The covid-19 pandemic was probably the biggest digital transformation agent we had in the last 20 years, with it we saw entire companies migrate to remote models, digitize their structures, optimize processes to cut costs, and invest massively in the digitization of work. The recovery came in the "K" model with some companies thriving during pandemic periods, such as Mercado Livre, Zoom, and 3m, and others that went completely bankrupt, such as urban mobility startup Grow ( green + yellow), and it seems that is the scenario for some unicorns as well.
This year, the largest accelerator in the silicon valley, Y combinator, asked startups to prepare for the worst, in a scenario of scarce resources, with the eyes of investors seeking more and more investments with safe returns, it will become increasingly difficult for startups to seek rump-up with high investment rounds. It's not that the fountain is drying up, it just got more discerning. It will be increasingly difficult to see cases of heavy investments like Softbank's in Wework, and with interest rate increases proving to be a trend around the world, we will see a dry spell for investments in unicorns.
The result of this is that many companies will probably start to reread their strategies, in a much faster and more assertive way; the competitive innovation market is no longer investing in fish, but in sharks. Investors are looking for more structured businesses, not necessarily robust ones (because they are not antifragile, as we said here), but ones with greater coherence. In fact, Softbank's own Rodrigo Baer said that there are many investors doing stupid things, and that probably what comes now is a moment of correction.
Correction that comes to the innovation market as a whole, since even cryptocurrencies have gone into decline, given factors such as high interest rates that we have already talked about here, and even the war between Ukraine and Russia, two of the biggest cryptocurrency mining powers. Add to this the "Layoffs" scenario we are experiencing, with startups cleaning out their staff, from Kavak to Ebanx.
The truth is that the sunset of unicorns is nothing more than a moment of correction, Adam Neumaan is a clear example of this, he has just attracted a huge investment in his new venture, Flow, drawing the attention of the venture capital manager Andreessen Horowitz, showing that there is still appetite for those who have learned lessons and are willing not to make the same mistakes of the past.
Around here we will still see a good number of companies redesigning their strategy, cutting the size of payrolls, focusing on leaning processes, and structuring more attractive margins. This means that the market will be quicker to treat products without goals, projects without strategy, and investments without tangible return. A redesign of strategies, where agile and lean practices will continue to thrive.
Me and some partners, especially David Moura, talked about the lean mindset for strategy management, and you can see more about it and prepare yourself by clicking here.