Previously I wrote about “Building a Proficorn”. (Decided to drop the hyphen in profi-corn after feedback from readers who said proficorn was a better way to write it.) Over the past month, as we have seen the coronavirus impact play out, we have also seen how companies have reacted in different ways to the crisis.
In this series, I will contrast the thinking between the proficorns and unicorns during difficult and uncertain times. While this is by no means a universal comparison, it will help accentuate two different models of building businesses. In the case of the proficorn approach, I will use examples from how my company, Netcore, has approached the challenges. The eventual choice is for each entrepreneur to make – given that each situation is unique.
Let me start with summarising what I wrote previously about the difference between a proficorn and a unicorn. I defined a proficorn as a company having four characteristics: profitable, private, promoter-funded and having a reasonable valuation (say, $100 million or more). This is an alternative to the “unicorn” growth model – where lots of capital is raised and burnt through quickly in the quest for rapid growth at all costs.
The first difference that has become clearly visible is that unicorns fire, while proficorns hire. We have seen many funded, loss-making startups lay off a part of their workforce. What goes up must come down. Even as they hire aggressively (perhaps overly so) during good times to focus on rapid growth without consideration of profitability, when the going gets tough the first instinct is to fire in order to control costs. There is also pressure from investors to control the burn – and employees tend to be one of the largest expenses.
Proficorns tend to view the world differently. Because of profits (and cash reserves) and without the external pressure of investors, proficorns can take the long-term view. One never wins by chasing the herd, but by being a contrarian. Proficorns can think beyond the immediate crisis and use the crisis to put their heads down and build for the new world after the immediate challenges have passed. In fact, at times like these, it is possible to even attract good talent – who have been fired by the hot-shot unicorns. So, the stability of a proficorn is an antidote to the mercurial nature of unicorns.
Tomorrow: Proficorns vs Unicorns (Part 2)