The billion dollar startup was once considered an impossible dream – which is why private companies worth in excess of $1bn are labelled “unicorns” after the mythical beast. But what does it actually take to build one?
Having analysed a list of all the 235 unicorns in Tech Crunch’s Crunch Base, cloud-based accountancy software specialist Sage has looked into what really makes a unicorn company and its founders tick. Where were they educated? Where were they born? Was it their first attempt at a startup company? Were they working alone or as part of a team? Here’s what we found.
Billion-dollar builders don’t fail
You might think that experience (and failing a few times) is vital to developing a successful startup – learning from your mistakes is key to improvement, after all – but our research shows that trusting your instincts might be more important than you realise: over 60 per cent of unicorn firms are the founders’ first company, so it might be a good idea to simply trust your intuition and take the plunge.
You might need better friends
You could be forgiven for thinking that the best way towards making your company a billion dollar enterprise is to single-mindedly stick to your ethos, but 67 per cent of unicorns have multiple founders. Mark Zuckerberg may be the famous name behind Facebook, but the company in fact had numerous founders who studied together at Harvard, while file-hosting service Dropbox was co-founded by Drew Houston and Arash Ferdowsi, who met at MIT.
That’s not to say you should be completely dissuaded from going it alone, however: Peter Thiel founded counter-terrorism and hedge fund software developer Palantir Technologies alone, before bringing friend Alex Karp on board later.
The Harvard boon
Unsurprisingly, Sage’s research has shown that not only does going to university have a huge positive effect on your chances of creating a unicorn company, but your choice of college is very important. Two of the US’s most prestigious universities, Stanford and Harvard, tower above all others in this regard, producing 51 and 37 $1bn companies respectively. Shazam founders Avery Wang and Dhiraj Mukherjee attended Stanford, while Harvard was home to Facebook founders Andrew McCollum, Chris Hughes and Eduardo Saverin. If you didn’t attend university, though, you shouldn’t worry – Facebook co-founders Mark Zuckerberg and Dustin Moskowitz both dropped out.
Are you a man?
While the gender gap is closing at the elite end of the business world, with self-made billionaires like Judith Faulkner (founder of Epic Systems), Diane Hendricks (co-owner and chairwoman of ABC Supply) and TV star Oprah Winfrey more than a match for their male counterparts, Sage’s studies still show that a disproportionate number of unicorn founders are male – 94 per cent of unicorns over the past 12 years were founded by men.
Move to a city
As you’d expect, most $1bn firms begin in major cities. California, home of the famed Silicon Valley hotbed, boasted 95 unicorn companies at the time of Sage’s research – far and away the most of any city in the world, dwarfing the 19 New York companies and 18 Beijing companies in second and third place. So it seems your best bet is to move to coastal America or the Far East. But if that’s not possible, European hotspots include London (seven), Berlin (five) and Stockholm (two). Or why not simply buckle down where you are, and create your own hotspot!