Why is Covid-19 killing Unicorn startups and not the Camels?

Authored by Parth Parekh on May 9, 2020

The Startup Trouble: Covid-19 kills Unicorns but the Camels survive. So, why is it that COVID-19 is killing Unicorn startups but not the camel startups? Let’s see!

Author and VC, Alexandre Lazarow, got my attention when he said “Forget Unicorns. Startups Should Be Camels.” But I knew that this man had gained my respect when he dared to raise the question that should have been raised even before the coronavirus outbreak and that is

“Disruptive innovation has become a mantra in Silicon Valley. But what if you exist in a part of the world where there is nothing to disrupt?”

No, Lazarow isn’t talking about Antarctica and neither is he delusional. I understand that by supporting his question I have made myself sound like a ‘hypocrite’ because as a part of the company that breathes disruption in and out I have myself told that there’s always space for disruption.

BUT one needs to understand what the phrase ‘nothing to disrupt’ means before making a judgement. 

To understand it let’s take two world-scenarios. One where the COVID-19 did not happen and where everything is normal and apps like Uber and Zomato are earning in billions and another where the COVID-19 has crippled all the Silicon unicorns around the world.

In both the scenarios, disruption can only happen if innovation or a model existed in the first place. You cannot disrupt something that does not exist at all. ‘Necessity is the mother of invention’ is a quote that you all might have already come across. The necessities prior to and during the deadly outbreak have been starkly different and it will be so even after we are done with this prevailing nightmare.

I mean, isn’t it surprising (in a good way of course) that most eCommerce and food delivery platforms have started delivering groceries and other daily essentials? This includes Amazon, Flipkart, Facebook, Uber Eats, Zomato, Swiggy, and all those previously exponentially growing logistics chains with a fleet of their own. Yea, yea, we both know that even we’d have done the same to protect our employees from starving and our business from falling flat on its face.

How long do you think these platforms will keep doing what they are doing now? Will they get back to their initial business plans once the pandemic is over? How many of them will survive? How many of them will thrive? If all the VCs are dried out or scared then who’s funding them? 

There are these questions and then there are terminologies like ‘contactless’, ‘cashless’, ‘safety-first’ being churned out by every other brand. This is the cry of the once-thriving unicorns. The pandemic has turned them into mere ponies with horns. Only a few of them are thriving and they are all mostly streaming or communication platforms.

The Silicon Valley that once thrived on disruption has not only been crippled but also been blinded by America’s declining economy due to its inability in decision making. Umair Haque in his article, America is Committing Economic Suicide, quite correctly states,

“Capitalism has convinced Americans that “debt” is as real as the violence of a gun. But it isn’t. “Debt”, “credit”, “money”, and “finance” — these are all just social constructions. There are times when societies need to go into massive “debt”, which really means invest massively, so that everyone and everything, including life as they know it, can survive. That simply means they need to allow their mechanism of collective action, the government, to “borrow” artificially limited resources from itself, tomorrow for everyone, today — or else we don’t have much of a tomorrow. This is one of those moments. Or else. Life as we know it implodes.”

In a futile attempt to save their resources for a better tomorrow, most of the previously known risk-takers are spending almost nothing on innovation and are currently thriving on remodeling their current online businesses.

When will Silicon Valley realize that they need new ways, new methods, and most importantly ‘new solutions’?

The sooner, the better.

While they are at whatever they are, entrepreneurs from places like Dublin, Detroit, Delhi, Bangalore, etc. who haven’t been blinded by the blingy Silicon Valley’s hypergrowth model have been more focused towards solving actual problems instead of replicating success by cloning models and apps.

Even during the lockdown and amidst the varying state government rules to curb the spread of the pandemic, many small-scale and large-scale entrepreneurs have joined hands with the hyperlocal commerce to provide people with necessary items in a faster and safer way. They have been using Google’s ‘near me’ feature to bring forth these close-knit communities into creating a network of supply-demand chain to sustain people and trade as well.

There’s a time to profit and a time to provide. The true worth of a business lies in providing value through their services and the ones who realize these will survive.

Time’s barren now. Drink less and keep moving until there’s water. Be a Camel!

The question in the picture is: “What do we do when there is nothing to disrupt?” We Innovate. #COVID19impact

Resources to read:

Beyond Silicon Valley

Silicon Valley Camels, will you please stand up

Reopening the Economy Now is a Death Sentence

The New-Market Conundrum

Let's make a

with the hope that it lasts forever

Everything you need to know about on-demand apps and services