t’s the latest blockbuster hit of American mega-capitalism. The kind of success that makes fortunes, sparks dreams — and changes the world. And like any blockbuster hit, it’s inspired a legions of admirers…imitators…wannabes. Uber…but for butlers! Masseuses!! Tacos!! Dogwalkers!! Everyone with stars in their eyes wants to be the next Uber—so much so that it’s inspired its own little bit of meta-modernist vernacular. The next Unicorn, in Silicon Valley-speak, short for: magical world-changing billion dollar blockbuster startup — after all, Uber, the Ultimate Unicorn, is the greatest, most inspirational success story of a shoulder-shrugging, dream-stifling, expectation-lowering age of stagnation.
Or is it?
In this short essay, I’m going to advance the heretical notion that the idea of Unicorns is to the art of human endeavor what instant microwavable noodles are to food: junk for the human mind, heart, and spirit. Because it is overly concerned with gain, profit, and magical fairy dust at the expense of meaning, value, and a point, it is toxic, detrimental, and damaging to building truly great business, institutions, startups…ideas, purposes, lives.
To make my case, in this short essay, I’m going to advance the equally heretical notion that Uber isn’t the textbook example of glorious capitalist success it’s widely heralded to be. It’s less likely to be the next Apple than than something like the next Groupon. Remember them? They were the Ultimate Unicorn once, too. Exactly. Thus, instead of wanting to become the next Uber, modelling ourselves upon it, we should be learning from Uber’s mistakes.
To demonstrate them, let’s begin with an elementary strategic analysis, that any grade-school MBA should be able to perform (or at least follow).
Switching costs are low. If I don’t want to use Uber, a rival’s just a tap away. Or at most, a new app install. See the point? I can switch away from it costlessly. And for that reason, Uber’s likely to have to begin to discount, as new rivals enter the market. Think airlines and frequent flyer programs, which are elementary kinds of switching costs, designed to keep you flying a certain carrier. As it discounts, so will its rivals. And then back again, and so on. But because there’s no natural limit to how far prices can fall — since Uber has no real marginal costs in the first place — once such a price war erupts, prices will keep falling…and so everyone’s margins are likely to shrink to vanishing point. Benefits will flow to riders and drivers, which is a good thing. But the point is this: the operators of such markets are more like utilities than blockbuster businesses.
Entry barriers are nonexistent. How many such rivals should we expect? In many industries, it’s costly to enter. You might have to pay steeply for real estate, talent, factories, or inputs. None of this is the case for Uber. Entry barriers aren’t just low — they’re practically nonexistent. I can set up a rival with a few lines of code and a marketing campaign. Hence, we should expect not just a few rivals — but an all out war. What kind of rivals? Not just massively capitalized startups who can afford to pay the cost of steep entry barriers — but even those who don’t have deep pockets. Hence, players like Arro are already entering the market. Some of them will suck, to be sure — but that’s not the point. Here it is: everyone from startups to co-ops will pile in…which is healthy for consumers and riders, but not the kind of bruising all-out war that lasting success is built upon.
Power is weak. You might think Uber’s mighty, invincible, strong — that it enjoys what economists call market power. The power to effortlessly set prices, and dictate them to everyone. But the truth is very different. Uber’s notorious for an arsenal of less-than-savory tactics. Let’s just say that while you might Uber, you probably wouldn’t want to hang out with Uber. But the interesting question is: why? The answer’s simple. Because it’s in a relatively weak — not strong — strategic position, it has to strong-arm, intimidate, bluster, and otherwise bully it’s buyers and suppliers (read: drivers and riders) into line. To have to use tactics of dominance is the surest admission that one is not powerful in the first place. Truly great institutions — that make stuff people truly love, adore, respect, and admire — don’t have to employ bullying tactics: they are powerful in truer ways.
Follow me so far? Good. Now. Here’s a tiny question.
Who does that strategic position — low entry barriers, low switching costs, and low power — remind you of? It’s very much the opposite of companies like Apple, who enjoy high entry barriers (try making an iPhone), steep switching costs (want to switch back to Windows? LOL I didn’t think so), and true market power (think of how the App Store created a whole new ecosystem).
In fact, exactly such a strategic position is curiously, strikingly, eerily, reminiscent of…Groupon. Once upon a time, it was the Hottest!! Startup!! Ever!! Everyone wanted to be Groupon…and every VC wanted to invest in everyone who wanted to be Groupon. It had the biggest tech IPO…ever…then. But. That magical once upon a time lasted approximately a year…because an army of rivals entered, bid down prices, launched an all-out-war, and pretty soon, it turned into poison for sellers…and never-ending spam for buyers. All of which flimsy strategic weakness might have been predicted by Groupon’s shady, bullying, blustering, strong-arm tactics in the first place. Today, Groupon’s barely much of a business at all.
Sound familiar? That’s where we end up when we focus on Unicorns. Why? It’s all in the idea itself: because we’re concerned with gain, profit, and magical fairy dust. Not with value, meaning, and reality. Chasing unicorns, we try to sprinkle the magic fairy dust of technology over something that doesn't sparkle like it once used to — and while people’s eyes widen in amazement, and they clap with glee, we grab as much as we can from their wallets. But what we haven’t done is stuff that a) matters b) endures c) grows d) lasts. That just might be the story of Uber — especially if it doesn’t get itself together, and focus on creating lasting value, instead of merely grabbing every penny that it can squeeze out of everyone within appifying distance. You probably think of the idea of the Unicorn as the express train to riches, meaning, success — but a little bit of reason suggests it’s probably more like a highway to nowhere.
Let me be clear. I like Uber. I’m a user, not a hater. I think it’s a great boon for the average transport-starved person. Hence, I’m not saying Uber’s going to go broke, collapse, implode, or even “Uber’s the next Groupon, dude!”. It will probably be more successful than that. But I am saying that unless all the above changes, it’s probably not going to be the next Apple, Google, Ford, or General Electric: that a little bit of hard thinking and a few tough questions say that it’s success is probably overhyped. And that’s true for Unicorns in general. Too much is made of too little — especially in the world of venture capital and technology, which seem fonder of bandwagons than teenage fandoms, and don’t stop and reflect often enough, or hard enough, on what it all means or matters.
And so. The point of this essay is not about Uber at all. It’s about you, me, us, and the world that we want to build.
The Groupons of the world at worst — and the Ubers of the world at best — are too often where we end up when we focus on building Unicorns. They rarely last, matter, or mean much that truly changes the world (unless you’d like to try to call millions of war refugees an Uber to take them to the nearest shut-down fenced-off barbed-wired border). Why? They’re not designed, built, or meant to. The hard truth is that when we employ the idea of the Unicorn as a heuristic to inspire, guide, and shape our limited, priceless effort, imagination, time, and creativity, we are simply limiting ourselves to seeking magic over meaning, convenience over rebellion, riches over worthiness, myopia over a point: all that is the textbook definition of settling for mediocrity.
Here’s what the idea of the Unicorn really does: it infantilizes us with magical fairy dust thinking, focuses us on the short term, prioritizes making money over creating value, and demands that we create instantaneously crowd-pleasing blockbusters — not devote ourselves to our masterpieces. So we must ask whether a Unicorn, in the final analysis, is just a magical word for finding cleverer ways ways to siphon wealth from the median to the already very rich, and thus entrench stagnation. All that is why Unicorns are junk food for the human mind, heart, spirit.
Unicorns don’t get us to the stars. They don’t cure cancer. They don’t eradicate poverty. They don’t give every child an education. They don’t reverse climate change. In short, they don’t do much of value, because, being overly concerned with gain, advantage, and magical wonder dust, they can’t. They are not there to do the hard work of getting to the stars, curing cancer, eradicating poverty, or educating the world…they’re merely there to sparkle, shimmer, and run away. We do not dream truly great dreams when we merely fantasize about magical things that make us fortunes. We simply build flimsy houses of cards on beaches, which will be knocked down by the very first wave of high tide.
Instead of reading the headlines, drooling all over our touchscreens, and desperately wanting to be the next Unicorn, we should dream greater, nobler, truer dreams. We might not want to create the next great vaccine, voyage to the stars, or compose history’s greatest sonata. Perfectly understandable — and reasonable. But we also probably shouldn’t settle for creating history’s next…Groupon. Because let’s face it: no one, lying on their deathbed, wants to say: “dammit!! I spent my effort, time, imagination, creativity, sweat, one true and only life…to build a company that was so successful…it lasted three whole months…before it all crashed and burned into an raging inferno of nothingness!!” Or if they do, they’ll say it not out of pride, with a sense of meaning, in exultation — but with a sense of bitter regret, futility, and despair.
You and I, if we are to live truly worthy lives, should and can do amazing and wondrous things. And if those things are to matter, then they must be more than evanescent bubbles, popping in the wind. They should outlive, outlast, and perhaps most vitally, outgrow us. Because that is how we earn the greatest reward, spark the truest miracle there is: becoming the people we were meant, by the privilege of life, to be.