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Surfari: Don't be an Unicorn. Be a Camel.
Inspired by the Movie "Endless Summer" by Bruce Brown in 1966 and the pursuit of two surfers crossing the dessert to surf Cape St. Francis in South Africa.
Many are familiar with the concept of a unicorn - a magical horned horse, but also known in the venture capital industry as any startup that reaches a $1 billion valuation. Unicorn startups are also referred to as such because of their rarity - the startup environment is harsh, with a steep climb to the top and challenging obstacles to their survivability, making those that do make it to the top as rare as unicorns. The rise of several unicorns in the last decade has raised a generation of startups that have adopted a Silicon-Valley model that involves growing at all costs.
The aftermath of the pandemic and the negative side effects of aggressive quantitative easing have led to global market conditions that some are already referring to as a recession. It’s an unfortunate reality that many startups and innovators are not prepared to weather these conditions, having already stretched resources in attempting to grow and scale as quickly as possible.
Let us introduce the camel. Camels are known to be incredibly efficient, particularly with water use. Their efficiency with resources has allowed them to thrive in an incredibly tough and dry environment. Startup camels offer an alternate playbook to the unicorn-factory playbook popularised by Silicon Valley startups. We’ve taken some lessons from camels to share.
Resilience and survival over rapid growth.
Camels don’t focus on the conventional wisdom that survival depends on rapid growth, prioritising speed over efficiency. They take a much more balanced approach to growth, using their resources more conservatively and prioritising survival during turbulent times. Camels also build resiliency through risk-managed decisions where a wrong decision doesn’t put the business at stake.
The ‘Death Valley’ curve is a popular venture capitalist concept describing the period in the life of a startup where cash burn is heightened in the critical period when the product is being commercialised, and losses can be steep. Camels try to flatten the curve by not aggressively burning through cash, managing costs and investing only in the opportunities that generate the most value for their business strategy.
Don’t starve in the pursuit of growth.
Silicon valley startups have traditionally been measured by the growth of their customer base. In the pursuit of building a larger customer base aggressively, some startups have become obsessed with offering subsidised or free products to build their customer base, then focus on retention later.
Camels don’t subsidise or give freebies at the cost of their cash flow - they charge for the value of the product and understand that price is not a barrier to adoption. Camels build their customer bases by innovating a solution worth paying for and charging an appropriate amount. While this may mean they don’t build an aggressive customer base early on, their focus on quality and charging an appropriate amount often meant higher retention rates because customers were paying purely because they believed in the quality of the product.
Raise money only when it matters most.
Venture capital is a popular tool for startups that pumps cash to be invested for growth in exchange for chunks of ownership in the company. Investors also take a more active role in the company to advise and monitor growth before investing more funds, which also adds to the startup’s growth potential. In 2021 alone, $330 billion was raised for American venture capitalist-backed companies. Camels that focus on sustainable growth don’t need to be constantly raising funds, are highly selective when they do, and more on their own terms.
Will camels only survive at the cost of losing their chance at unicorn-dom?
While camels are incredibly good at survival, this doesn’t mean they can’t thrive. Being effective in an incredibly bootstrapped environment also has significant benefits when the business does scale. A startup that is able to retain the same resource efficiency when it scales can sometimes have a steep growth trajectory as they maximise the use of their resource in the opportunities that can help them grow the fastest.
Camel founders understand that building a successful company can be a long game. By prioritising balanced growth through conservative cash burn, selective investment, and building for long-term resilience, camels can survive and thrive in any market condition. With the global market set for some tough challenges ahead, there is much we can learn from camels who have turned adversity into an advantage.
Keen to see the section of the movie that inspired the post - click below. #bestoked
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