The startup landscape loves to talk of unicorns — those elusive companies reaching billion-pound valuations. Dreams of overnight success lure in entrepreneurs and investors alike. But as someone once said to me, there is one Facebook David, the rest are chasing a not to happen dream.
When I was thinking about this piece, I thought I would write down phrases I have heard in the last 20 years, so here it goes
Playful Buzzwords
“Chasing the Rainbow”
“Hype Fuel”
“The Growth Gamble”
“Gold Rush Mentality”
“Bubble Trouble”
I love this one, “Too Big to Fail…Until It Does:” Honestly I have heard this from founders and shareholders and you just think WTF.
But this relentless pursuit of becoming a unicorn has a dark side: Unicorn Fever.
Unicorn Fever: The Cost of Rapid Growth
Unicorn Fever describes the obsession with achieving unicorn status, even at the detriment of a sustainable business. Fueled by venture capital and media hype, companies often gamble on aggressive growth, inflated metrics, and unsustainable spending. Spending that would make your eyes water and you think to yourself “were you building a town?” All while fundamental factors like profitability and market need take a backseat.
The fallout from Unicorn Fever can be brutal. Overextended businesses collapse when they fail to live up to unrealistic promises. Market bubbles burst, shattering fragile confidence and leaving marks on the startup ecosystem. We’ve witnessed once-hyped companies crash and burn, victims of their own ambition. Ironically the founders or senior team end up “ok” and have made their money through the crazy time.
I’ve witnessed this pretty much first hand as a shareholder who was in round 2 of a now unicorn (and that’s what the company bothered to let us know). Their underlying approach wasn’t a long-term plan, but leveraging all funds on a single gamble in the hope they’d pull it off. We saw similar after a NASDAQ float with investor sentiment driving growth rather than customer focus. This need to make headlines became an unsustainable daily obsession aimed at fueling the stock price. If you think I am kidding we use to sit with Reuters news feed on and see how many headlines a day we had vs a competitor.
Founders a question?
Does your board focus solely on growth figures or can you discuss actual market risks with them?
Could you survive lean times if investors got spooked? Cockroach companies build adaptability into their core model.
Are your team’s KPIs meaningful indicators of business health, or vanity metrics prone to vanish overnight?
Vanity is a real issue that I see a lot. Its a bit like sending a deck at seed stage and saying our sales have grown 100% in the last year, when you have gone form £1 to £2! Ok no one does that but have seen it at the 3 zeros stage.
Be a Flea on the Dog: Smart and Sustainable
I always tell startup founders “be a flea on the dog!” It’s about becoming small, resourceful, and agile. Don’t compete directly with giants; instead, find ways to tap into existing markets or capitalize on the success of larger companies. And now, with the focus on resilience, I guess I’m adding “be a cockroach” to my list of creature sayings for startups!
Be a Cockroach: Survival is King
Beyond being a strategic flea, it’s time to adopt my other mantra: “be a cockroach.” In the business world, this means having the stamina to survive even the harshest climates. Focus on operational efficiency, a lean cost structure, and an adaptable mindset.
In contrast to the risky, all-or-nothing play of Unicorn Fever, cockroaches embody a slow-and-steady approach. It might not always be flashy, but these businesses become masters of resilience, capable of adjusting to downturns and unexpected shifts in the market.
The Power of the Cockroach Model
Let’s dive deeper into the advantages of adopting a cockroach mindset in business:
Resourcefulness: Cockroaches can survive on minimal resources. For a business, this translates to doing more with less — creatively maximizing what you have and minimizing waste.
Adaptability: No environment is completely hostile to a cockroach. Similarly, cockroach-minded businesses embrace change and can pivot strategies to weather new challenges.
Low Overhead: Cockroaches have very few needs. Applying this to business means prioritizing a leaner model, cutting unnecessary expenses, and prioritizing profit early on.
Resilience: Nothing seems to eradicate cockroaches entirely. In business, this means being persistent through failures, setbacks, and market fluctuations.
What is a Cockroach Business?
A cockroach business:
Prioritises Survival: This trumps rapid growth or a flashy image. The focus is on a core offering with reliable demand and building a stable business that can operate efficiently.
Manages Expenses- Slave to the pound (or dollar): Operating costs are meticulously controlled, ensuring the business can function even with fluctuating revenue.
Embraces Flexibility: Cockroach businesses don’t cling to rigid plans. They’re ready to change tactics, target markets, or even scale as the business environment demands.
Values Profitability: Revenue alone isn’t success. Profit is prioritized early on, and it forms the foundation for healthy growth rather than being sacrificed for a unicorn dream.
Are You a Cockroach Business? A Founder’s Checklist
The cockroach mindset isn’t about self-sabotage or lacking ambition. It’s about strategic longevity. Ask yourself these honest questions:
Am I obsessed with rapid growth over reliable revenue? If your main goals are metrics designed for investors and not actual profitability, it might be time to reassess.
Could I survive a major drop in revenue? Build a scenario where investment dries up or a key client drops out. Have you cut costs enough, and is your core offering strong enough to sustain you?
How easily can I pivot? Is your business model locked in place, or could you adapt your services, target market, or pricing model with relative ease?
Are my profits healthy? Unicorn dreams focus on valuation. Cockroach businesses are profitable early on, with a clear path towards increasing those earnings.
Don’t be disheartened if you answer “no” to most of these. They’re meant to highlight areas you can strengthen to adopt a more cockroach-like resilience within your company!
Finding the balance
The wisest companies don’t fall neatly into either the “flea” or “cockroach” category. They’re both resourceful and tenacious, always ready to seize a “flea-like” opportunity for quick growth while keeping the unwavering survival mindset of a cockroach.
Ultimately, a successful business needs to know when to pivot and when to hold its ground. They exist in a dynamic environment, sometimes benefiting from the trends that unicorns both create and fall victim to.
So there you have it, another probably not very useful blog. I am just thinking what creature I can use for some other part of the business world and learnings lol
David Murray-Hundley www.thegrumpyentrepreneur.co.uk
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