Why it is so difficult to spot unicorns when they are hatched – I need your opinion

Yesterday I was a judge at the TechCrunch event in Seattle. The meetup had 500+ folks from the Seattle area, with 9 companies being selected to pitch at the event. Over 100 startup applied – some that were idea stage, others with prototype and still others with a few customers and early traction.

TechCrunch Meetup
TechCrunch Meetup

Here are the 9 startups in a nutshell.

1. A bar robot that helps mix cocktails (home, personal use). It comes with 4 ingredients standard and you can add more ingredients (think of vodka as an ingredient and same for tomato juice as an example). It is meant to be counter-top friendly and starts at $99. They are building a prototype.

2. An Outdoor ad projection system for personal messages. According to the founder, as an individual, when you are trying to get your message out, there are few options other than those online (the rest are prohibitively expensive). So, he designed a projection system, which beams the messages at key spots outdoors. They are in 2-3 locations in Seattle right now.

3. Cashless POS and payment system for bar owners. The big problem is that busy bars lose money since it takes 2-5 min to get payment from the users – either with cash or credit card. Many bar owners lose money since patrons lose patience and instead opt to give up standing in line for a drink. This company produces a band (wearble) which you tap for contactless payment.

4. A lock screen app that replaces your lock screen (which most people stare at 50-100 times daily. This will replace it with images and photos from your collection on the cloud or the phone. The app has 100K users already.

5. A Car on demand service, replacing owning a car. Long term leasing or renting of cars. You can “rent” a car when you want for however long you want and keep changing. Need a small car for the weekday, rent it. If you however need a boat-towing Ford F150 during the weekend, no problem, replace your compact car with that for the weekend. In beta at Austin.

6. A curated collection of interactive STEM content (videos right now) for kids between the ages 7 and 15. This product provides way for children to get interested in STEM content watching engaging and interactive videos online. Has many users already.

7. A soccer ball sized Mic for student participation in class. Most teachers have trouble getting kids to listen to their voice, so they use a mic and speakers in the classroom. If they have to get the kids to talk, then they pass another mic in the classroom. This product has a mic built into a soccer-sized ball so kids can “engage” with the class and have fund doing it. Being tested by a few teachers in their classroom.

8. A learning system with games for your dog. They provide hardware that allows your dog to “learn”. These toys come with hardware that can be controlled and upgraded for new toys. When you dog plays with these games, you get notified via your smartphone. Currently looking for beta testers.

9. Uber for beauty. There are some days you want to look your best – party, interview, etc. For those days you can get a beautician “on demand” locally, who will come in and help you get your hair, clothes, etc. right and ensure you look the best. They use local beauticians and are a marketplace. Have a few users trying the service.

So, there you have it. 9 ideas and startups.

If you were the jury and had 1 min to listen to each of the founders, which ones would you pick to “have a deeper” conversation. I am not sure which of these companies will become a unicorn, or if any of them will be venture scale, but they are all promising ideas, and some have traction as well.

We declared one winner – the car on demand company and one runner up – the Uber for beauty. The audience choice was the learning system for your dog.

  1. If you were an early stage investor with $50K to put in one of these companies, which one would you invest in?
  2. Do you think any of them will become large in a short period of time?
  3. Which ones are cash-flow businesses – generating enough cash to be profitable, but not large.

Some of these ideas are really interesting, others I am not sure about at all – in terms of scale.

I’d love your opinion.

8 thoughts on “Why it is so difficult to spot unicorns when they are hatched – I need your opinion”

  1. Ans1) My Heart goes company five but what I can achieve in 50k , so will invest company nine . The amount may help startup to test MVP atleast in small town.

    Ans2) Traction wise company four can become grow but company eight can grow fast since pet owners love try out . Word mouth can spread in pet kingdom.

    Ans3) One,two, three,four, seven & eight.

  2. Only 3 of those have even close to unicorn potential (4, 5, and 9), but it depends far more on execution than idea.

    None of them are doing anything really defensible IP-wise, so the barriers to entry are low in that regard.

    #5 has a high cost of scale, which could be good or bad (so did ZipCar, and look at their valuation).

    #4 actually has some large potential from an advertising perspective (huge number of daily potential impressions, and tons of potential personal data to target photo ads a la Pinterest). I know the guy building this, so I might be biased, but I can see a lot of ways to monetize quickly through partnerships.

    #9 might be the easiest to scale and monetize, but it’s way too easy to knock off. They’d have to move very quickly, and offer a competitive price point vs. a salon.

  3. Ideas that look commercially more attractive might not be the unicorns. Something that starts with ‘learning tools for dogs’ might transform education. Uber of x and another car renting service are not terribly creative. The dog venture stood out to me before reading that it was the audience choice. Getting more creative might mean more chances of commercial failure but equally better chances of being a unicorn. Makes sense?

  4. Hi Mukund,

    The “Uber for beauty” already exists in NYC and has for awhile. Google “Glamsquad.” They raised $7 million in 10/2014 and have already launched services in New York.

  5. 6. A curated collection of interactive STEM content — can you reveal the website or is it is it covered under any confidential agreement? This sounds interesting because I have a child aged 11.

  6. Something ate my initial response. Take 2
    My top likes – 3 (cashless), 5 (on demand long term car rental), 8 (dog training)
    Lock screen has risk of being blocked by Apple/MS/Google or supplanted by them. However has best chance of user traction.
    Anything that teaches my dog new tricks is welcome, but this is niche play because such training is human intensive.
    Car rental co. needs lot of money to scale due to need to hold tons of inventory, maintenance, asset depreciation. Likely a little early.
    I’m antsy about Uber for anything as Uber with its war chest can become Uber for anything.
    Cashless system solves a real problem, but I would lose the band (not cool in a bar) and try a different method of contactless payment

    Unicorns have soared to $1B+ valuation purely on fundraising. That speaks to the slosh in the funding market, so hard to predict which one of these will be unicorns. I would rather have two horns:-)

  7. In control theory, a causal system (also known as a physical or nonanticipative system) is a system where the output depends on past and current inputs but not future inputs i.e. the output y(t_{0}) only depends on the input x(t) for values of t <t_{0}.

    Unicorns are like non-causal aka acausal systems – systems that have some dependence on input values from the future (in addition to possible dependence on past or current input values)

    So let us all stop chasing acausal systems. Atleast, in engineering they mostly are virtual.
    ……… Hence it is difficult to spot unicorns when they are hatched

  8. This was an article that discussed what made most start-ups successful – http://tech.co/bill-gross-ted-2015-06

    Being slightly ahead of or right at the tipping point of market/ consumer acceptance if a solution that is solving a big pain point appears to be the key differentiation – esp for consumer products. And I would echo that from my own experience as well. Having competition or defensibilty isn’t as relevant. Google and Microsoft with its traditional fast follower approach are prime examples. Keeping in mind my insights of the pain points in these varies. But the STEM video content and uber for beauty would be the ones I would track.

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