GUESTS: Pablo Dominguez, Operating Partner of Sales and Customer Success at Insight Partners
Matthew May, Senior Advisor at Insight Partners
Ten to fifteen years ago, a startup company with a value of over one billion dollars seemed like something almost impossible or mythical.
That’s why venture capitalist Aileen Lee, came up with the term “unicorn” in 2013 to describe such unique and rare startup companies.
However, as of June 2022, CB Insights identified over 1100 unicorns worldwide.
So we were wondering…
What principles have allowed these companies to achieve such a high level of growth? And how do we best maintain that level of growth?
To help us with this incredible topic today, we have Pablo Dominguez and Matthew May, authors of the book, What a Unicorn Knows: How Leading Entrepreneurs Use Lean Principles to Drive Sustainable Growth. Pablo and Matthew also work for Insight Partners, where they have seen over 90 unicorns.
What Are the Lean Principles and How To Apply Them?
Lean is based on the Toyota Production System, which focuses on order-to-cash time reduction through waste reduction. Traditionally, people heard about lean principles in manufacturing-focused organizations. But you can apply them to non-manufacturing companies too. Lean means the absence of waste you take out of your processes and daily activities and focus on improving revenue.
For SaaS, Marketing, and Sales, applying lean principles effectively comes down to identifying and fixing process inefficiencies. For example, you can decrease the time it takes to get the customer to sign a contract or decrease new technology implementation times. So, it’s about taking those principles and applying them to Sales & Marketing and Post-Sales Executives to increase revenue.
“The reason why we’re focusing on sustainable growth is that unicorns are doing things that allow them to grow sustainably and efficiently long-term versus growth at all costs”.
Driving sustainable growth
A unicorn is a startup company valued at a billion dollars. The success of unicorn startups goes down to their focus on a sustainable growth strategy that allows them to grow sustainably and efficiently long-term. The key element is focusing on the strategy because many companies try to do too many things at once without enough capacity to achieve that sustainable growth.
In 2020, there were about 200 unicorns. That number has grown fast over the last two years. But the main challenge is not just being branded a unicorn but maintaining your status. You have to maintain sustainable growth, be more disciplined about your strategy and the value you’re providing to customers, ensure that your product remains robust and evergreen, and ensure products are continually being released.
Always start with the metrics
Reaching the unicorn level starts by applying the right strategy, which has to be metrics-driven. Focus on what you want to achieve in terms of strategic goals, check if your metrics support that growth, and understand where you can grow most effectively.
To achieve revenue targets and retention rates, it takes both organization-wide effort and an understanding of the sales cycles desired outcomes. The most successful companies understand the importance of cross-functional teams in identifying and solving issues within a business and growing sustainably.
The SCALE framework
The SCALE framework proposes five principles that would allow a startup to grow as a unicorn. These are strategic speed, constant experimentation, accelerated value, lean process, and esprit de corps, which is likened to a Formula One car for its fast-moving target capabilities.
In terms of obstacles, some companies try to do too many things at once without focusing on lean principles to optimize processes. Also, unicorn companies have a deep understanding of the value of customer-centricity in their business processes.
“The challenge is not just being branded a unicorn but maintaining your unicorn status. So it’s about sustainable growth, which lands us on the doorstep of efficiency and durability”.