Corporate Innovation

Unicorns Don't Exist

If you live in the Silicon Valley or have been anywhere near the venture capital establishment of Sand Hill Road, you ...

If you live in the Silicon Valley or have been anywhere near the venture capital establishment of Sand Hill Road, you have undoubtedly heard the term “unicorn,” denoting that startup that has grown to astronomical proportions and likely accounting for the strong returns to limited partners in the VC’s funds.  The tech giants at the top of the S&P500 are unicorns:  Apple, Amazon, Alphabet.  One would think if you’ve named a unicorn company in recent years, you should have it begin with “A.”

I’ve heard innovation managers talk about unicorns too.  As in, “Can you please help me manage the executive team’s expectations about unicorns?”

Here’s the thing.  Unicorns don’t really exist.  Meaning, a new innovation does not by itself make a unicorn. Unicorns are significantly more than a big hit.  A unicorn emerges from a series of sequential bets - tested with the market and then scaled - that amplify over time. Unicorns are also usually not the first to market.  Google was not the first search engine or online advertising platform. Apple did not build the first smartphone. Facebook was not the first social network. 

It’s more that generations of smaller innovations add up until a moment - a change in the market or circumstance - when unicorns can emerge. A properly defined long-term innovation program helps position your company to be in the right position, with the right sequential series of bets, with a way to evaluate the sequential events to come, when moments occur that allow for fast acceleration. They are not there to promote a single innovation team, idea or “theme” as the “big idea.”

That’s hard using the traditional “big bet” strategy that is so common in large companies today. In the book I am co-authoring with Andre Marquis, we are laying out the premise that testing many small bets and directing sequential investment in innovation based on this continuous market data is how you get to long-term astronomical growth.  In other words, you don’t go build a huge platform company in anticipation of the market arriving.  You monitor the market through continuous testing and adjustment, testing and then scaling.

I went back through online articles to refresh my memory on what was being said about Amazon.  I remember Amazon’s launch. “Hey, online books!”  What I remember about those days was the common refrain, “Wait, you feel COMFORTABLE putting your credit card on a website?  That’s not safe!” I did it anyway.  I figured I could always change my credit card number.  Many were skeptical.

In 2000, the Guardian published an interview with Jeff Bezos.  He was quoted saying, "What you see today and what you think of as e-commerce is so primitive. Computers are not always on; people don't even have them in their kitchen or bedroom." 

Bezos went on to note that his vision of people being able to order anything they needed, not just books or CDS, rested on the premise that this future ubiquity of computers is what would enable it.

Those of you who may be of my generation may also remember that people thought computers would get into the kitchen by way of tablets for recipes.  The family chef might prop up the 8-inch tablet on the kitchen counter and refer to it for the ingredient list.   Or maybe TV.  I didn’t hear anyone say that people would be carrying computers around in their pockets, or on their wrist. The Apple iPhone didn’t exist.  Cellphones were new, big, and bulky.  They were bricks and had antennas. 

Ok, so let’s go back to my blog thesis:  Unicorns don’t really exist.  Well, surely the numbers don’t lie.  In two years, between 1997 and 1999, Amazon’s market cap exploded, only to crash back to earth in 2001 (and another dip in 2008) and then explode again.

Market cap history

May 1997

Amazon goes public, market cap of $438 million

September 1997

$1 billion


$30 billion

2001 bubble bursts, dropping market cap  to $2.25 billion


$50 billion


$100 billion


$1 trillion


In 1999, Amazon was called the most overvalued stock ( The story kind of goes like this:

  • Amazon:  “We’re making investments in marketing and acquisitions.  These are important. We’re going to lose money.”
  • Stock analysts:  We’re worried about the widening losses and the variability in bottom-line performance.  The price is irrational.  It will sort itself out.

Certainly, the dot com correction did put a dent in the valuation, but only temporarily.  The analysts were right that the price did sort itself out, just not in the direction they expected.

So, was Amazon just really good at predicting the future?  I say no.  The anecdotal story, as captured in the following article, suggests that Amazon was just particularly good at testing innovation at scale, and then scaling the innovation.  This article talks about innovation spending:

“As Recode recently reported, Amazon spent nearly $23 billion on innovation research and development last year (2017), up 41% from the year before—more than any other U.S. company, That’s more than Microsoft, Intel, Facebook and even Apple spent on R&D.

To put that in perspective for the grocery industry, a report from the IHL Group states: “Amazon’s 2016 R&D spending was more than the top 20 retailers (excluding Walmart) technology spending combined … and about 75%-85% of the top retailers’ IT budgets is spent on simply maintaining and upgrading existing systems. As such, retailers are completely outgunned when it comes to spending on IT.”

What’s interesting is that this article is still comparing Amazon to RETAILERS.  But, if you look at the innovation evolution, here are some of the major milestones:





Online retailer of books

Online bookstore


Fulfillment centers.  These grew from 2 in 1997 to more than 175.

Supply & logistics, real estate


Marketplace:  online retailer of many product categories



EC2:  computing platform

Technology platforms


Kindle e-reader

Digital content distribution


Amazon Echo

Voice-activated speaker for ordering


Air cargo (15 planes growing now to 50-60)

Air service


Purchased Whole Foods



Flex:  freelance delivery workforce

Flex workforce / new economy

Each of these innovations took a core competency that Amazon needed to deliver its business well - operations, delivery, ordering, digital distribution - and scaled it as a customer service once proven successful.  Amazon is significantly more than an etailer.  It is a real estate company, an airline, a digital content distribution company, a grocery store, a new workforce. 

Amazon did not become a “unicorn” by being an online bookstore.  It became a unicorn by testing innovations and then commercializing the ones that had a demonstrated home with the customer.

So, maybe unicorns exist.  But they only do so by taking their starting innovation and then building incrementally on it with market-validated offerings that may change, redefine, redirect what they are.  They emerge over time and usually end up intersecting with market forces with significant tailwinds.

If you’re thinking, ok, was this just luck?  Does a company need a Jeff Bezos to have this type of success?  Or was it just being in the right place at the right time?

Hypershift’s Innovation Pipeline allows large companies to develop exactly this discipline.  It provides a systematic way for testing a broad portfolio of business model innovations, stopping less fruitful projects early, focusing capital investment on the ones that are validated with customers, and visualizing emerging trends so you can see where customers are changing - where your opportunities actually are that can help you design long-term unicorn strategies. We call this strategic foresight.

Hypershift’s co-founders were busy with other startups at the time that Amazon went public, including perhaps the first online advertising platform, the largest online payment system (sold to Amazon) the first large-scale image platform (think of B2B Instagram). Those companies were worth hundreds of millions of dollars and one was even a unicorn. We understand the value of strategic foresight in rapidly changing technology and business model environments.  We are now focused on bringing the ability to generate strategic foresight for your company. We help you and your employees drive data-driven, customer-validated innovation at scale and visualize the results so your odds of having innovation contribute to your corporate outcomes grow with every new business opportunity you test. Let us show you how it’s done.

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