Australian startups are doing us proud. Early this year Canva announced unicorn status after raising US$40m for a US$1bn post-money valuation, adding to the short but mighty list of Australian unicorn tech startups.
Obviously not every innovative technology company can wear that price tag. There are only 266 tech unicorns in the world right now.
But, if you were to become a unicorn, how would you do that?
Below is a 15 step process that most startups go through, whether they’re aware of it or not, to create a globally scalable business.
Let’s work backwards and evaluate how they do it:
Step 15: Create a globally-scalable business.
Let’s face it, you’re not going to be worth that much if you just sell to the 24 million Australians. Expand your market.
Hang on, step 15. I think you missed some steps. How do you create a globally-scalable business?
Step 14: Have a scalable product, a scalable business model, and enough cash to fund your growth.
Ok, so let’s break that down a bit.
How do you build a scalable product?
Step 13a. Automate the things you can’t do manually anymore because you have too many customers.
Step 12a. Do things that don’t scale.
Time is a precious resource and doing things that don’t scale can help you move quickly.
For example, if there’s a choice between building an automated process for your shiny new feature over a month, or adding the new feature and doing everything manually in the background to test it for a day – the latter manual and quicker choice is preferred.
Why? Because customers using and finding value in your new feature is still a hypothesis. It’s better to waste a day to find out the hypothesis is wrong than wasting that month.
Tech startups have an advantage with their products because they are easier to scale. If you can cut out things from bricks and mortar businesses, then that makes life easier – such as shipping, storage, supply chain, prototyping and materials etc as well as better unit economics and profit margins.
How you get a scalable business model?
Step 13b. Have the ability to be profitable.
Step 12b. Have growing, recurring revenue.
Step 11b. Have a product or service lots of customers are willing to pay for.
ˆThat’s almost too simple. Are there really 10 steps before this?
How do you get enough cash to grow?
Step 13c. Have a lot of retained earnings (profit), or raise capital from investors.
Step 12c. Have sustained revenue growth.
Step 11c. Retain a high percentage of your customers, and keep getting new customers.
Okay, fine, so you need paying customers. So… how do you do that?
If you’re selling business-to-business (B2B):
Step 10: Solve a big problem for your customer in a recurring way.
Step 9: Have customers use your product.
If you’re selling business-to-consumer (B2C):
Step 10: Make customers love your product or service.
Step 9: Have a product your customers can love.
Well duh. How?
Step 8: Use customer insights to improve the product.
Step 7: Have customers use your product.
Okay, now we’re getting somewhere. No matter what the business model is, you need customers to use your product. Sounds easy, you can go build that now – but not so fast! Haven’t you heard that 42% of startups who fail do so because they build the wrong product?
So how you do make sure you have customers who use your product?
Step 6: Have a product your customers can use.
Seems simple. How?
Step 5: Have a customer who wants to use your product.
Okay wait —
Yeah, that’s where a lot of startups go wrong. They build the product first, then try to sell it. But if you don’t do it in that order then how…?
Step 4: Have a compelling unique value proposition.
Step 3: Have a way to solve a customer problem.
Before which you need to?
Step 2: Identify a) a problem worth solving and b) a customer segment who wants you to solve it.
Phew. Okay. That sounds great. So where do you begin?
Step 1a: Understand your customer
Know how they operate, how they make decisions, what’s important to them. Know how to reach them, where to find them. Know what language they use. This is your number one competitive advantage early on.
If you don’t know all of this already, go and talk to your customers.
Step 1b. Be committed to solving this problem.
After all, it will be with you every step of the way. You might try 100 experiments and only find three things that work. And after a while those things might stop working, so you’ll need to find more.
The average journey to unicorn status is seven years.
The journey to create a global business and a unicorn isn’t an easy or linear journey. Having a strong motivation to solve a problem will help when times get difficult.
Download the full How to be a Startup Unicorn PDF here and JPG below.