You know what a unicorn is? I’m not talking about the mythical beast that doubles as Scotland’s national animal. See, in modern business finance, a “unicorn” is a company valued at over 1 billion dollars. And, apparently, one valued at over 10 billion dollars is a decacorn. Which is like saying dinosaurs had feathers. But anyway.
Ever wonder what it’s like to run one of those billion dollar tech companies in silicon valley? Of course not. But what if you did? What would it be like? How rich would you be (on paper)? There are books and articles and the Internet for days that’ll answer those exact questions. There’s also a trend in the way in which these companies are run and how they too, sometimes often, fail.
Well, being that I have the power to manifest my imagination via technology, I’m going to tell the story of your every-day would-be billion dollar company without leaving my ass-indented seat. This is the fictional storyline of Johnson Electric, Inc., and I’m going to be using Free Enterprise by Tsunami Software to tell it.
It Started with an Idea
The thing about billion dollar companies is that at some point most of them had to pivot to get where they are. A pivot, is when your initial idea was a bad idea but your new idea might be a better idea, maybe, and you do that instead. Otherwise you lose all your money. That said, I needed to come up with, like, at least two ideas before I got started. I like computers and electronics and I’m a software guy but that’s a grind so let’s do hardware this time around.
I don’t know anything about hardware but I’ll worry about that later because right now my idea is just too killer! It’s also very proprietary, you understand.
Then I Raised Some Money
We ain’t runnin’ no mom-and-pop shop here. That also means we won’t be using our own money to do this. Too (risky) expensive. Besides, I heard that’s outta style and money for new unicorns is everywhere! We’re trying to create a billion dollar business on an obviously billion dollar “idea”.
Here’s the thing, any idea can be worth a billion dollars if enough people say it is, and stuff. So say you sell 25% of your company for 250 million dollars. That shit is worth 1 billion dollars, in theory. On paper.
$250,000 is worth 25% of JE which gives us a 1 million dollar valuation. For the layperson, “valuation” is short for “evaluation of your idea’s and/or assets’ worth”. But that’s a mouthful. And time is money. So fine, maybe it’s not a billion dollar idea yet. But it’s a million dollar idea, which is a step in the right direction.
I Began the Journey
It’s time to put this money to new use, but first we need an office which should double as a factory because why not. It’s one of those open floor plans that are all the rage these days. That means we need a lot more space than your typical garage. Duh.
We Started Hiring (Competitively)
Gone are the days when people worked for free pizza and softdrinks for the chance to make the world a better place. I’m sure some start-up down the street is actually paying these kids in cash and pizza AND softdrinks.
Now I heard somewhere that it’s easier for a marketing team to sell simple things that people need. Even if we can’t really tell anyone what it is we’re doing yet. It wouldn’t hurt to establish the brand. We definitely should hire a team to do some pre-launch marketing.
And Then We Pivoted
We’re still scaling because you always want to hire the best people before someone else does. And by now we’re all in and out of conferences about how great this new product is. At some point the new clerk asked what it was we were selling, which isn’t really good etiquette so we set her up by the finance people who don’t really talk much. But about that product idea…
We bought this really expensive equipment because at the last conference I decided that the premium circuit board market was underserved and those are used in lots of things, I heard. So we pivoted. The marketers probably cried themselves to sleep. At least the pay is good.
Everybody gets on board immediately because they probably don’t want to lose their jobs. The salespeople get to work and pretty soon we get our first order!
We Had Sales But No Profits, Yet
As is the silicon valley tradition, the party that night would be full of live music and free booze. We’re on our way to dominating the marketplace. We got the world by the balls. We toast, to riches!
We Got Competition
Somebody else making circuit boards? Cheaper!?
I call an all-hands meeting, we even hire a consultant. It all happened so fast! It’s only been a month since our very public debut, after all. And where the hell did this other $362,000+ worth of customer revenue come from? The marketing department is sending me memos about being shortstaffed. We obviously need more sales. Meeting! We hire salespeople too.
By now we’re talking to the loan manager at the bank and he’s shaking his head solemnly at the numbers we’re presenting. Still, we manage to pull an extra $150,000 to make payroll for the next few months since, we only had $63,000 left after all the equipment and building out the space in the first place. We took a big loss our first month (January) but I was so sure..
Our first quarter sales were rising but our cash-on-hand was decreasing fast. The consultants said our competition just had a more solid product but we had the edge on pricing. If we could just keep the company afloat..
Johnson Electric went bankrupt 26 days later. But hey, wasn’t my money!