In Silicon Valley the predominant model is to raise unicorns, startups worth over a billion dollars.
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Traditionally, this is done through rapid growth, Alex Lazarow writes for Harvard Business Review.
"The problem now, however, is that this growth-at-all-costs methodology, which the Valley’s top players are exceptionally good at, only works in the strongest bull markets, in the most optimal conditions.
"But consider what I call the Frontier: those business ecosystems outside the Bay Area bubble, where startups have less access to capital or trained startup human capital, and where, especially in many emerging markets, they are more susceptible to severe and unpredictable macroeconomic shocks.
"Instead of the unicorn, the camel is the more fitting mascot.
"Camels are able to survive for long periods without sustenance, withstand the scorching desert heat, and adapt to extreme variations in climate.
"They survive and thrive in some of Earth’s harshest regions.
"These startup camels offer businesses in all industries and sectors valuable lessons on how to survive through crisis, and to sustain and grow in adverse conditions, even if the metaphor isn’t as flashy.
"They do this with three strategies: they execute balanced growth, they take a long-term outlook, and they weave diversification into the business model.
"Camels have no interest in “blitzscalingâ€, rapidly building-up the enterprise and prioritizing speed over efficiency in pursuit of massive scale.
"They are as ambitious to grow as any Silicon Valley enterprise, yet they take a more balanced growth path.
"This balanced approach has three key elements.
"Camels understand that price shouldn’t be considered a barrier to growth.
"Instead it is a feature of the product that reflects its market position and its quality.
"Camels manage costs through the life cycle of their companies to align with a longer term growth curve.
"Managing burn throughout the life cycle of a company prepares startups to weather tough conditions over a sustained period.
"The typical Silicon Valley startup has a cash trajectory with a deep “valley of death†the graph line reflecting steep losses before profitability is achieved.
"The line for Frontier startups looks different.
"Of course camels don’t avoid growth or venture capital funding, but their scaling trajectory and associated burn rates will be less extreme.
"In some cases, as with Grubhub, they’ll grow in controlled spurts, choosing only to put their foot on the gas and invest (often by raising venture capital) when required by the opportunity at hand.
"Founders at the Frontier understand that building a company is not a short term endeavor."
For many, breakthroughs don’t come immediately, but rather occur later in the company timeline.
Survival is often the primary strategy.
This allows time to build the business model, find a product that resonates with the market, and develop an operation that can scale.
Competition will exist.
But the race is about who will survive the longest, not about who goes to market first. ■