Unicorn Businesses are described as businesses that are privately held and are worth more than $1bn. When the term was coined in 2013, by VC Aileen Lee, there were just 39 companies that met the criteria, fast forward and eight years later, as of August 2021, there are more than 700 unicorns around the world.
Unlike unicorns, slightly fewer people are familiar with the term Camel Businesses. Camel Business is a term that was coiled in 2017, by Alex Lazarov from Cathay Investment, to describe companies that can withstand and survive harsh conditions such as hard economic times, pandemics, or any downtimes and remain resilient.
A great example of a Camel Business is Zoom, which started out as a sustainable growth company and only sought equity when it was strictly necessary. Now Zoom is a giant worth over a billion dollars. Undeniable proof that camels like to grow.
Amazon is also considered a camel thanks to its Amazon Web Services (AWS). With Netflix, Reddit, Pinterest, Airbnb and more all running on AWS, it’s the most resilient and profitable part of the Amazon empire.
Today unicorns represent more than a valuation. In the wake of failed IPOs and businesses experiencing economic downtimes, the shift to becoming unicorns accelerated, and it’s no surprise as startups are now looking into how they can survive an increasingly likely drought and become camel businesses.
More so, the number of deals taking place has been declining. Investors are also looking into investing in companies that can prioritize sustainability, and thus survival, from the get-go by balancing strong growth and cash flow. Hence the need to adopt the camel mindset.
Unlike unicorns, desert camels are not imaginary creatures living in fictitious lands. Camels adapt to multiple climates, survive without food or water for months, and when the time is right, they sprint rapidly for sustained periods of time.
They are real, resilient, and can survive in the harshest places on Earth. Camel startups also harbour the same characteristics as the Desert camel. In businesses, these characteristics include:
Look into building a profitable, reliable business core. Only once you have this solid base should you start thinking about new ideas and growing your business.
One of the strategies that successful companies employ is the diversification of their business. These companies often diversify their product focus in order to reach different customers and market environments.
Even though this approach requires more upfront investment, it helps them evade the risks that can emerge, i.e currency shocks, new regulations, competitors, and other roadblocks.
These companies also balance their growth from the beginning. Camel startups focus on growing through revenues (and ideally profits), instead of venture capital alone.
When they do take on capital, they always have a plan in place, for instance, a growth strategy like an expansion into a new market or a product launch. Once the strategies are complete the company re-evaluates whether to seek more funding.
These businesses’ solid financials also allow them to weather storms.
Don’t get me wrong though, camel startups also focus on growth. They seek many of the same elements that make traditional startups extremely successful, like network and other strong defensive channels.
They then balance this with a focus on resilience from day one, and this inherent strength makes them more attractive to investors looking for opportunities during economic crises, as a business with solid financials is seen as a safe play despite unfavourable short-term market conditions.
Hire the right people, who are energized about and invested in your vision, and who have realistic ideas about how to connect it with your target market, especially when barriers arise.
Apart from the right team, also have in place a distributed team. Before remote working became a thing last year, most companies were already having remote workers distributed across the globe.
There are many benefits to building a distributed team, and many companies had been leveraging different models of remote work long before COVID-19 forced workers out of the traditional office.
Some companies have been remote from the start, and it is an approach with an inherent appeal to camels.
There are some clear benefits to adopting this approach in the long term that can actually make a company both more competitive and more resilient. Some of these ways include:
To ensure that you have successful remote team companies must put the right checks in place, so that no team member is invisible or disengaged, simply “clocking in and out” without contributing meaningfully to the mission.
They can do this through a combination of technology and collaborative company policies and work culture, like randomized team one-on-ones. If this is done effectively, team members often find themselves well-connected to other workers, particularly those that are outside of their direct work units.
Focusing on your purpose. Remember the problem you set out to solve when you launched your startup and the people whose lives you want to transform. This could be the most effective way to deal with difficulties. Because even when you take unexpected turns, one thing will stay constant: your purpose.
Mission-driven businesses reflect on their desired impact and decide how to assess their success in achieving it – a process that could involve measuring customer safety, quality of life, or other metrics.
They then assiduously track, report, and disseminate information about their progress toward this goal across the organization, and use it to optimize their various operations. By making this data so central to their business function, the mission stays front and centre.
So instead of measurable metrics like sales and deadlines, focus instead on your organization’s mission and vision and always use them as lenses to make difficult choices about how to move your organization forward.
Camels startups understand that a product’s price is not a barrier to adoption, but rather that it reflects its quality and positioning in the market.
In emerging markets, incumbent solutions are either nonexistent or so dysfunctional that customers are willing to pay — often even a premium — for reliable, safe, and efficient products. Despite lower incomes, customers are not looking for free products. To draw customers, innovators have to offer a solution worth paying for, and they will be rewarded if they do.
In conclusion, it would be very easy to say that unicorns are myths whereas camels are real animals, but not everything is that simple. As soon as COVID-19 fades, interest in unicorns might return and it will probably also remain in camels. It is that the variety of targets competing for finance providers’ attention will increase.