The conventional wisdom is that there are two types of entrepreneurs:
† Small and Medium Business Owners (SMB): They make up the bulk of entrepreneurs
† unicorn starters (U-Starters): This type uses the Silicon Valley style venture development method to build a unicorn with capital as a weapon. It seeks first-mover ideas, minimum viable products (MVP), product-market combinations, angel capital (AC), and venture capital (VC). In this method, entrepreneurs start the ventures, seek VC and are replaced by professional CEOs. This method accounted for 6% of multibillion-dollar entrepreneurs (NDEs), ie entrepreneurs who started and grew businesses from start-up to over $1 billion in revenue and valuation. Examples include Earl Bakken (Medtronic) and Pierre Omidyar (eBay).
Unicorn-Builders: The Unpublished Model
However, there is a third, and mostly unpublished, type of entrepreneur: the Unicorn-Builders, who accounted for 94% of NDEs. In this method, unicorn entrepreneurs remain CEO by delaying or avoiding VC – and keep control of the business and the wealth they create. To stay as CEO, Unicorn-Builders has taken the lead in leadership Aha by avoiding VC (76%) or delaying (18%).
Unicorn builders who avoided VC include:
† Sam Walton (Walmart) who used the big box concept and improved the strategy
Michael Dell, who built Dell with supply chain financing and cash flow
Michael Bloomberg, who built Bloomberg with alliance and corporate chain financing
Richard Burke, who built UnitedHealthcare through alliances and cash-flow-based financing
Richard Schulze, who built Best Buy with cash-flow-based financing and leasing
· Bob Kierlin, who built Fastenal with cash-flow-based financing and leasing.
Unicorn builders who delayed VC and their controlled companies include:
Jeff Bezos who started with angel capital then used VC after leadership Aha
Bill Gates, who used limited VC, after strategy and leadership Aha, because he wanted experienced board members with a vested interest in Microsoft
Brian Chesky, who used limited incubator capital to prove his business model followed by angel capital and then VC after proof of model and leadership to build Airbnb
· Mark Zuckerberg who defeated MySpace with a brilliant college-focused strategy, then used angel capital and VCs, but retained control of Facebook.
Instead of focusing on the Unicorn-Starter method, focusing on the VC method, including pitch competitions, minimum viable products, incubators, accelerators, venture studios, angel capital and venture capital, and helping very few entrepreneurs. business schools can do better by focusing on the Unicorn-Builder method and teaching everyone the skills and financial savvy strategies needed to take off without VC.
Instead of focusing on the method that has worked for a few in Silicon Valley, business schools can focus on the method used by Unicorn-Entrepreneurs everywhere. This shift in focus could help all entrepreneurs build unicorns in Silicon Valley or beyond, and with access to VC or not.
MY RECORDING: Many Unicorn Builders do not seek publicity unless they intend to make their business public, so their achievements are not widely announced by the corporate press. But that doesn’t diminish their performance or their importance to business schools.
Building a unicorn isn’t about the idea. It involves the unicorn strategy to beat the idea. It’s about the process of finding the unicorn strategy. It is about the skills to implement the unicorn strategy. It’s about the entrepreneur, not about the pitch, nor about the plan, nor about the idea. It’s about you.