A unicorn is a startup worth over a billion dollars. It is estimated there are over 1,200 unicorn startups in the world.
Some of those unicorns include startups like Airbnb ($93B), Spotify ($57B), Canva ($26B), and Doordash ($42B).
Why does any of this matter? If you're a startup founder or operator, even if you don't aspire to reach the unicorn club, learning lessons from the stories of some of the startups above could be incredibly helpful.
Here are 3 essential lessons we've learned studying some of these startups. Some might surprise you, some you might have heard before (always worth repeating good cliches if they're true!).
Lesson 1: Don’t discard ideas just because you’re “inexperienced”
Some entrepreneurs have the habit of discarding startup ideas because they think they don’t have enough experience.
In fact, when pitching to investors you'll often be asked what your experience around the industry is.
Although for certain industries, like healthcare, specific credentials may be necessary. Most industries can actually be disrupted by total outsiders.
“There is something said about that the entrepreneurs that are successful in an industry seldom the people with the best knowledge about it. It’s usually outsiders or people that have somewhat of an insight but aren’t full deep in the weeds of why things are working.”
- Daniel Ek
Great examples being Doordash & Spotify. In both cases the founders had no idea how their industries worked.
Delivery is super complicated and yet Tony Xu, Andy Fang, and Stanley Tang had no experience in delivery. In fact, they worked as delivery drivers for Dominos, FedEx, etc to understand how the industry worked.
The same thing goes for Daniel Ek and Martin Lorentzon where they had no idea how music copyright and record labels worked.
Lesson 2: Use the faster, easier, cheaper framework for brainstorming ideas
If you've been in the startup world for a while, you've already heard this. So many great founders struggle to find the right idea to work on.
This is one of the many frameworks you can use to come up ideas people actually want to buy.
Look at the way people do things and simply brainstorm how you would make it faster, cheaper, or easier. Here are two great examples.
In 2013 when Melanie Perkins was in college, she tried using Adobe Photoshop for a project. At the time, it took a long time to figure out how to use it, the software itself was incredibly slow, and a single license would cost you over $1,000.
Melanie took advantage of the opportunity to create Canva. She found a way to build something that was easier to learn & use, way cheaper with it's $12 a month pricing, and allowed you to create designs within minutes.
Another great example is Netflix. When Netflix was founded in 1997, everyone had to drive to physical stores to buy DVDs. Reed Hastings & Marc Randolph, the two founders behind Netflix, decided to improve the process by shipping DVDs to customers through the internet.
Lesson 3: Operate at the lowest level of detail
“Operating at the lowest level of detail is pretty much trying to find your way to the right problem. And it’s almost never at the surface.” - Tony Xu, CEO & Co-Founder of Doordash
One of the things that made the Doordash founders successful was they took a very analytical approach to dealing with business problems.
They always went deeper then the surface to find the root cause of things - they call this operating at the lowest level of detail.
For getting to the lowest level of detail, the founders of Doordash use the 5 why's formula.
Example:
- “We received lots of angry customer emails today”
- Why?
- “Our website was down”
- Why?
- “We had faulty code”
- Why?
- “Because the intern made an accident”
- Why?
- “Because we didn’t provide training and guidance”
For Doordash, this looked more like:
- “Delivery was late”
- Why?
- “The Dasher picked up the order later”
- Why?
- “The restaurant took too long”
- Why?
- “One of the employees called sick”
- …
This approach + building an understanding of even the smallest details of delivery by working for FedEx, etc is what made Doordash such a successful company.
Data, according to Tony Xu, never reveals the mechanics behind a problem. You almost always need to go much deeper than the numbers to understand why things are the way they are.