Every time I hear people talking about unicorns, I think “all hat, no cattle” or “another person living in the land of style over substance.” I’ve found myself blurting out, “F$&@ Unicorns!”* twice recently, including when I was on a panel at Stanford School of Engineering on Entrepreneurship from Diverse Perspective. (Yes, I get the irony.)
It’s not that I don’t like billion-dollar companies. Believe me, I like them as much as the next guy.
When Datalogix was bought by Oracle or when Yokou went public, it felt like great validation from years of hard work that came before it. I was thrilled for the teams that had worked so hard to build the business and proud of my involvement, even if the role of an investor is somewhat limited relative to the founders and management team.
When Netscape went public on August 8, 1995, I was sitting around the table with our engineering team and it instantly changed the life of the team. While those exits were milestones in my career, I am really pleased that our investment strategy at Costanoa, including the size of our fund, doesn’t require that we can only invest in unicorns. (For more on this subject, please see the well-written piece by Todd Hixon on how smaller funds can build a venture portfolio that can make money in a broad range of outcomes.)
I think my level of emotion on the subject is a function of how the press and media distort the real Silicon Valley. As I said at the panel, “If you get all your information on the entrepreneurial ecosystem from HBO, you’re screwed.”
The notion that gets propagated through the media is that Silicon Valley is the land of the fast and loose, where everyone is shallow and trying to make a buck (or a billion of them) as quickly as they can. Yes, it exists, but they aren’t the majority. The investors and entrepreneurs I have worked with do not encompass that stereotype at all.
Most of the people I know in Silicon Valley are hard-working, substantive and dedicated to building their products and business. They want to work on problems they are passionate about and they want to work with teams of people they love. And most companies, even the successful ones, are filled with moments of anguish and ecstasy. As former Netscape CEO Jim Barksdale said to us, “Our purpose here isn’t to make money. Our purpose is to acquire and serve customers. Making money is the logical consequence of doing our jobs well, but it isn’t our purpose.”
If you’re in the business of building companies, focusing solely on the unicorns will get in the way of executing on the high-priority items right in front of you. It is understandable that unicorns get outsized focus from outsiders, press, analysts and even LPs who observe the “inner workings” of entrepreneurial companies only when they’re doing well and nicely packaged by a PR team.
But life inside startups is messy. Most successful founders have to grind through periods of difficulty, face moments of apparent doom, and think their way through complex and multi-layered problems.
It’s okay that outsiders don’t understand the sausage making, but when entrepreneurs and venture capitalists who ought to know better focus on a “play” in gaming, a “deal” rather than an investment, or a “unicorn” rather than a company, they misinterpret — and understate — what Silicon Valley really is and why it is the biggest driver of innovation in the global economy. So saddle up, people, and get back to building companies . . .