“Not Passionate”Īfter a multi-year period of what can only be described radio silence from Evernote, the company made a change at CEO in late July of this year.
When we look at how a unicorn might fail, it's clear that one in particular is already well down the path to failure - Evernote. For every company taking cash as it attempts to improve its financials before finally going public, there's another just weeks from becoming a boutique European-inspired furniture retailer. There are layoffs, late-stage down round financing, and pivots. Unicorns die a slow death as their core products lose relevance, new product initiatives fail, user growth slips away, costs mount, and key employees and talent drain from the system. Aside from anecdotal stories like the Zirtual mess, unicorns don't simply vanish over the weekend like Bear Sterns. This means failure in technology doesn't look like failures in other industries. Companies have been able to raise massive amounts of capital, amounts that companies can sit on for years while doing next to nothing.
The strange thing about dead unicorns is that picking out the ones you expect may be in trouble is tricky. Unlike the financial crisis of 2008, there are no short positions, reverse ETFs, or levered credit default swaps to buy that could provide someone upside like with the failure of a public company.īill Gurley, who believes we're in a bubble. For employees, it means intense periods of stress, loss, and potential hardship. Dead unicorns mean people losing their jobs, their work and projects becoming abandoned. The idea of dead unicorns in general isn't so compelling to think about. With the average company staying in the S&P 500 for a mere 18 years as of 2015, it's crazy to think that there wouldn't be major failures amongst a group of companies that's ballooned to 84 as of earlier in 2015 - especially as many of the privately held companies would have already gone public in earlier investment cycles. Rowe Price, Janus, and Fidelity are certainly getting an incredible deal on their investments. If no major companies are failing, and instead have access to permanently wide open streams of capital to fix insurmountable problems, perhaps we're in even more of a bubbly tech ecosystem than many think.Īnd, if the risk of failure is essentially zero, late stage investors like T. “I do think you'll see some dead unicorns this year,” said Gurley earlier in 2015 at SXSW.įor all the talk in technology about embracing failure, we've seen relatively little among the highly valued companies known as unicorns.
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