Startup founders are often “hailed as superhumans,” but the truth is they’re not. They’re everyday people like you and me. But the thing that makes them different is their fearlessness to take risks.
In saying that, there is a lot that can be learned from successful entrepreneurs that have made it. So, I decided to spend a good chunk of my weekend researching billion dollar tech companies to see if there were any unique patterns or key learnings that I could distill. Here are a few things that I discovered.
Lemonade Insurance
Founded: 2015
Industry: Fintech
Approximate valuation: $2 billion
Using artificial intelligence, a mobile app and other tech-centric methods, Lemonade founders Daniel Schreiber and Shai Wininger are turning the centuries-old business of property insurance into a millennial-friendly consumer product.
Every homeowner and renter needs insurance, but many distrust insurance providers. The two concluded that insurance, with its market value of $4.6 trillion, was ripe for disruption.
The Lemonade business model differs from that of a typical insurance company – it keeps a flat 25% fee of a customer’s premium while setting aside the remaining 75% to pay claims and purchase insurance. Unpaid premiums go to a nonprofit of the users opted for the annual “give back” deal. This builds trust with millenials.
Unlike fintech competitors Hippo and Jetty, Lemonade doesn’t sell policies backed by established insurers. It took the risk to become a licensed carrier itself, retaining claim liability on its own balance sheet.
This risk has paid off, allowing them to create a social-compact pitch that pays claims fast. Lemonade can’t profit from denying legit claims, and customers making bogus claims are cheating charity, not some greedy insurer.
Lemonade puts users first, building its product with the user experience in mind. One of the biggest pain points of traditional insurance companies is the fact that interactions can be intimidating and time-consuming, leaving consumers powerless. Not the case with Lemonade. They started by thinking about the users and built from there.
Entrepreneurs can sometimes make their lives harder than they need to be. Often falling victim to things like shiny object syndrome and paralysis by analysis. By focusing purely on the most essential things I.e. the problem you’re solving and your solution to that problem.
Lemonade, as a name, is brilliant in its simplicity. Each step along the customer journey? Also simple. Their content? Simple to digest.
Netflix
Founded: 1997
Industry: Entertainment
Approximate valuation: $141 billion
For nearly twenty years Blockbuster sat at the top of the US video-rental industry. In the early 2000s a small disruptive company called Netflix offered to partner with them to help run their online brand in exchange for promoting Netflix in their stores.
Reed Hastings (co-founder of Netflix) got laughed out of the room. Fast forward to 2020, Blockbuster is now merely a distant memory after filing for bankruptcy in 2010 while Netflix is currently worth $166B (Feb 2020).
Netflix is one of the best examples of transforming your business to stay ahead of the curve.
When Netflix first launched in 1997 it was purely a website-based movie rental service — this was groundbreaking at the time. It took them 10 years before they introduced their streaming services which changed the entertainment industry forever.
Reed Hastings (co-founder of Netflix) got laughed out of the room. Fast forward to 2020, Blockbuster is now merely a distant memory after filing for bankruptcy in 2010 while Netflix is currently worth $166B (Feb 2020).
Netflix is one of the best examples of transforming your business to stay ahead of the curve.
When Netflix first launched in 1997 it was purely a website-based movie rental service — this was groundbreaking at the time. It took them 10 years before they introduced their streaming services which changed the entertainment industry forever.
Like many other innovative companies, Netflix is not driven by pressure to do things first, but by delivering good experiences for the customer. The opportunities to do this evolve with technology, making it a never-ending process of testing, implementation and testing again.
Netflix also shows that it pays to take risks. It took a decade for broadband internet to catch up with the founder’s vision, and Netflix’s decision to switch to "original content" and divert budgets away from licensing film releases was another famously big bet.
The political drama House of Cards, cost a reported $100 million to produce the first two seasons. This bet paid off, when the show went on to win multiple awards and attract millions of viewers every episode.
Airbnb
Founded: 2007
Industry: Travel
Approximate valuation: $35 billion
Long before Airbnb persuaded strangers to sleep in one another's homes and became a $35 billion company, it was just an idea to earn a bit of extra money to make rent. After their first guests, the three founders realized they were onto something bigger.
They presented a final version in 2008 but investors weren’t convinced. Out of 15 angel investors, eight said no and seven ignored them completely. It was 2009 when they finally picked up $600,000 in seed funding and the rest is history.
Airbnb shows how important it is to understand your users and update your product according to their requirements. The company realized early on that receiving payments was crucial for those who are giving out their space on rent, so they promptly added the advance payments feature.
Marketplace models such as Airbnb have become common today, but back in 2007, this model was mostly unproven. To apply this lesson to your own startup, you need to have an idea that not only challenges existing solutions but is also able to create value.
Airbnb used disruptive technology by creating a marketplace at a time when it was rare. It created ripples in the hotel industry by providing a service that was different, endearing, and reasonably priced. Airbnb used innovative referral programs and new-user discounts to build loyalty for its product.
Their focus is on providing more and incremental value to their customers. If you can build a product that adds value while providing your users with an incentive to spread the word, you can create a win-win situation for your business as well as your users.
Canva
Founded: 2013
Industry: Internet software + services
Approximate valuation: $4.7 billion
For every second that you’re reading this article, Sydney-based startup Canva (fun fact: they were originally known as Canvas Chef) — have helped millions of people create beautiful designs and documents using its online graphic tools.
More than 100 million designs have been created since its 2013 launch, which makes you wonder why it took three years of rejections by more than 100 potential investors before it got started. These knockbacks worked in favor of the founders, allowing them to polish their offering before it hit the market.
Canva’s purpose is to democratise graphic design – to create a tool that is imbued with such simplicity, it allows amateurs to do things that previously were only in the domain of experienced design professionals.
“Simplicity” is at the core of Canva’s brand, and it’s an attribute that the company tries to weave through its entire customer experience, from an easy-to-use drag-and-drop interface, to its polished design templates – even its privacy notice.
The strongest attribute Canva’s founders Melanie Perkins, Cliff Obrecht and Cameron Adams have is persistence. Canva’s success didn’t happen overnight, with their journey starting all the way back in 2007.
It takes time to build a unicorn — with it almost being guaranteed you’ll experience rejection, failure and frustration along the way. A great example of the founder’s persistence is the fact that it spent three years from meeting their first investor to actually landing the first investment.
Focus is another strong attribute. One of the sole reasons Canva has been a big success is that the founders focused in the early days on finding one highly influential person in their space and getting them to help with their startup.
Avoid trying to meet hundreds of people that aren’t really related to your business or what you need. Concentrate on the few names that can have the most impact instead.
SEEK Limited
Founded: 1997
Industry: Employment
Approximate valuation: $7 billion
SEEK Limited (stylised as SEEK) and its subsidiary companies, known as the SEEK Group, is one of the largest job sites in Australia. SEEK focuses on facilitating the matching between jobseekers and employment opportunities and helping hirers find candidates for advertised roles.
SEEK was founded by brothers Paul and Andrew Bassat and Matthew Rockman, essentially as an online version of print employment classifieds. Today SEEK makes a positive impact on a global scale, with exposure to 2.9 billion people, more than 51 million students and learners and a presence in 18 countries.
While a recruitment giant and disruptive force, Seek went through “a scary period” when it found itself on the other side of the fence, with new disruptors coming in and threatening its place in the market. Andrew Basset admits they were not “pushing or challenging ourselves”.
Seek started to re-focus, considering what makes a person choose one platform over another, given the way technology has evolved.
Bassat and SEEK’s leadership team realized that if they didn’t innovate they would be in “a lot of trouble.”
“The reality is, today, everyone is either disrupting or being disrupted,” he said. “We always need to be vigilant. There’s always someone coming to take our business from us.”
Key takeaways
It’s important to remember that although some of the ideas and technology leveraged by these companies had never been seen before and completely changed the game. The principles and values used by the founders have been around for a very long time. Here are 3 of the main takeaways:
- Consistency: Canva and Netflix are great examples of two companies that took nearly a decade to really hit their stride. That’s over 120 months of riding the emotional rollercoaster that comes with building a company.
- Simplicity: All of the companies I’ve covered in this article have benefitted from simplifying processes, tasks and experiences that were traditionally painful for their customers.
- Be obsessed with your customers: It can be easy for founders to become distracted by vanity metrics and superficial product features. By focusing on your customers' problems and how you can solve them — your company is more likely to create real value for your customers.
These ideas might not be as exciting as the latest trends or tactics. But they are almost guaranteed to continue to be essential building blocks for the billion dollar companies of the future.
Summing up
Establishing a unicorn startup is no easy task and it’s not meant to be. You need to become comfortable with the feeling of failure and remind yourself the journey of an entrepreneur is a marathon not a sprint.
Once upon a time, unicorn startups were a rare breed. Today, not so much. Lastly, if you are looking to take the dive into startup land then: be curious, be problem focused, but above all, take action.