Unicorn Hunting

Sup? 

Every week, I get an inbound that reads something like this: "[So-and-so startup] just reached out to me about [so-and-so position]. Do you know how they're doing?"

A good chunk of these emails come from friends several years into their careers. They're often considering accepting lower salaries—with the promise of building something with a greater upside at a startup.

What they're really asking is, "Will this move make me rich?"

Sound familiar?

While we might do well talking about the company's culture or people, when it comes to predicting the long-term outcome of a startup, we're all pretty unfit. Even a VC, who makes their living picking companies, has only a 10-20 percent success rate.

Unicorn Hunters

Enter CBInsights.

It’s a company with a SaaS data platform where VCs, Corporate innovation professionals, investment bankers, and others analyze privately-held companies.

In 2015, they launched Mosaic, a system to predict the health of privately-held companies. (Sidebar: it has a fantastic newsletter. Check it out.) That year, CBInsights released a list of 50 companies it believed were destined to become “unicorns.” 50 percent of the companies on that list are now valued at over $1Bn. Not bad. (PS - 2019 list can be found here). 

Think about the engineers, designers, product people, etc. who picked a winner. How'd they do it? Insight from a friend? Luck? Probably not science.

Mosaic for job-seekers

So, here's my idea: Mosaic for job-seekers. The next time someone sends me an “how is company xyz is doing?” ask, I want to be able to point them to this tool. When you are applying for a job or weighing an offer, you can use Mosaic’s score to understand the company’s long-term prospects.

Mosaic produces scores that are based on the market (how hot is the industry), the financial health of the company (burn rate and quality of investors) and momentum (social media sentiment, customer news, etc.) These combine into a score of 0-1000.

If you find out that a startup has a poor score, this might affect how you view your offer. Perhaps you ask for more cash to offset the risk you’re taking. Conversely, if a company is doing really well, you might forgo the cash in favor of equity.

Bankrolling the biz

Who would pay for it? I see a few options.

On one side, companies hunting candidates could subsidize access via ads or paid memberships. Or, companies like Glassdoor, Angellist or LinkedIn could integrate CBInsights into their platforms.

Startups = Sugar Cookies

The prospect of working at a startup can be exciting. You get to rise quickly, wear multiple hats, and, yes, it might make you Zuck-rich.

That last part is what often clouds judgment. Especially if there’s a charismatic founder. When giving advice to someone looking to join or start a company, I often quote this commencement speech by General William McRaven at UT- Austin:

Several times a week, the instructors would line up the class and do a uniform inspection. Your hat had to be perfectly starched, your uniform immaculately pressed and your belt buckle shiny and void of any smudges. But it seemed that no matter how much effort you put into starching your hat, or pressing your uniform or polishing your belt buckle — it just wasn’t good enough.

For failing the uniform inspection, the student had to run, fully clothed into the surf zone and then, wet from head to toe, roll around on the beach until every part of your body was covered with sand. The effect was known as a “sugar cookie.” You stayed in that uniform the rest of the day — cold, wet and sandy.

There were many a student who just couldn’t accept...that no matter how hard they tried to get the uniform right, it was unappreciated… Those students didn’t understand the purpose of the drill. You were never going to succeed.

Sometimes no matter how well you prepare or how well you perform you still end up as a sugar cookie. It’s just the way life is...

Job-seekers should have all the facts. Mosaic isn't a panacea, but it can certainly create more sober dialogue around the professional trade-offs an individual makes by joining a startup.

Odds are, you are going to be a sugar cookie. But if you make it, it is the most rewarding professional calling there is.

Thoughts? Send ‘em my way.

PS - Special thanks to my friends on LinkedIn who helped me think about this one