{"id":29625,"date":"2020-10-28T14:11:05","date_gmt":"2020-10-28T12:11:05","guid":{"rendered":"https:\/\/www.euruni.edu\/blog\/?p=29625"},"modified":"2021-06-14T12:27:01","modified_gmt":"2021-06-14T10:27:01","slug":"lean-startups-zebra-companies","status":"publish","type":"post","link":"https:\/\/www.euruni.edu\/blog\/lean-startups-zebra-companies\/","title":{"rendered":"Lean Startups and Zebra companies: Increase Your Chances of Success with Daniel Batlle"},"content":{"rendered":"\n

Many budding entrepreneurs, particularly in the tech space, have their sights set on building a unicorn. Unicorns are privately owned companies that have been independently valued by venture capitalists at $1 billion or more. It\u2019s not hard to understand why startup founders dream of the day their company achieves unicorn status and takes its place alongside household names like Uber<\/a>, Airbnb <\/a>and Pinterest<\/a>.  <\/p>\n\n\n\n

However, as 90% of startups fail, this scenario remains a dream for most entrepreneurs. What\u2019s more, chasing unicorn status comes with a huge financial cost, making failure extremely expensive. Not only this, but businesses chasing astronomic profits are doing so at the behest of investors and at the expense of their customers, and our planet. The world unicorn companies are seeking to create is not necessarily one that we want to inhabit. <\/p>\n\n\n\n

This is why entrepreneurs Jennifer Brandel and Mara Zepeda wrote a manifesto advocating a different approach: the zebra. Sitting at the heart of this model are the twin aims that informed their choice of animal: \u201cZebra companies are both black and white: they are profitable and improve society. They won\u2019t sacrifice one for the other.<\/strong>\u201d <\/p>\n\n\n\n

To better understand the pros and cons of starting a zebra, we invited co-founder and CMO at Alfred Smart Systems Daniel Batlle<\/a>, to share his experience of using the methodology to start a successful business.  <\/p>\n\n\n\n

The Crafting Your Future event series runs throughout the academic year and introduces the EU community to entrepreneurs and experts in their fields. <\/em><\/p>\n\n\n\n

\"unicorns<\/figure>\n\n\n\n

Starting a Business: The Traditional Approach <\/strong> <\/h2>\n\n\n\n

Daniel asked students to explain how you start a company. The answers came in thick and fast: have a great idea; find a gap in the market; know the problem you are trying to solve; and understand what makes your solution different. These, he said, are all correct and essential steps to starting a company.  <\/p>\n\n\n\n

However, the approach Daniel advocates has a slightly different set of priorities.  <\/p>\n\n\n\n

Starting<\/strong> a Business: Bootstrapping and Zebras<\/strong> <\/h2>\n\n\n\n

Daniel outlined the essential ingredients he believes help founders increase their chances of success.  <\/p>\n\n\n\n

Understanding a Unicorn <\/h3>\n\n\n\n

In order to differentiate, it\u2019s helpful to first understand how companies achieve, or strive towards, unicorn status.  <\/p>\n\n\n\n

First, the purpose that drives them is exponential growth. They are motivated by profit and success is measured through customer acquisition. Unicorns seek to defeat competition and obtain a monopoly<\/strong>. Rapid expansion is a key technique for gaining market control, which requires a lot of investment. The end goal is usually for founders to sell or go public and leave their business having made a fortune. The main pitfall of this approach is the incredibly low probability a company will achieve unicorn-level success, even with access to the vast amounts of funding required to do so. <\/p>\n\n\n\n

What Makes a Zebra <\/h3>\n\n\n\n

Conversely, zebra companies marry twin aims of profit and social benefit. They aim to achieve sustainable profitability<\/a> rather than huge growth. Zebras focus on achieving quality and pursue mutually beneficial collaborations with other companies operating in the same space<\/strong>. Instead of acquisition, their success is measured through their customers\u2019 success.  <\/p>\n\n\n\n

The aim of a zebra to build a successful and sustainable business is far more achievable for most business owners than reaching a $1 billion valuation. The pitfall of this approach is that zebras won\u2019t attract the attention of venture capitalists, whose sights are set on much larger profits. However, many investors are seeking more reliable and sustainable investment opportunities, particularly after the well-documented and dizzying fall of unicorn WeWork<\/a> from a valuation of $47 billion to less than $8 billion in under a year. <\/p>\n\n\n\n

A Bootstrap Entrepreneur <\/h3>\n\n\n\n

In the world of startups, bootstrapping means to start a business in the leanest possible way. That means starting from scratch with no outside investment, the opposite approach to founders of would-be-unicorns<\/strong>. And it comes with its own advantages; entrepreneurs who bootstrap can focus entirely on finding customers and selling their product. They don\u2019t have to divide their attention to seek investment or prioritize pleasing investors. And in a bootstrap startup, the founders retain full ownership and control. The disadvantage of this approach is that growth is much slower, which is why Daniel placed such an emphasis on entrepreneurs knowing their why<\/em>.  <\/p>\n\n\n\n

Steps to Start<\/strong>ing<\/strong> <\/strong>a<\/strong> Zebra<\/strong> <\/h2>\n\n\n\n

Daniel outlined the following steps to starting a successful zebra.  <\/p>\n\n\n\n

1. Purpose: Know Your Why<\/em> <\/h3>\n\n\n\n

The first step for founders aiming to build a zebra is to know why<\/em> they want to start a company.  <\/p>\n\n\n\n

How you set up your business should be informed by your aims. If you are looking for freedom, happiness, a sense of fulfilment and to contribute to society, then it makes sense to follow the zebra methodology. However, if you are seeking profit, growth and fame, it\u2019s not the right route for you. <\/p>\n\n\n\n

2. Prepare: Build Your Team <\/h3>\n\n\n\n

In an ideal world, Daniel said, a startup will have three founders, each with complimentary skillsets so that, between you, you can perform core business functions. Having a team of three greatly improves your chances of success; founding a company on your own is an incredibly tough journey. <\/p>\n\n\n\n

The key roles Daniel identified were: <\/p>\n\n\n\n