For the uninitiated, a unicorn is a startup company that reaches $1 billion valuation (yes, that is a ‘b’illion, a number with many zeroes; more money than most of us dream about). So, what does it take for someone to become that successful; that rich? Quite amazingly, while the economy itself nose-dived, nine new unicorns managed to come up in 2020. Some unicorn founders share their tips:
According to Sridhar Vembu, founder and CEO of Zoho, which makes cloud based business software, timing is important. One has to look for the right market conditions, target the right segment and look for the right time to launch. According to Vembu, an entrepreneur also has to be fearless. It can be intimidating to set up a business that is in direct competition with other large corporations. However, one has to remember, that if things don’t work out, one can always get back to a regular job. So one has to overcome their apprehensions, maybe step out of their comfort zone to actually do something big, different.
Ritesh Agarwal is the boy wonder who founded Oyo Rooms. During the pandemic lockdown, his business revenues were literally down to zero. According to Agarwal the initial strict lockdown had crippled the travel and hospitality industry and it was necessary for the company to realign its strategies just to stay alive. Being able to do this can make the difference between surviving and perishing.
In contrast to Oyo, companies such as Big Basket and Zerodha vastly increased their valuations during the year 2020. At a time when people were stuck at home, unable and unwilling to step out for regular purchases, Big Basket stepped into the breach and provided seamless services. There were supply chain issues and other difficulties faced by delivery persons; however Big Basket overcame those hurdles and came back strongly to become indispensable to their customers. According to Hari Menon, co-founder and CEO of Big Basket, fewer government regulations can help Indian businesses succeed. Obtaining permits and other procedures need to be eased so that businesses can expand to other states.
The pandemic caused a lot of grief, but for the discount stockbroking company Zerodha, 2020 was a very successful year. Many people opted for equity investments during this time for the first time ever, which benefited the company hugely according to company CEO and founder of Zerodha Nikhil Kamath. At this time, the company was able to grow its user based massively; doubling numbers from 2 to 4 million. The company was able to make money for its customers as well as for itself.
Each of the CEOs of these hugely successful startups believe that the term unicorn is misguided; that valuation of a company ought not to be the aim of any business. Creating a sustainable business model is much more important for success in the long term than aiming for some magic valuation number which, in the end is as irrelevant as the mythical unicorn.
A sustainable business is one that solves problems that people have, provides a valuable service and makes itself indispensable to their target customer. This is the reason that Big Basket weathered the lockdown and made itself indispensable to so many. This is also the reason that Oyo is well on the way to recovery even after the beating the company took. If one is to take one most valuable lesson from the CEOs of India’s best known unicorns, it would be to focus on creating sustainable businesses – valuations will follow.
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