10 AM PDT

Ro, a two-year-old startup known for its online pharmacy of men's health products, has named BuzzFeed's former Todd Levy its chief technology officer.

Levy first joined BuzzFeed in 2014 as the digital media company's vice president of engineering; he was named CTO in 2016. Prior to BuzzFeed, Levy co-founded and led link management tool bit.ly. Levy begins his new role Wednesday, August 14.

BuzzFeed declined to comment.

Ro, valued at $500 million earlier this year, has raised $176 million in venture capital funding from Canaan Partners, FirstMark Capital, BoxGroup, Initialized Capital, General Catalyst, SignalFire and others. The fast-growing startup poised to enter the unicorn club in the next year represents an opportunity for Levy to get back in the business of early-stage startups.

The news comes months after BuzzFeed announced its largest layoffs to date. Despite having raised $500 million over the last decade, the site has struggled to find a path to profitability. BuzzFeed chairman Ken Lerer, a prolific media investor, stepped down this June.

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Former BuzzFeed CTO Todd Levy.

In an email announcement to staffers, Ro co-founder Saman Rahmanian said the new hire will help usher the business into a new phase of growth: "First and foremost, we needed a great team builder – someone who cares about team spirit not just the code," Rahmanian wrote:

Given the high growth state of our business, we also needed a leader who has seen or led the scaling of an engineering team like ours into the next stage (from 30 engineers to 200). We also needed someone with a strong technology background who has gone through the ranks and is fluent in modern software architecture. And equally as important, we needed someone that was the right fit for Ro – someone who will provide strong mentorship, who is excited about a distributed team, and who will evangelize the engineering team inside the business as well as outside of Ro to attract top talent.

New York-based Ro was founded in 2017 and has quickly become a leader in the direct-to-consumer health and wellness movement. The company competes with Hims, another online service for health products, as well as NumanManual and Thirty Madison, which have raised capital recently.

Ro was started by a trio of entrepreneurs: Rob Schutz, the former vice president of growth at Bark&Co; Rahmanian, a co-founder of the WeWork-acquired business Managed by Q; and chief executive officer Zachariah Reitano, who previously co-founded a Y Combinator-backed startup called Shout.

The startup initially launched under the name Roman, which became its flagship brand when the business adopted the umbrella name Ro last year.

In a 2017 interview with TechCrunch's Josh Constine, Reitano said he began experiencing ED at 17 years old: "I think in a good way I've become numb to the embarrassment," he said. "I remember the embarrassment of having the condition with no solution, and that's much worse than sharing the fact that I had it and was able to fix it myself."

Roman offers men a $15 online doctor's consultation and access to an instant prescription for Viagra, Cialis or generic drugs that can be filled at Roman's in-house cloud pharmacy. The company also sells hair loss, cold sore medication and more under the Roman brand.

Ro also operates Zero and Rory, purveyors of a quit smoking kit and a line of women's health products, respectively.

Startup That Teaches Businesses to Sell on Amazon Moves Closer to HQ2 - ARLnow

Posted: 12 Aug 2019 09:00 AM PDT

Sponsored by Monday Properties and written by ARLnow.com, Startup Monday is a weekly column that profiles Arlington-based startups and their founders, plus other local technology happenings. The Ground Floor, Monday's office space for young companies in Rosslyn, is now open. The Metro-accessible space features a 5,000-square-foot common area that includes a kitchen, lounge area, collaborative meeting spaces, and a stage for formal presentations.

Most people using Amazon won't browse past the first page of listings for any given search or category. That's where newly-Arlington-based startup Amify comes in.

Amify doesn't sell products. Rather, the company works with other brands to help them drive sales and maximize their revenue on Amazon.

"Much like a brand might outsource PR to a PR firm, brands can outsource their Amazon presence to Amify," Amify CEO and founder Ethan McAfee said in an email. "We can usually do it a lot better and a lot cheaper than a brand can do it internally. A few brands we work with include Fender Guitars and Pacers Running."

Now with Amazon setting up its new HQ2 in Arlington, Amify has uprooted from its Alexandria headquarters and relocated closer to the company it is intrinsically tied to.

McAfee said Crystal City has historically been viewed as a "boring concrete jungle filled with government agencies and contractors," but that Amazon's move will help to change that.

"We moved there to be ahead of the curve," McAfee said. "In a few short years, the number of fun and modern restaurants and bars will increase and make National Landing" — the name for the combined Crystal City, Pentagon City and Potomac Yard neighborhoods along the Blue and Yellow lines — "a much more attractive place to have an office."

McAfee said the two Metro lines, airport, VRE and highway access also make Crystal City an attractive spot for Amify. It doesn't hurt that McAfee said the largest pool of talent for people with Amazon knowledge will be centered around the new headquarters. Like a remora fish swimming alongside a shark, it's a symbiotic relationship that can hopefully keep Amify well-fed on business in Amazon's waters.

"Wherever Amazon goes, it's going to generate some sort of regional brain trust or community that somehow relates to its business," said McAfee. "We want to be a part of that brain trust. We want to be around smart people who work or who have worked for Amazon, and are passionate about selling online and advancing the experience of sellers on the platform. It's an excellent environment to be in if you're a business like ours."

Things have been going well recently. McAfee said Amazon's reported decision to retire a large number of its first-party seller relationships — ditching some small brands that sell their own products to Amazon via purchase order, in favor of third-party marketplace sellers that stock and sell goods via Amazon's platform — has left some of those brands reeling and trying to reclaim their Amazon presence.

But like the remora fish, McAfee said sometimes Amify can very much be at the whims of the larger beast.

"Much like Walmart, Amazon is a very large retailer and can throw around its weight," McAfee said. "It certainly makes sellers' lives more difficult, but at the same time, no other platform is going to provide sellers with the same exposure or access to consumers as Amazon."

"Given control of the largest online marketplace in the world, it's conceivable one might tip the scales in their favor," McAfee continued. "This is not to give Amazon a pass, it's just to say that this is something we've anticipated and therefore can respond to in the context of how it impacts our customers."

Despite that uncertainty, McAfee said relocating closer to HQ2 should help put the company on more stable ground.

"Being closer to Amazon will be an opportunity for us to grow our company by solidifying our place as Amazon's top brand partner and attract new talent by being one of the first companies on the ground of this growing tech hub," he said.

Photos via Amify/Facebook

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