Chapter 28: Everyone's chasing the unicorn


Demos Demetriou

Chapter 28: Everyone's chasing the unicorn

Unicorn. It’s been a buzzword in Silicon Valley in recent years and rightly so. Imagine building a business worth at least $1B. We have to give credit to the successful companies who broke that barrier because it must be a herculean task, but those same people have a lot to answer for. They have got investors in a frenzy all looking for the next unicorn. It seems as though if your figures don’t have a billion-dollar valuation, then you are not a worthy investment.

In a recent conversation with Gaynor Matthews we spoke about exactly that. As she pointed out, about 90% of the UK business landscape is SMEs. Some of them can be fairly big too and maybe someday the chosen few may even become unicorns, but as I’ve said so many times, we all have to start somewhere. It’s the reason she has decided to get involved in the My Nexus Platform which will match entrepreneurs with investors. She is an advocate of startups and has a real passion for helping others. I wish her every success and as I said over the phone, if we can help in any way, we certainly will. It was so refreshing to talk to someone who is on the front line and understands exactly what startups are going through.

Bubbles bursting

Back to the unicorns. Just like various bubbles that have burst in the past, could the unicorn bubble also be about to pop? Actually, pop is an understatement, it would be a blast that would create a devastating result of job losses and lots of other knock-on effects throughout the supply chain. To be honest though, maybe it’s what is needed to bring a few of these investors back to earth.

The thing is just like the huge downturn in 2008 when banks were lending people money they could not afford to pay back, aren’t some of these big unicorns going the same way with continuously raising money? The most recent company WeWork may be out of money as early as next month. That’s a pretty dire situation. How can you go from a $47B valuation only a few months ago to $8B. That’s still a pretty big number but the kicker is these guys lost £76M in 2018 which is 10 times worse than the year before and who knows how much they will lose this year; it could even be their shirts. Their leading investors have so far lost A LOT of money all on the premise that this could be a huge company that will make it. In any case, what is an $8B valuation when there is no end in sight for the losses and you have 6 weeks worth of money left to burn? Who calculates these valuations? Are they literally made up? You have to wonder.

Maybe it will be a huge success, and I hope for all of their workers’ sake it is, but there are warning bells sounding all over the place. Uber is another one, in the pursuit of trying to grow so fast they have lost their founder and are now cutting back the work force. I guess it can be easily done as a founder if these investors are throwing money at these companies, but the music has to stop at some stage, surely. If and when it does, it will change the business landscape on so many levels.

Startup lessons

I think as a startup we can learn lots of lessons from these bigger players. Growth has to be fast but also managed properly without sinking in debt. Investors also need to realise that it isn’t just about the fabulous valuation that isn’t even worth the piece of paper it’s written on. It’s about the idea, the people and the appetite for growth at a pace that will not cripple the company in the future.

As a startup it’s our aim to become hugely successful by constantly innovating and growing, employing lots of people, paying our taxes and delivering huge returns to our business and investors. It will not be done though on the basis we will not turn a profit. In my eyes that is a pretty bad investment no matter how many billions you think you’re worth.

Other news

In other great news we have just released the second version of the app. Our team have worked flat out to get this done before the end of this month so well done team Marlin! The most exciting part is the new features we will be bringing out regularly and all before the end of the year. It will make it easier than ever for employers to find the best hospitality staff quickly and cost effectively.

I recently met with the Ivy Collection and I hope we will have the opportunity to work together in the future. Their recruitment needs are huge, but they also have a clear problem. A job advert was placed recently that attracted more that 3,000 applications. They all had to be screened and at the end of it they had 12 candidates shortlisted. That is a huge burden on resources and the reason we exist and why we are pushing every day to make it easier than ever for hotels and restaurants to find staff quickly.

As I write this blog it’s hard to believe it’s almost the end of October, time has flown by this year and there is still so much for us to do before the year ends. Better get back to it!

Until next time…