Aug 2, 2024
Exploring the two distinct mindsets behind building billion-dollar companies
Out of 85 billion-dollar entrepreneurs studied, only 6% succeeded with the VC Mindset, while 94% adopted the less-hyped but more prevalent Unicorn-Entrepreneur (UE) Mindset. This article explores the key differences between these two approaches and why entrepreneurs should consider the UE Mindset for building successful companies.
This approach assumes entrepreneurs need VC to start, launch, and build their venture. It focuses on seeking capital and pitching ideas to secure angel capital. VCs often replace founders with professional CEOs in up to 85% of VC-funded ventures. Only 6% of billion-dollar entrepreneurs used this mindset. Example: eBay, where Pierre Omidyar sought VC early and was diluted by both VCs and the new CEO they recruited.
This approach emphasizes capital efficiency and entrepreneur control over VCs. 94% of billion-dollar entrepreneurs used this mindset, which is 16 times higher than those using the VC-Mindset. It delays seeking VC until after achieving Leadership Aha (18%) or avoids VC altogether (76%). Examples include Sam Walton, Bill Gates, Michael Dell, Michael Bloomberg, Jeff Bezos, Brian Chesky, and Gaston Taratuta.
The UE Mindset works for more entrepreneurs, not just in Silicon Valley. It helps entrepreneurs get to the 'Aha!' moment that VCs wait for. Most importantly, entrepreneurs retain control and reduce dilution, keeping 2 to 7 times the proportion of wealth created compared to those who get VC early.
According to VC Marc Andreessen, the VC Mindset only works for about 20 ventures out of 100,000 and really well for about 15 home runs a year. It's often concentrated in Silicon Valley and can lead to significant loss of control and dilution for entrepreneurs.
While the VC Mindset is often seen as a shortcut to riches, it's like playing the lottery where only a few win. The Unicorn-Entrepreneur Mindset, on the other hand, allows entrepreneurs to control their venture and the wealth they create, significantly reducing the risks associated with VC funding. As Rao emphasizes, getting VC is not success - becoming wealthy is. Entrepreneurs should consider adopting the UE Mindset for better long-term success and control over their ventures.