Don’t Die Trying to be a Unicorn.


For those of you who have followed my personal blog, you know I don’t think the mythical Unicorn is a very good role-model for entrepreneurs. It isn’t that I’m anti-Unicorn. Quite the contrary, I’m a huge fan of building companies that are worth billions of dollars. My objection, rather, is to the tech-media inspired horn-envy that came along with the Unicorn phenomenon and the subsequent risk-taking craze that ensued. Left in the wake are Unicorn wannabes that died trying and some one-time Unicorns that ultimately fell from grace.

An alternative role-model to the Unicorn is the sturdy Workhorse.

Workhorses are smart, tough, sturdy, dependable, and patient. They are unfazed, even in the presence of a storm. Workhorses are durable and adaptable. Oh, and workhorses aren’t mythical.

Think of the workhorse as a unicorn that has evolved. The unicorn is of mythical value. The horn was useless and the magic isn’t real. Workhorses are are evolved in that they are producers of fundamental value. They shed the horn, solve real problems and create fundamental value.

We believe so strongly in the Workhorse as a role model for entrepreneurs that when my new partner, Dave McLean, and I named our firm, we chose Workhorse Capital. For us, the Workhorse represents both the characteristics of the companies and entrepreneurs we wish to back and also reflects how we see our role in the process of company building.

Fundamentals vs. Vanity
In our view, companies that create tangible, intrinsic value for their customers don’t need to achieve Unicorn status to be wildly successful investments. We’d rather predictably invest modest amounts of capital in growing, fiscally disciplined and capital efficient businesses that result in $100 to $200 million outcomes than rely on low probability, “long tail” momentum exits which require tens of millions of dollars as table stakes. After all, there are very few businesses that have a legitimate shot at becoming a billion dollar company. The loss-rates that venture firms incur trying to build Unicorns are unacceptably high for our risk tolerances.

For entrepreneurs, there can be significant collateral damage to this level of risk- taking. We can’t begin to guess how many venture-backed companies failed trying to birth a Unicorn when they could have built wonderful, thriving Workhorses using a different financing strategy – one better aligned with the true potential of the business. My guess is that there are many intellectually honest entrepreneurs who would admit falling victim to this approach.

Company Building Philosophy
Dave and I view our role in company building as more than just capital. We are committed to putting our shoulder into the plow of the value creation process, working hand-in-hand with the entrepreneurs we’ve backed. Our winning philosophy is based on earning and building trust with entrepreneurs and management teams. We’re not big fans of the judgmental approach. Stress-filled beat-downs don’t produce the best results or lasting esprit de corps. No, our role is to be the entrepreneur’s support system and to help them achieve both the purpose and objectives that they’re so passionate about. Our Workhorse mentality is rooted in our collective experience and in our company-building passions. It’s the way Dave and I are wired – supporting entrepreneurs is the work we are designed to do and we love doing it.

I’m gratified to be partnering with Dave as a fellow Workhorse. He is 12 year veteran of Sevin Rosen Funds, an experienced investor, mentor and a five-time CEO who brings a grounded perspective to the process of building valuable businesses. Dave and I arrived at the same destination along very different paths. What connects us is our desire and commitment to support entrepreneurs and our belief that investing growth equity in emerging tech-enabled services businesses presents the best risk-reward trade-off available in the private markets. Together, we aspire to build Workhorse Capital into a world-class growth equity firm.

I leave you with our intentionally irreverent mantra. T-shirts and coasters coming soon to a store near you!