clock menu more-arrow no yes mobile

Filed under:

I Am Re/code's Unicorn Beat Reporter (Cue Laughter)

The word "unicorn" hypes companies up while equating them to something impossible that turns money -- not product -- into the symbol of success.

It seems in Silicon Valley, nobody likes a unicorn.

Or more specifically, the term “unicorn” — which has been used to describe hot tech startups valued at $1 billion or more, such as Airbnb, Dropbox, Uber, Slack and, just this week, Warby Parker. It was originally meant to connote something straightforward, but it has since become a symbol of the current tech market frothiness and an omen of the bubble pop to come.

I know this, because since it was announced I was the unicorn beat reporter for Re/code, jokes and jibes have poured in. “A 21st-century twist on every 6-year-old girl’s dream job,” wrote one Twitter user; “I found you a story,” kidded another friend, after passing a Chinese restaurant called Unicorn; “This means you get to say, ‘Talk to me when you’re worth a billion dollars’ for a living,” said a third.

The main issue centers on the fact that the word both hypes companies up, while equating them to something impossible and that it turns money — not product — into the symbol of success.

It's unicorn party time

Still, my email flooded with demands from alleged unicorns, many of which I’d never heard of. “We’re a unicorn! Write about us!” they proclaimed. “Unicorn news! This Thursday! Embargoed!”

It appeared we’d unleashed a monster, as obscure companies with buzzword pitches like “full-service, big-data solutions firm” and “email marketing software company” used my beat as validation for their significance.

So, I decided a good first beat task was to figure out where the word came from and how it became so loathed but also so overused.

The place to start, for anyone who knows anything about unicorns, was with Cowboy Ventures’ Aileen Lee. The former Kleiner Perkins Caufield & Byers partner actually seems to be the one who coined the term back in 2013, when looking for a snappy, concise way to describe the billion-plus valuation club for a study she was doing on their similarities.

“I was using ‘home run’ or different things and came out with unicorn,” Lee said. “It made the whole thing more readable.” She said she liked that it captured a “mythical quality” and that it was rare.

 A unicorn was born
A unicorn was born

She knew the word wasn’t perfect and even included a footnote to the study admitting that. But “unicorn” was precisely the right imagery at the right time, and it quickly spread.

“It’s been co-opted into a marketing tool,” Lee said. “This is becoming something to aspire to.”

Floodgate investor Mike Maples, who came up with the word “thunder lizard” in the 1990s to describe startups with wildly disruptive ideas, has seen this happen before. “What happened to the term unicorn is what happened to the term ‘pivot,'” he said. “A bunch of other people appropriated it for their own interest, but the initial analysis was on point.”

But, said Maples: “The point is to have a dialogue about what’s a truly disruptive idea and what’s not. I’ve gotten pressured to say what’s the difference between thunder lizard and a unicorn, that a thunder lizard has an exit and a unicorn doesn’t?”

Nonetheless, Maples thinks “unicorn” is a good placeholder, and he blamed the media for its role in the overhyping of it. Some reporters admit that we’re guilty as charged.

Some other reporters suggest that maybe the problem is with the word unicorn itself. Among the other terms being floated to replace it include mammoths, elephants, home runs or hungry hungry hippos.

Hippos? Really? Let’s be honest, any metaphor chosen would likely be met with ridicule. What people are really deriding is the current market environment, where money is equated to influence and innovation.

In truth, we’re reacting to the fact that these company’s values are judged partly on promise, on a good sales pitch and on a charismatic leader and perhaps not on fundamentals like great products. And since the internal metrics are hidden from the public’s gaze, we have no real way of knowing how accurate these valuations are.

In that way, these billion-plus companies really are mythical unicorns, whose existence is tenuous, created by our imagination and held there by the power of our minds.

That’s why there are those who think there shouldn’t be a word for billion-plus companies at all — that classifying them exalts them to god-like status and encourages behavior like valuation inflation.

Brad Brooks, CMO at new unicorn DocuSign, is one of them. “I hate the term,” Brooks said. “This fascination with the whole subject defocuses on what these businesses are doing that are so unique.” DocuSign’s valuation has been reported as $1.6 billion, but according to Brooks the company doesn’t use it for recruiting or marketing purposes.

Perhaps the biggest problem with the word unicorn is that its prestige has worn off, as the number of companies saying they have a horn too grows by the week. There are herds and herds of them at this point — 85 by some counts — neighing and braying in the hipster Blue Bottle coffee shops scattered around San Francisco.

With such an ever-growing group, how many of these valuations are based in reality, and how many are based on hopes and dreams? Will many unicorns drop dead in 2015, as Bill Gurley predicted? How will their deaths — or survival — impact business partners, the flow of funding and employment in the tech industry? What can we learn from both the failures and the successes?

These are some of the questions I’ll seek to answer on the unicorn beat at Re/code.

As for the creator of the word? Lee cautions would-be fundraisers against chasing the fantasy. “If you can’t sustain that valuation or grow it then you’re in a really bad place,” Lee said. “There’s plenty of entrepreneurs who understand the dark side.”

Maybe so, but consider another new term that has emerged from the first, since the value of so many unicorns has exploded. Now they are “decacorns,” startups that are valued at $10 billion or more.

This article originally appeared on

Sign up for the newsletter Today, Explained

Understand the world with a daily explainer plus the most compelling stories of the day.