Attaining unicorn status continues to be one of the main obsessions in Silicon Valley. The irony is that multi-billion-dollar valuations seem to be, well, almost humdrum nowadays.
Yet the focus on becoming a unicorn may distort things. It may even stunt the prospects of a company. As the Notorious B.I.G. once noted: “Mo Money Mo Problems.”
Granted, with huge amounts of venture capital sloshing around, it does seem kind of crazy to say “no” to it. Won’t this mean that your rivals will instead grab these resources and fight you?
Perhaps. But it’s important to keep in mind that there are plenty examples of highly successful companies that have avoided mega rounds of financing.
Take a look at Alteryx, Inc. (NYSE:AYX). Founded in 1997, the company did not raise its first round of institutional funding until 14 years later!
Despite this, Alteryx has been able to become a top player in the fast-growing data analytics software market. Note that last year the company pulled off an IPO and has gone on to continue to grow at a rapid clip. In the latest quarter, Alteryx snagged hundreds of net new customers, including Facebook, Netflix and PayPal.
“We never wanted to be a unicorn,” said Dean Stoecker, who is the co-founder and CEO of the company. “We never thought about getting the highest valuation possible. Instead, our goal has been to be a monster truck. It’s been about building a powerful business model around a successful platform.”
The inspiration for the company actually came from the frustration he had as an executive with other companies. “I saw strategies where there was a focus on too many areas,” said Dean. “But this meant not creating the best technology. I knew that success was having one core competency – and for us, this was to create a platform. In other words, you don’t want to chase shiny objects. Rather, stick to your business plan and opt out on any projects – even if they will result in big sales wins – that take you away from your core competency.”
Consider that this vision took quite a bit of time to realize. If anything, Stoecker was too early to the market, as he was looking at concepts like subscriptions and cloud computing.
So in the early days, Alteryx (which was originally called SRC LLC) was essentially a systems integrator, which provided a revenue base. It also meant that Dean was able to build the components necessary for the data analytics platform. At the heart of this was a system that allowed for a repeatable workflow – now called Alteryx Designer – that made it much easier to make customized solutions. And by 2006, Alteryx would launch the first version of its platform.
“Without large amounts of capital,” said Dean, “we had to be disciplined, patient and innovative. Most importantly, we had to be customer-centric. We learned that customers wanted more capabilities, not more tools.”
This definitely went against the conventional wisdom of the data analytics business. Then again, it helped that Alteryx was an outsider. From the the start, the company has been based in Orange County, California. “I think this has been an advantage,” said Dean. “There isn’t the temptation to get caught up in the latest Silicon Valley fads.”
Tom Taulli – Read the full article on Forbes.com