Unicorns Don’t Exist

There is something so funny and also so appropriate about all this talk about Unicorn companies.

I’m not the first person to say that the proliferation of $1B+ valued startups is a signal of an overheated late stage market. Yet, there continues to be so much fanfare and excitement about all of these unicorn companies.

Unicorns are a great metaphor and a brilliant meme – just excellent marketing. But what I find so funny is what is so obvious:


Unicorns are mythical creatures. And guess what, the unicorn-ness of many of these companies are equally mythical.  Moreover, all the excitement around these unicorn financings are IMHO pointing entrepreneurs and the whole market in the wrong direction.  In particular, I feel a few things really strongly.

1. $1B private financings do not equate $1B of company value. These are private sales of a minority position in these companies, not IPO’s or acquisitions.  It’s what one investor was willing to pay to have a small position in a company.  Not a measure of true underlying value.  I think Fred Wilson had a post on this a year or so ago, but I couldn’t find it, so I’ll leave my attribution at that 🙂

2. The goal for a great company isn’t to get to unicorn status as quickly as possible (or to be on that trajectory as quickly as possible). It’s to build a great company that creates huge value for users or customers and will keep doing so for a long long time.  I wish there was more excitement about great, durable businesses instead of unicorn financings.  I’d rather read more thoughtful reflection on what made Etsy a fantastic, thriving marketplace vs. the next company that raises a unicorn round.

3. Sometimes, great companies take time. It takes time to build a durable foundation for a great product or scaleable growth. This can be true in all sectors, even consumer-social. I loved Hunter Walk’s quick post on the “Slow Graph” as he talked about Meerkat.  No commentary on Meerkat itself, but the post points to choices focused on durability, not just the fastest rise possible. Tumblr’s user growth wasn’t actually very fast in the early years, but over time, the community became incredibly rich and robust.

4. There is a shocking disconnect between public market valuations and private market valuations, and it’s not because the public markets a) don’t know how to value these companies accurately or b) great companies find the public markets too much of a burden vs. private financing. Keith Rabois wrote an excellent post here on Quora going into more detail. Read it.

5. Some of these unicorn companies will be (or already are) wonderful businesses that will be around for a long time.  My point isn’t that these companies are bad, some are great.  But in this market, unicorn status is becoming less and less of a real indicator of actual greatness (or accurate value).

I wish I could come up with a clever label for these rapidly scaling, great companies aside from unicorns. I kind of like the idea of Alligators or Sharks. Both are pre-historic and at the top of the food chain. But I guess they aren’t rare enough.  Maybe a good marketer out there will have better ideas for a good unicorn replacement.

Rob Go

Thanks for reading! Here’s a quick background on who I am: 1. My name is Rob, I live in Lexington, MA 2. I’m married and have two young daughters. My wife and I met in college at Duke University - Go Blue Devils! 3. We really love our church in Arlington, MA. It’s called Highrock and it’s a wonderful and vibrant community.  Email me if you want to visit! 4. I grew up in the Philippines (ages 0-9) and Hong Kong (ages 9-17). 5. I am a cofounder of NextView Ventures, a seed stage investment firm focused on internet enabled innovation. I try to spend as much time as possible working with entrepreneurs and investing in businesses that are trying to solve important problems for everyday people.   6. The best way to reach me is by email: rob at nextviewventures dot com

    • John Caplan

      +1. Warren Lee shared the term Rhino (I believe he referenced another VC for coming up with the term). Resilient, thick skinned, determined…

      • robchogo

        I need to find that reference. I like Rhinos, but want to give him proper credit for the IP 🙂

        Hope you are well John!

    • I blame the over proliferation of the term Unicorn on Fortune 😉

      • robchogo


    • Preet Anand

      Thank you for writing this. I was worried we were going to get into an industry-wide dungeons and dragons game where some companies decided to try and be hydras, dragons, unicorns, satyrs, and phoenixes!

      A lot of people in the startup ecosystem would do themselves a big favor by reading three of Berkshire Hathway’s Annual reports

    • I have been writing about this stuff but I might stop. Yours is much clearer! I think some of these so called unicorns will go pop. One company which seems much more grounded is Etsy which has just filed for IPO.

    • Jordan Thaeler

      Companies that take a long time to build durability are not in the VC crosshairs. Great dialogue, irrelevant for Silicon Valley.

    • Ask&Bid

      There are unicorns!

      Called Rhinocerus and Narwhal 🙂

      But if a unicorn looks like a horse, you should be suspicious