Be a Cockroach, not a Unicorn.
In Brad Stone’s recent book The Upstarts, he recalls a key moment when AirBnB was applying to the famed startup accelerator, Y Combinator.
Applying a day late to the program, AirBnB’s chances were already slim. Their initial interview with Paul Graham, the Founder of Y Combinator, didn’t go so well either.
As the three AirBnB founders left the room, one of them handed Graham two cereal boxes of Obama O’s and Cap’n McCains — custom cereal boxes the AirBnB founders created and sold to pay the bills and keep the company alive, eliciting a surprising reply from Graham.
“Wow, you guys are like cockroaches… You just won’t die.”
According to Brad Stone, “Cockroach was Graham’s word for an unkillable startup that could weather any challenge”.
When I think back to my story in helping build Exact Media, and the prior companies we worked together on, I’m pretty confident in saying that we have some cockroach-like tendencies on our team.
We survived a poor business model in our first business together, multiple stop-and-start attempts at launching new ideas to keep the lights on, finally falling back on the one idea that made money to buy us time.
That idea turned into Exact Media — a business with 27 employees, operations in three countries, and much more room to grow.
When studying other individuals and businesses that continue to create long-term value, many of them exhibit extreme Cockroach-like tendencies.
Marvel Entertainment
In 1996, Marvel Entertainment filed for bankruptcy, due to poor choices on betting on the sticker and trading card industries. They saw modest success in the film business with Blade and X-Men, but earned no money off those movies due to poor licensing deals they struck.
They placed a major bet to finance the creation of a movie studio and create the Marvel Cinematic Universe, launching the first Iron Man movie with the little cash they had left.
Even though they didn’t make money off the X-Men they embraced their inner-Wolverine (a cockroach in its truest form) and refused to die.
Thirteen years later, Disney offered to buy Marvel for $4 Billion, with their movies earning over $6 Billion in Box office revenues.
Elon Musk (SpaceX and Tesla)
This story has been told many times over — during the 2008 financial crisis, SpaceX and Tesla were both weeks away from death. No investors would cut him a check, so Musk invested the remains of his life savings to keep both companies alive. As of March 2017, SpaceX has plans to take us to Mars by 2018 and Tesla is worth over $40 Billion.
Intuit
Scott Cook, a Co-Founder of Intuit, which created an accounting software known as Quickbooks, very nearly lost his company in 1985. The firm had no revenues, and all but 4 employees left as Cook could no longer pay salaries.
Cook was $300,000 in debt, which would have taken 30 years to payoff if Intuit failed. He pitched 30 venture capitalists, including one who was his Harvard classmate, and was turned down every single time.
With $95,000 left in the bank, Cook placed $125,000 worth of ads to push the sale of Quickbooks directly to consumers. This turned Quickbooks around and spurred year over year growth in the 1980’s.
Today Intuit worth $32 Billion.
Unicorns are overrated. Be a cockroach instead.
