Now that ChatGPT has opened the doors to the AI gold mine, the rush is on. Entrepreneurs interested in building a big business using AI may find it helpful to know how Unicorn entrepreneurs of the past 6 decades struck gold.
Most Unicorn entrepreneurs, from Sam Walton (Walmart) to Brian Chesky (Airbnb), launched an emerging trend – and dominated the trend. Emerging trends offer growth opportunities. By dominating them, you can build a real unicorn (with sales of over $1 billion), as opposed to VC unicorns with manipulated valuations.
Based on my funding, interviews, and research of 122 Unicorn entrepreneurs, here are 7 rules to help you dominate your emerging trend.
#1. Smart input beats slow input: input before the industry takes off.
It’s hard to dominate an emerging trend after it takes off because someone else is leading the fast-growing industry and it can be hard to keep up. According to research by Karl Ulrich (Allen Shockley Lecture at Carlson School of Management), most emerging trends take off within 3 years to 11 years of onset. Unicorn Entrepreneurs mainly enter the trend after it has started and before it takes off. Now is the time to build a unicorn in AI.
#2. Clever movers beat first movers: it’s all about strategy and skills.
While the business press continues to hammer on “first movers,” the reality is that 9 times out of 10, fast movers beat the first movers. First movers identify potential. Smart movers seize potential. They imitate and improve on the first movers like Sam Walton, Bill Gates, Michael Dell, Steve Jobs and Brian Chesky did. Contrary to Silicon Valley “wisdom,” it’s not about first movers or minimum viable products. It’s about smart movers with strategies and skills. Sam Walton got smart in small towns, Bill Gates in the operating system, Michael Dell in direct-to-consumer, Steve Jobs in a music platform, and Brian Chesky in making it easier for hosts to find guests.
#3. Smart capital beats venture capital: grow with control.
To maintain control over your venture and the wealth it creates, you can delay or avoid venture capital (VC) by using smart capital to take off. 6% gained VC before they proved their leadership potential and lost control of both their venture and the wealth they created. 18% of Unicorn-Entrepreneurs gained VC after Leadership Aha and retained control of their businesses. Examples are Bill Gates and Mark Zuckerberg. 76% avoided VC and retained more of the wealth created. Examples are Michael Dell and Michael Bloomberg.
#4. Smart starts beat money-losing starts: Income is the smartest capital.
The capital-intensive VC model that hopes for revenue has especially worked in Silicon Valley. If that’s where you are, that could be a good option if you don’t mind being at the mercy of angels and VCs. But know that only about 100/100,000 get VC and about 80% of those who get VC eventually fail. In addition, you are likely to lose control of your business. If you are not in Silicon Valley, your chances are better if you finance with cash flow and smart capital rather than relying on second-tier VCs because the Top 20 VCs are mainly in Silicon Valley. Billion dollar entrepreneurs from Sam Walton and Bill Gates to Joe Martin and Gaston Taratuta grew with revenue.
#5. Smart speed beats wrong speeds: launch to balance cash flow and leadership.
How fast you grow often affects how much capital you need. Grow with the ‘smart’ speed, which is based on your cash flow speed, market speed and industry speed. Bob Kierlin dominated the fastener industry by growing 30% annually with internal cash flow.
#6. Smart alliances beat prosperous competitors: disrupt slow companies and dominate.
The Internet has allowed retailers such as Amazon.com to disrupt larger retail chains such as Borders, as online sales did not require retail stores, rendering Borders’ business model obsolete. But when companies can add AI to existing business models, they can be a strong competitor – or a potential acquirer. So consider companies when starting your venture – for alliances or acquisitions. Google bought YouTube because YouTube was better than Google’s own service.
#7. Smart skills beat startup skills: Unicorn-Builders beat Unicorn-Starters.
Learn technical skills to develop an AI product, sales skills to find customers, financial skills to launch, and financial savvy skills to lead. Unicorn Entrepreneurs used financially savvy skills to grow more with less. Get these skills. Or else your idea could be appropriated by someone else like Mark Zuckerberg who was approached by fellow Harvard students to write the code for what eventually became Facebook. Zuckerberg seems to have appropriated the idea. Or you will be replaced by a professional CEO, which happens to many founder entrepreneurs.
MY TAKE: Emerging trends create unicorn opportunities for quick decision makers. AI is taking off and will create many new industries and growing businesses. This is the time. But entrepreneurs need skills to move smart. Territories can build unicorns by training everyone.