Reality distortion of 100 Unicorns! What's the Fu*s ?!

While reading Walter Isaacson’s Steve jobs a few years ago, I came across a rather intriguing term/phrase ‘Reality Distortion Field’. Apparently, this was a technique used by Jobs to convince himself, and others around him, to believe almost anything with a mix of charm, charisma, hyperbole, marketing, appeasement and persistence. Just like any other superpower, this can be (and was) used to achieve formidable objectives and also to deceive others.

For the past few days, social media is inundated with celebratory posts on India (apparently) achieving 100-unicorn milestone. Company logos stacked in 10*10 grid with ginormous (almost inconceivable) valuations flashed repeatedly by “Startup magazines” to distort our sense of reality. Most likely for some extra traffic on their website, some more ‘likes & shares’.

Before the argument gets dismissed as inconsequential and cynic, here are a few things we should think about:

-?????????Definition of a Startup: Although there isn’t a global standard age till which a company qualifies to be a startup, Indian Govt. recognizes startups as companies where period of existence and operations should not be exceeding the date of incorporation for its schemes. Taking that as a foundational definition, India’s poster boy e-commerce company, largest cab aggregator, oldest food-tech company, Fintech behemoth and many more are way over 10 years old today. How long do we plan to term them as startups? Its almost like working for a decade, star-kids in Bollywood termed as newcomers!

?-?????????How many of these companies are truly Indian, currently: Its an incontrovertible fact that India has always had a large talent reservoir. Whether its doctors, engineers, scientists, IT professionals, financial experts and even entrepreneurs, there’s been no dearth of talent pool in India. The trend of outsourcing jobs to Indian talent has gone from doctors, engineers & scientists in the 70s and 80s; Backend, customer services & IT mostly in the 90s and early 2000s through BPOs and now entrepreneurship! The only difference is that through technology and capital deployment, physical migration is no longer necessary.

?Although I havent researched through the entire list ‘100 Indian unicorns’, but unless I am wrong (in this case I wish I were), all of these companies perhaps were founded by Indians but are now owned by foreign entities through Private equity VC firms and other institutions. By no means am I disregarding Indian entrepreneurial spirit or innovation capability, however economics suggest that we have gone up in the value chain of outsourced jobs that we perform. From being call center executives & IT professionals to being entrepreneurs. ?

?-?????????Valuations: Only 23 of these 100 unicorns are actually profitable. Traditionally, a company’s valuation is calculated on the basis of multiple factors like Market size, growth potential and most importantly, its revenues. With over 70% of the ‘unicorn list’ losing money, revenue multiplier is pretty much tossed out of the window with valuation done on the basis of last round of capital raised. There have been more than 1700 layoffs in 2022 alone done by the companies featuring in the list. While as consumers, we continue to enjoy deep discounts, cabs at our doorsteps and super-fast deliveries, listed companies’ stock exchange performance project a different view. 7 out of the 11 public listed companies from the unicorn list are below their IPO price anywhere in the range of 16% to appalling 72%.

?Under the garb of corporate Darwinian subsequent stage of mergers & acquisitions and consolidations, its likely that people who will face the brunt of it will outnumber the flourishing ones.

?I guess that such kind of volatility is inherent to any capitalistic setup. However, while all of us are gung-ho getting caught up in unicorn frenzy, maybe all relevant stakeholders need to sit back and think about critical matters that would really make the Indian startup ecosystem self sufficient and sustainable.

Perhaps more home bred investment companies for capital infusion and true value proposition instead of enormous valuations can be a good starting point for channelizing our entrepreneurs with unbridled ambitions, indomitable will and immense potential.

Wouldn’t it be a good idea to use the reality distortion to conquer the insurmountable in a true sense than just dumping ourselves in realm of complacency and corporate chicanery?

Please feel free to share your views. ?