The Problem with Tech Unicorns
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Millions of users love the brands and leaders of these unicorns. Those tech giants have everything—except a way to achieve high profits.
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Three things have changed over the past 25 years.
- The rapid growth of unicorn companies has become easier due to the development of cloud computing, smartphones, and social media.
- Low interest rates have provided returns for investors.
- Some well-known companies (such as Google, Facebook, Alibaba, and Tencent) have demonstrated that wealth primarily comes from:
- large markets, high margins, and natural monopolies
- limited physical assets and light regulation
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Due to the contentious market for unicorns, profit margins have not consistently improved despite rapid sales growth.
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The lightning-fast idea of buying customers at any cost has peaked. After unicorns, a new, more compelling entrepreneurial approach must be designed.
Alas! Andrew Grove said—success breeds complacency. Complacency leads to failure. Only the paranoid (those who embrace change) will survive.