Building A Unicorn Company By Resurrecting The Dead

We’ve looked at a number of Unicorn companies so far: Tableau, FireEye, RightNow, Palo Alto Networks and Kayak. Today, we look at SuccessFactors.

If you’ve been around long enough, you’ve heard this narrative before: The market is grinding to a halt, the IPO window shut, and only a few brave souls dare venture out into the turbulent seas. The mergers and acquisitions market is adrift as well; public companies are under stock price pressure; further down the value chain, the startups – especially the venture-funded ones – are stuck in an exit-starved no man’s land.

You can sit around, depressed, or as some technology startup veterans will tell you, you can pick up great technologies at rock-bottom prices and build businesses out of them. Big businesses.

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Building Unicorn Companies Using a Roll-Up Strategy

We’ve looked at a number of Unicorn companies so far: Tableau, FireEye, RightNow, and Palo Alto Networks. Some have followed the lean startup model, some have raised a lot of money, and hence, have followed more a fat startup strategy.

Today, we look at Kayak, that made it to the billion dollar Unicorn Club by using a roll-up strategy. We also look at two other roll-ups that have the potential to become Unicorns.

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How To Navigate The World of ‘Fat Startups’

In the Unicorn series, I have so far written about Tableau Software, FireEye, and RightNow. Of these, while Tableau and RightNow have followed Lean Startup principles, FireEye is definitely what I call a ‘Fat Startup’ that required a lot of early funding to get to market.

While it is true that these days, we focus a lot more on lean startups than startups that require capital to get going, fat startups still play an important role in developing large-scale success stories with significant defensible competitive advantage. In the FireEye article, we saw how Ashar Aziz has used cross-domain innovation to build a business that has scaled to an over $3 billion market cap.

The bulk of the industry has moved away from the ‘fat startup’ category. Investors expect that you will have your product launched, customer acquisition model fleshed out fully, and a team in place before Series A.

However, infrastructure software, hardware, networking, chips – they need capital. Even in cloud software, to build complex technology like personalization and analytics requires some serious investment.

While in the 1M/1M program, we steer people mostly along lean startup paths, I have pondered and investigated the question: How do people fund ‘fat startups’ these days?

I am seeing a few trends:

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Starting Unicorn Companies: Tableau Software

Last November, Aileen Lee with Cowboy Ventures wrote a post on Techcrunch titled Welcome To The Unicorn Club: Learning From Billion-Dollar Startups. In it, she offered a list of companies that have had billion dollar exits, and analyzed some of the common threads.

In this series, I would like to look at some of the ‘unicorn’ companies that she identified, as well as some others that I know well, and one by one, explore their early stage entrepreneurial journey. The case studies we explore are all from the 1M/1M Entrepreneur Journeys series of interviews.

We begin with Tableau Software, currently trading in the public market under the symbol DATA with a ~$3.5 billion market cap.

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