Take another kind of entrepreneur. This guy is more aggressive. While everything is going well, investors and employees tend to stand behind him. But if things get rocky, and some real challenges appear, then people tend to distance themselves. If that business ultimately fails, there’s a much lower chance that people will work with him again. It is worth remembering that there is a bit more to business than just financial success, and, in an interesting echo from a company fraught with a history of difficulty, how important human relationships ultimately are: ‘Failure of your company is not failure in life. Failure in your relationships is.’ – Evan Williams, founder, Twitter and Blogger
And the last is enterprise, whereby companies pay for larger-scale software (again, via a subscription-type model)
Billion-Dollar Secret Sauce But let us go back to the 0.07 per cent of companies who have achieved billion-dollar success over the last 10 years. Is there common ground that binds our billion-dollar apps and Internet companies together? Is there something those entrepreneurs know – or do – that makes them different? There definitely is. I’ve pulled together research from a number of studies. I’ve based this on a dataset of all kinds of Internet companies7 from all around the world, from a number of data sources, that have a value of at least $1 billion, in either the private or public market. I chose to focus on consumer – and enterprise – companies to provide a fairer, and broader, view of the possibilities. Apps, after all, are not only focused on consumer markets but are increasingly invading big enterprises and changing the way we work. I have also included billion-dollar tech companies as well as apps. Because, as well as building a billion-dollar app, you’re also going to be building a great technology company. Appcentric companies have a number of mobile-specific challenges – and opportunities – compared with those of just Internet or technology companies. But at the end of the day, high-growth technology companies face a lot of overlapping challenges – so let’s see what we can learn from our billion-dollar brothers. IT’S A SMALL CLUB. As we saw on page 63, there are only 43 companies that
are members of this rather exclusive club – and only 12 app-centric companies breathing that rarefied air. But I am going to focus on the number
doesn’t happen overnight. On average it takes seven years to reach a billiondollar valuation (and either an IPO, or merger, or acquisition), so you had better be in for the long haul. The minimum was just under the two-year and YouTube) and the upper end was eleven years (Pandora). As the inside stories show, this path is never smooth. Perseverance – and a belief in the long-term vision of your company – is key if you’re going to make it all the way.8 FIVE BUSINESS MODELS THAT WORK. It turns out that five business models
Why is that?
underpin so many billions in value – and, interestingly, each model seems to contribute equally in terms of value. The first is gaming, where users pay for a virtual service or good. The second is e-commerce / marketplace payday loans in SD, where users pay for a real world good or service. The third is advertising (or consumer audience building in the case where the company has not yet switched on the advertising). The fourth is Software as a Service (SaaS), whereby users pay for cloud-based software (typically via a subscription model). So there isn’t a huge amount of reinventing the wheel here. If you want to make it big, it’s pretty clear what business models to stick to. EXPERIENCE MATTERS.