The Problem with Tech Unicorns

13575 2019-05-04 02:50
  1. Millions of users love the brands and leaders of those unicorns. Those tech stars have everything - except a path to high profits.

  2. In the past 25 years, Three things changed.

    1. Growing fast became more accessible thanks to cloud computing, smartphones, and social media.
    2. Low interest rates left investors chasing returns.
    3. Superstar firms (e.g. Google, Facebook, Alibaba, and Tencent), proved that wealth is made by
      • huge markets, high profits, and natural monopolies
      • limited physical assets and light regulation
  3. Because the unicorns’ markets are contested, margins have not consistently improved, despite fast-rising sales.

  4. The blitzscale philosophy of buying customers at any price is peaking. After the unicorns, a new and more convincing species of startup will have to be engineered.

Alas! Andrew Grove says - Success breeds complacency. Complacency breeds failure. Only the paranoid (who embrace change) survive.

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