The term “unicorn” is tossed around frequently in entrepreneurial circles, referring to 130 or so private startups with a valuation of $1 billion or more. For some, reaching this mythical status can be the driving force behind a young startup.
But one Seattle venture capitalist today offered some cautionary advice to entrepreneurs at the Seattle Interactive Conference: Don’t let the unicorn status distract you from running a meaningful company.
Madrona Venture Group Principal Julie Sandler spoke on a panel at SIC on Tuesday and said that people can sometimes get lost when it comes to figuring out how to build a company valued at $1 billion or more.
“The fact is, you can build tremendously impactful, meaningful companies and build those companies here in Seattle and they don’t all have to be venture-style plays,” said Sandler, a former Amazon manager who joined Madrona in 2011.
Update: Sandler later clarified that her comments were directed specifically at entrepreneurs in the room working on companies that see a different, more local focus. “I’d encourage them to keep in mind that desire to solve a real problem for customers, going after a meaningful market opportunity for their product, hiring a great team, and focusing on a product or service that you love and want to commit your time to building,” she said, adding that “I’m excited to see more true ‘U-words’ here in Seattle, and as a venture investor, I obviously am laser-focused on finding and working with them. I’m extremely bullish on this region and my sense is we’ll see these more and more.”
Sandler said that entrepreneurs don’t need to always measure whether their work is meaningful or important based on how close their company is to becoming a unicorn. Rather, it should be more about passion that you have for building a particular business.
“I would encourage entrepreneurs, as you think about a category you want to build a business in, think about a category that you like, one that you’d want to spend the majority of your time, week, and month working on and hiring people to work on with you,” Sandler said. “If you don’t like it, don’t build it.”
However, as my colleague John Cook noted earlier this year, it is a bit concerning — from a startup ecosystem perspective — that Seattle hasn’t really had homegrown unicorns as of late. While startups like Zulily and Tableau reached $1 billion-plus valuations before their IPO, no companies hail from Seattle on this list of 50 up-and-comers compiled by CB Insights on behalf of The New York Times.
“There are multiple reasons,” Cook noted. “The big companies suck the oxygen out of the startup ecosystem. The venture capital infrastructure is not here to support companies of this ilk. The entrepreneurs in Seattle don’t dream big enough, or swing for home runs.”
That last point is similar to what Apptio CEO Sunny Gupta told us in April, saying that Seattle’s lack of unicorns speaks to the tech community’s immaturity here.
“I fundamentally believe that entrepreneurs in the tech industry in Seattle are still early stage,” he said. “Entrepreneurs aren’t thinking that big, so the first time someone knocks on our door, they sell their company.”
There could be some Seattle unicorns on the way, though, as we detailed in April. Companies like Apptio, Redfin and OfferUp are on the verge of reaching the elusive $1 billion evaluation, according to multiple investors familiar with Seattle’s tech scene.
The list doesn’t necessarily stop there, either. Seattle area companies such as Bellevue game maker Valve and Renton software company Parallels usually don’t fall on any unicorn lists, due in part because they’ve built big businesses without much venture funding, and therefore it’s hard to grasp their true valuations.
Geoff Entress, an angel investor and venture partner at Seattle’s Voyager Capital who is a backer of Hootsuite, is confident there will be more in Seattle.
“I honestly don’t know of any companies that have actually raised at north of $1 billion yet, but I expect that several are candidates in the next year or two,” he said in April. “I would be surprised if we don’t see several unicorns emerge here, either as the private company $1 billion-plus ‘unicorns’ or as $1 billion-plus public companies.”
But for Seattle to maintain its status as a worldwide startup hub, that should happen sooner rather than later.
“Whatever the reasons, Seattle is at risk of losing its status as an epicenter for startup innovation if a few unicorns don’t emerge from the shadows,” Cook wrote. “Even if predictions of ‘dead unicorns’ come to pass, you need an entrepreneurial ecosystem that’s cultivating and supporting some of these world-changing companies.”