What Does Unicorn Mean?
The term “unicorn” has three different, separate meanings in the business world. The first meaning of this term refers to privately owned startup companies in the tech sector that have achieved a valuation of more than $1 billion. The valuations that have been assigned to these companies often bear little to no relation to the company’s fundamental metrics, such as profitability, cash flow or assets. The term became widely used after Aileen Lee, a venture capitalist and founder of CowboyVC first coined it in her article, “Welcome to the Unicorn Club: Learning from Billion-Dollar Startups” that was published in 2013.
Unicorns can also refer to a potential employee who takes on an almost mythical status among human resources professionals. In today’s competitive marketplace, many HR departments are looking for candidates who are capable of wearing many hats at once and smoothly integrating many different unrelated tasks. But in many cases, companies are looking for a caliber of employee that does not exist in the real world. They want someone who is overqualified for the job to work there so that they may cut costs by hiring only one or a small handful of employees instead of an entire department. But this approach can often lead to disappointment for both hirees and their employers.
Finally, the term “unicorn” can also be used to signify a company that is viewed as a possible target for buyout. When there are a large number of companies available for takeover, a unicorn would be a company that meets many additional characteristics above and beyond those that are strictly required for it to be a viable takeover target. This type of company is therefore said to be a unicorn because of its extreme rarity.
Divestopedia Explains Unicorn
Unicorns in the venture capital arena are much more plentiful today than they were 10 or 20 years ago. In Lee’s article, she notes that Alphabet (GOOG), then Google, was the first super-unicorn from the 1990s with a valuation of over $100 billion. In the 2000s, Lee posits that less than 0.07% of all venture capital startup companies in the software industry went on to become unicorns, with super unicorn Facebook (FB) being the most notable exception. Lee stated that it was therefore as difficult to find an actual living unicorn as it was to find a billion-dollar company funded with private financing during that time.
On the HR front, small and mid-sized companies usually cannot afford to hire a large number of workers to accomplish a given task. They therefore often try to land an exceptional, superstar employee who can perform miracles for the company on a regular basis. But this is easier said than done. Ryan Holmes, the Chairman and co-founder of the company Hootsuite lists out five key characteristics that all unicorn-level employees possess:
The ability to wear many hats - Unicorn employees are able to perform a variety of tasks competently and with a minimal amount of training. Unicorns can save companies from having to expend large amounts of money conducting training programs and orientations.
The ability to think both big and small - A good unicorn employee can always see the big picture while still paying attention to details. The ability to do this consistently is fairly rare, so many HR departments will quickly jump on a candidate who is perceived to have this ability.
True grit - Angela Duckworth, the psychologist who authored the popular TED talk and book defines grit as “perseverance and passion for long-term goals.” Unicorns can overcome all sorts of obstacles and still continue to perform their duties.
Respect for themselves and others - Unicorns recognize the inherent worth in fellow employees and supervisors. Unicorns have better things to do than gossip about others or engage in rude or disrespectful behavior.
The ability to get things done - This is perhaps the most important characteristic of a unicorn. No matter how respectful, gritty and versatile an employee can be, if he or she cannot accomplish their assigned tasks competently on a consistent basis, then they are of little use to a company.