Beyond Ideas: The Strategies of Billion-Dollar Entrepreneurs

While the current Entrepreneurial Ecosystem (EE) focuses on the idea and the pitch, the reality is that few billion-dollar entrepreneurs have used “ideas” as the foundation for their unicorns. Most used strategies and skills.

• Musk has proven the importance of entrepreneurial strategies and skills by taking an idea where large car makers failed and building a unicorn.

The Five Key Paths to Build a Unicorn

Unicorn-Entrepreneurs have used 5 key paths to build a unicorn.

#1. First Movers

First Movers seek to find a product or strategy that no one has used before. Shark Tank seems to be built on this concept. Examples of successes in this field include Xerox, Genentech, Medtronic, and eBay. But contrary to the hype about First Movers, only about 11% of them dominate. The reason is that most ideas can be imitated and improved either by indirect competitors who add the “first-mover” product to their arsenal, or by fast followers, like Sam Walton.

#2. Fast Followers

Fast Followers imitate a hot product, mainly on an emerging trend and often with a more capital-intensive strategy. When eBay was launched, there were others who used more capital to launch their fast-follower ventures. These fast-follower imitators forced eBay to seek venture capital and dominate online auctions. Lyft is another Fast Follower, but Uber was able to hold off the challenge since it had strong leadership and a capital base.

• The keys to success as a Fast Follower include:
• Speed of entry after the first mover’s launch and before the leader establishes a strong base to beat new entrants, and before the industry has taken off, which often makes it difficult to catch up.
• Lots of capital for an edge and the ability to use Capital-as-a-Weapon.

#3. Smart Followers

This is the strategy used by most billion-dollar entrepreneurs. Few were first movers. The key traits of Smart Followers include early entry before the industry has taken off, which makes entry more difficult, and a better understanding of the emerging trend to identify the best product-segment-competitor mix for a stronger competitive edge, and skills to launch and dominate.

• Examples include:
• Steve Jobs (Apple), who used a legal strategy to launch the iPod platform.
• Bill Gates (Microsoft), who focused on the guts of the PC industry.
• Jeff Bezos (Amazon.com), who focused on the right product and trend.
• Brian Chesky (Airbnb), who focused on helping landlords succeed.
• Travis Kalanick (Uber), who pivoted to a strategy that opened ridesharing for the masses.

#4. Price Cutters

Many price-cutters barely eke out a living especially if they do not have a competitive edge. A lower-price strategy is often the easiest to use but difficult to win. For skilled entrepreneurs, like Jeff Bezos, price cutting has worked when combined with the lower cost of an emerging industry like the Internet.

• Many price-cutters barely eke out a living especially if they do not have a competitive edge.
• A lower-price strategy is often the easiest to use but difficult to win.
• For skilled entrepreneurs, like Jeff Bezos, price cutting has worked when combined with the lower cost of an emerging industry like the Internet.

#5. Consolidators

Consolidators usually have access to capital, which is used to acquire a strong base company, often in a highly fragmented industry, and then to acquire other companies to build a big business. The private-equity industry and the Entrepreneurship-Through-Acquisition (ETA) industries prefer this strategy. To execute this strategy, entrepreneurs need access to capital. However, there are exceptions. Glen Taylor built one of the biggest companies in the wedding invitation industry by becoming a very strong operator, acquiring his first company by bootstrapping, increasing profitability with his skills, and using the higher profits to build a national giant (Glen Taylor in Bootstrap to Billions).

• Consolidators usually have access to capital, which is used to acquire a strong base company, often in a highly fragmented industry, and then to acquire other companies to build a big business.
• The private-equity industry and the Entrepreneurship-Through-Acquisition (ETA) industries prefer this strategy.
• To execute this strategy, entrepreneurs need access to capital.
• However, there are exceptions. Glen Taylor built one of the biggest companies in the wedding invitation industry by becoming a very strong operator, acquiring his first company by bootstrapping, increasing profitability with his skills, and using the higher profits to build a national giant (Glen Taylor in Bootstrap to Billions).

Price Cutters: A Risk-Reward Approach

Price cutting is a common strategy for entrepreneurs looking to gain market share, but it's not without its challenges. While it can be effective in certain situations, like emerging industries with lower costs, price cutters must carefully consider the potential risks and rewards.

• Price cutting is often the easiest to use but difficult to win.
• It's crucial to have a competitive edge to make it successful, otherwise, entrepreneurs may find themselves in a margin hell with no profits.
• Price cutting can be a viable strategy if it's combined with the lower cost of an emerging industry, like the Internet, as seen with Jeff Bezos and Amazon.

The Importance of Entrepreneurial Strategies

The success of unicorn entrepreneurs often hinges on the implementation of smart and strategic approaches. While some might rely on "first mover" advantages, many have achieved their goals by using "smart follower" strategies, identifying gaps in the market and capitalizing on emerging trends.

• Most unicorn-entrepreneurs used smart follower strategies.
• They used their unicorn-skills to get an edge and finance-smart strategies to dominate.