What makes Unicorn CEOs Remarkable?

What makes Unicorn CEOs Remarkable | CGILD

Our research on the unicorn CEOs with great track record helped us delve into some great insights and lessons, this article focuses on our learning.

unicorn is a privately held startup company valued at over $1 billion. The term was coined in 2013 by venture capitalist Aileen Lee.

As of August 2018, there are more than 260 unicorns around the world according to CB Insights 1. This has given rise to emerging and disruptive CEOs, these new CEOs face varied challenges with transitions from a startup mindset to an enterprise mindset functioning, balancing stakeholders, assembling of a new management team, casting a clear vision, developing strategies for the VUCA environment. We looked at the data set of these 260 startups from the year 2010 onwards.

Our research was driven to understand the top 5 percent CEOs in this sample, the fastest growing companies whose net-worth and profitability index was high (we chose to stay away from perception valuations). We contrasted this group both our full sample (click here to download the whole list) with a subset of CEOs whose companies achieved top-quintile performance during their tenure as compared with their contemporaries.

This diverse group had some remarkable leaders who delivered phenomenal performance in the face of adversities including country and region-specific regulatory issues, strategic repositioning, managing volatile VCs, challenging economic climate, internal leadership inadequacies, sexual harassment suits. These leaders were found across segment and industry lines although some interesting aspects emerged

  1. The largest share of the unicorn companies are internet software & services companies (15%), followed by e-commerce (14%) and fintech (12%).
  2. The most valuable company in the e-commerce/marketplace category is Meituan Dianping ($30B), while Infor and Slack are the two most valuable companies operating in internet software & services, worth $10B and $9.4B, respectively. China’s Lu.com ($18.5B) is the most valuable private fintech company

Here are top 2 reasons we discovered why they perform really well:

The Outlier effect:

In our research, we found that on average, CEOs who are rose through internally as a transition from a founder to CEO tend to pull more strategic levers than those who come from outside and outperform their external counterparts over tenure. What makes them unique? For starters, its the way they think, their thinking is still not shadowed by normative ideas of growth and business models and hence when they view problems they always seem to challenge the status quo in surprising ways. It’s also the average age of the CEOs, the median age is 29 and that’s remarkable compared to established public company CEOs.

They are data-driven, focused on the value proposition and they seem to get it right most of the time, they also understand their uniqueness – data, platform, network, user-generated content, community and more, and create their strategy playbook from there. That’s what gives them an unfair advantage.

Secondly, they have a natural appetite for risk as they are entrepreneurial CEOs compared to established CEOs whose affinity towards risk is playing safe.

 

 

Disruptive strategies:

The findings offered additional insights into how these unicorn CEOs shaped their strategies. Three elements emerged – One they focus on validation and secondly they don’t mind big pivots, Thirdly they welcome the spring of innovation from anyone in the company, and its not lip service but a real-time execution of these suggestive ideas backed by data.

 

 

 

Take for example Didi Chuxing, a lesser known unicorn from China in the public transportation business which has established a dominant position in its home country. Harvard-educated Jean Liu, president of Didi Chuxing, is focused on growing the global footprint of the $56 billion-company that she leads. In China, the company has 550 million registered customers in more than 400 cities and delivers 30 million rides per day but its reach extends to Australia, Brazil, Japan and Mexico as well as Southeast Asia, India, Europe and Africa through various partnerships.

Didi employs 7,000 people, nearly half who are engineers and data scientists, and they continue to recruit other tech professionals to support its artificial intelligence labs, autonomous vehicles, and other tech operations.

In conclusion, not all CEOs will be remarkable. Yet for any CEO starting a transition, there is much to learn from the unicorn CEOs. Adopting an outlier view will yield the unbiased insights needed for breakthrough moves. Likewise, investing in disruptive strategies will provide a surer perspective for setting a strategic direction.  Those in our research focus at this at the highest level, setting a benchmark for every CEO aspiring to a successful start.

 

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