NetSuite has unique perspective into this situation. Thirty-eight of the 89 members of the Billion Dollar Start Up Club, venture-backed companies valued at $1 billion or more and tracked by the Wall Street Journal and Dow Jones Venture Source, are NetSuite customers.
As exciting as backing the next Lyft, Spotify or FitBit and their explosive growth may seem, handling that growth is every bit as daunting. Unicorns, or really any company with ambition, are squarely focused on growth and for some, that growth can come very quickly. Many unicorns take time early on in their development to hone their focus and their product. Once they have the supply chain and a sense of user demand in place, they are in the starting blocks and ready to gallop. They are often cautious about international growth, ensuring they have built up a significant local presence and learned from that experience.
As they ponder their development, that’s the time they often move to a more sophisticated business management system. It’s not the solution they need today necessarily, but it’s one they will definitely need tomorrow and way into the future. Startups don’t want to fall into a trap of starting out with one system, outgrowing it, moving to another, outgrowing it, etc. It’s too time consuming and a prime example of the Silicon Valley heresy of not thinking big enough. Unicorns are looking for the big picture – that’s why they realize the importance of real-time, accurate data across their entire organization. That information is their fuel to power expansion, to provide the necessary business confidence that they’re on the right track.
These companies also need to be flexible. Flexible enough to adapt to their own growth and disruption and the flexibility to adapt to challenges from the market leaders they’re disrupting and other startups eager to copy their model.
Evolution and the unicorn
Take Jawbone, which began with a business selling noise cancelling headphones, expanded into wireless speakers and is now selling activity trackers with smartphone apps. Or Shazam, which began as an app that texted users the name of the song they held up to their phone and now lets users access all kinds of information about music, television and film, partnering with advertisers.
Those sorts of changes in business models are the things that can turn a start-up into a unicorn but they put tremendous pressure on the organization to adapt and demand systems that can do the same. For example, for each product or business model innovation there is an exponential increase in billing complexity. Meanwhile, customer expectations for personalized, relevant communications continue to rise, which creates a need for greater accuracy and completeness of information. Businesses evolve rapidly. Those that can’t adjust can quickly become extinct.
A single system that can handle customer and financial data, while also growing with the business, can mean the difference between spending limited resources aggregating data vs. growing and adapting the business. Billing becomes just as critical to both the front office and the back office.
Take Lyft, for example. The ride sharing business needs to identify customers, drivers, the location of both, conduct a credit card transaction and collect, analyze and share feedback. That requires a nimble system that can easily adapt to a changing landscape. Its rival Uber continues to transform itself and is now hinting at getting into logistics.
FitBit, which evolved from selling devices online to stores around the country and is now getting into B2B with a corporate wellness business, in which it sells FitBIts direct to corporations around the world to distribute Fitbits to their employees, with the goal of making them more active and potentially lowering their healthcare costs. These weren’t necessarily in the business plan from the beginning, but these agile businesses are able, and even eager, to adapt their business model.
Bringing front and back together
In particular, the new rev rec standard ASU 2014-09 and agile billing present challenges that impact all unicorns across their internal systems and processes. As more and more businesses adopt models that recognize revenue over time, they’re going to need a system that allows them do that. They’re never going to be able to cash in on that lofty valuation, if they’re not following the new industry standard.
And it doesn’t stop at $1 billion. Every company has the soul of a unicorn but it takes technology to unleash and then fully tap that potential. Apple was no start-up when it essentially created the smartphone market. All businesses today need to be agile and scalable. Small start ups want to become the Apples and Googles of the world, while big businesses are continually looking for ways to be more like a start up.
Confidently moving forward into an uncertain future is possible with a system that can be adopted gradually when functionality is needed and can complement with ecosystem of partners. But that type of technology needs to be in the cloud, it needs to be from a supplier that’s forward thinking itself and it needs to be adaptable.
Otherwise the business winds up more like a dinosaur than a unicorn, plodding forward, unable to adapt and expand and doomed to extinction.
Image credit: Unicorn silhouetted against sunrise © adrenalinapura – Fotolia.com.