If you’re at the helm of a fast-growing startup, you may have wondered if your innovative project has what it takes to become a unicorn. A unicorn startup is a private company with a value over $1 billion.
The chances of achieving this type of success are improbable, but the right business model and management skills make reaching unicorn status more likely.
Here are some business tips and advice from founders of unicorn startups who have taken their company all the way to the top.
8 lessons from unicorn startups
1. Solve a problem
Unicorn startups are notable in that they provide a unique solution to a common problem. This can be a brand-new idea or an improvement to an existing product or service. It helps if you understand and relate to the problem so you can attack it from a personal perspective.
2. Align with your customer’s values
Differentiate your business from the competition by aligning your mission statement with the values of your target audience. Your mission should do more than just attract customers; it also needs to reflect your passion so people believe in and trust your business.
3. Recognize when to change course
Developing your business is not easy. You invest time and money into making your idea work, but what do you do when something isn’t working? Unicorns have a sixth sense regarding when it’s time to make a change. Don’t think of this as failure, but rather as a way to re-evaluate and pivot to a new strategy.
4. Be bold and innovative
Many of the companies that have made it onto the list of worldwide unicorns started with a game-changing idea. The founders of these businesses believe that their idea can have a huge positive effect on the world. A good example of a world-changing unicorn is SpaceX, a manufacturer of spacecraft and advanced rockets that is valued at over $31 billion.
5. Understand the challenges of expansion
To reach the status of a unicorn startup, you’ll not only need to sell within your initial market, but also expand into new global markets. You can overcome obstacles like cultural and language barriers by adapting to new environments and learning as much as you can about the realities of various markets. Ask yourself whether it’s worth it to adapt your products or services.
6. Make healthy competition work for you
Although many unicorn startups have found a unique solution to a specific problem, there’s still room for healthy competition. While for years Uber was the only ride-sharing company in North America, Lyft came in as a second disruptor behind Uber and scaled even faster. Now a public company, Lyft is a good example of how a second startup can expand on the innovation of the first in a competitive market.
7. Don’t shy away from a niche market
A mistake that many startups make is entering a market because it’s large, with a huge number of potential target customers. But with fierce competition from other startups, the failure rates are high, with over 50% of U.S. companies failing after the first five years. Consider finding your own niche and proving your idea within a smaller market. You may be able to see more scalable growth with niche concepts. Rocket Lab, for example, built up to its $1.1 billion valuation by launching small satellites, a market with very little competition.
8. Bootstrap your unicorn startup
According to Adi Tatarko, co-founder of Houzz, bootstrapping allows entrepreneurs to create their idea, building a concept that people will need and use. Instead of focusing on finding investors in the first six months, you can fully develop your idea and bring your unique brand to life. At that point you will have a solid brand that you can scale operationally, finding funding based on a model you know is working.
Final words on unicorn startups
Becoming a unicorn startup means thinking outside the box. Although there’s not one set rule when it comes to starting a successful business, founders of unicorn companies have effectively used the tips listed here, building their businesses with a mixture of creativity and concentrated business strategies.
For more industry trends and facts about unicorn startups, check out this infographic, which breaks down 2019 unicorns by industry, highlighting lessons and advice from leading unicorn business success stories.
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