If you’re a budding entrepreneur or a new business owner, you most likely have been to a fair share of startup conferences.
Generally, these events are centred on the endlessly positive theme of “opportunity” or the startups scene’s favourite buzzword “disruption”.
This year Freelancer’s Startcon – formerly SydStart – has taken its conference theme in a new direction. It’s bearishly-titled Bonfire of the Unicorns, and promises advice “to help you survive and thrive in the coming startup apocalypse.”
We got in touch with Cheryl Mack, product manager for events at Freelancer.com, to ask why the name was chosen and what it represents.
“We wanted something fairly bold that would match the almost unprecedented things that are happening in the industry,” she says.
“Anyone reading anything in tech or startup news recently has probably seen the growing problem of Silicon Valley’s $585 billion unicorns who aren’t able to find exits.
“Unicorn status used to be the prize, but the trouble with these hyped-up valuations is that the companies can’t possibly retain that valuation in the public markets. This is making them unsustainable and hurting them in the long run.
“The unicorn funding model is clearly not working, companies should no longer be trying to get into the unicorn club — it is just a vanity valuation that is coming back to bite them — but instead focus on operating the business. That’s why StartCon’s theme this year is around throwing away the less-than-shiny unicorn dream and learning how to survive and thrive in any economic environment.”
This “startup apocalypse” that Mack describes reflects the warnings big investors froms Marc Benioff to Marc Andreessen have been predicting for some time.
“The number of venture capital exits is decreasing at an alarming rate,” says Mack.
“This plus investors pulling back on making investments in new companies and the uncertainty in global stock markets is creating a much tougher environment for startups to get funding — creating a ‘startup apocalypse’, where only the toughest will survive.”
She suggests that instead of aiming to be a unicorn, startups should think about being “a cockroach”.
“A unicorn is a company that has been valued at over $1 billion by private investors. These unicorns have taken huge amounts of capital to fund their growth. When the capital dries up as uncertainty grows, the startups with high burn rates will struggle to live up to their valuations, meeting harsh scrutiny from media, regulators, and future public market investors,” she says.
“Cockroaches however, can survive in any economic environment. In fact cockroaches have thrived in some of the worst conditions. That is the type of company startups should want to be, and that is the type of company that investors are now looking at.”
The simple reality, says Mack, is that unicorns are unsustainable.
“The reality is that the vast majority of these unicorns will not be able to go public at anywhere near their most recent valuation, if at all. When unicorns go public at lower valuations than their last round of funding, bad things happen, including ratchets and other investor guarantees, that hurt the company’s founders, employees and early stage investors. Many of these companies will simply vanish. It happens every cycle, and this one will be no exception.”
With this is mind, this year’s StartCon will focus on how startups can bootstrap and grow revenue quickly.
Here are some of the strategies that will be touched on at the event, that Mack suggests can help startups with this.
- How to use experiments to find the best growth tactics
- How to optimise your funnel for maximum revenue at minimum costs
- How to target the best channels for acquisition and then scale
- How to not get screwed in a venture financing
- Using Social Media and other free tools to hack your growth
- Thinking global from the start and how to scale globally
- Most importantly: How to fund your own growth through customer revenue
“When it comes to getting investment, Australian startups face a similar challenge as Silicon Valley’s startups, and that is focusing too much on their valuation rather than delivering a product that people will pay for,” says Mack.
“When startups focus too much on their valuation, they are more likely to accept unfavourable terms that can put them in an unsustainable situation, which will hurt them, their employees and early investors in the long run.”
StartCon, which is also Australia’s largest startup conference, will be held on November 26 and 27 at Randwick Racecourse.