Unicorn or Foie Gras
Gazillion people argue if and how much some of the unicorns are completely over hyped. How could VCs pump so much money into some that seem to have no impact. Recently a juicer startup raised $100 Million. Well to some extend it’s a gamble hoping for the much needed success — but lots of money can actually create a brute force success.
If you look very deep down in the recipe and the making of recent unicorns you find a rather disturbing pattern:
1) Take an entrepreneur who is well known, knows how to build a company, VC loyal, had an exit before, has at least somewhat of an idea
2) Then pump the company full of money until everybody believes it is great.
3) Find a disruptive element under way and just push any other company to the side. Simply out-money any competitor. (Who told you that life is fair)
Twitter is a great example — by now public, lots of users, but no business model, no vision, and most importantly if you shut it down the impact would be marginable at best.
VCs who can’t find enough truly disruptive companies with a potentially huge impact may as well just create a brute force success. Very much like brute-force feeding geese to the point that there is a good Foil Grass — not caring much about the geese. Is it a sustainable model? Of course not — but ponzi scam has been legal before it was recognized as a scam.
All that said — there is an alarming fact accompanied by that latest behavior:
Since the capital invested in startups is not magically increasing, more and more capital flows in less and less startups. No need to explain the consequences.
I guess entrepreneurs need to decide for themselves if they are a Unicorn or Foie Gras.