The Unicorn and the Cockroach

Redefining startup zoology for the sake of small entrepreneurs

Startup Zoology Status Quo

Two animals come to mind in the startup world: unicorns and cockroaches. 

A unicorn is a startup with a valuation of $1 billion or more. When a company raises money, investors determine its valuation based on traction and future outlook. As it focuses on growth, a unicorn is usually not profitable for many years and depends on investments to survive. The press reports extensively on unicorns. Whether they release a new feature or raise millions of dollars, major specialized publications will mention them. They earned the nickname because the one-horned horse is rare and high-valued. It is also majestic, mystic and charismatic, and every little girl wants to own one.

A cockroach startup is a self-funded, lean, and profitable company. As it usually never raises money, its revenue determines its value, and it can't survive without profits. The press barely mentions cockroach startups; they come to life and grow in silence. Their new features go unnoticed. They earned the moniker because a cockroach is very resistant. It is also repugnant, and every little girl runs away if she sees one. The girl's dad whacks it with a slipper to restore peace at home, even though cockroaches are sentient.

So unless you are gothic (bless them), these animals sit on opposite sides of the reputation scale.

Let's look at the consequences of a recession on the two types of startups.

The owner of a cockroach startup, usually family-owned, reduces his salary and marketing budget by twenty per cent and warns his spouse and children that they will have brunch once a month instead of once a week.

Times are tough. Eggs benny once a month only!