Reshaping the start-up world

In start-up speak, unicorns are mythical businesses that reach dizzying heights of success, while donkeys are the ventures that fall by the wayside. Here entrepreneur Jason Cronshaw argues it’s time for the one-horned wonders to grow a social conscience.

Words: Jason Cronshaw

“Seething masses of bodies clambering over each other, nipping and clawing their way to reach the carrot at the top of the pile, all the while desperately pedalling a spinning wheel.” Touring Silicon Valley as part of my Masters of Business Administration (Social Impact) course at the University of NSW, I was struck by the mouse cage analogy. I was also interested in the cultural diversity.

On one hand is the never-ending courtship between start-ups, gambolling in overexcitement around the people able to make or break their future, and venture capitalists (VCs), who skulk in the corridors of innovation searching out ways to compound their already extreme wealth and power.

Then there are the spruikers of the social impact business philosophy. I know the Robin Hood model of taking from the rich and giving to the poor is not the solution. But there must be a better way to cultivate innovation, develop products and nurture ideas than the current Silicon Valley method of wasting money on businesses with no chance of success (which is most of them).

What if that money could be redirected earlier from obviously doomed ventures (donkeys) into those with a reasonable chance of success (unicorns)? niggling thoughts that nagged my mind while listening to Haroun Education Ventures founder and CEO, award-winning business school professor, Columbia University MBA graduate and former Goldman Sachs employee Chris Haroun, who has raised/managed more than $1 billion during his career. But the whole start-up culture and system disturbed me.

Understanding start-up culture

My unease deepened as we walked around global venture cemented when we heard from Melbourne-based Blackbird Ventures partner Nick Crocker. Crocker also runs Australia’s best start-up accelerator Startmate, and has previously worked on product strategy and operations at Under Armour and was a product manager at MyFitnessPal, the world’s most popular health and health coaching company Sessions, which MyFitnessPal acquired in Collaborative Fund, Blackbird Ventures, SV Angel and Joshua Kushner. He also co-founded We Are Hunted, which was acquired success was also marked with failure. Early in his career, he was forced to sell an idea to a wealthy investor, who then developed the product as his own, reaping the ensuing wealth.

American entrepreneur and investor Adeo Ressi, who founded TheFunded and The Founder Institute, says while standard contracts aim to help start-up creators, most are changed to suit venture capitalists.

What’s the success rate in the start-up world?

Of the 100,000 start-ups created each year, 1,400 progress to VC funding. That’s a lot of failures left behind.

The odds of becoming a unicorn That tiny fraction (of businesses that a gamble: throw enough money at multiple ventures and one is sure to succeed to cover the losses of the rest. are not concerned with the venture itself, its founders or teams. But at what cost? Money. Jobs. Social.

The advantage of being in Silicon Valley is that if you lose one job today, you are almost assured of another tomorrow. There is even a “cool to fail’’ culture.

Even once a start-up progresses through the VC rounds and begins operating, success is not cent of all companies will fail in was the reverse of the accepted model of nurturing start-ups for success in preparation for big company buy-up.

Of course the business world reality is different following the COVID-19 pandemic, and the washup has not yet settled. However, the current system must change. If big business is gone, who will bail out the failing start-ups?

Support for social entrepreneurs

There must be a more efficient way to encourage and support innovation in business.

Serial entrepreneur Alina Adams said she thought the biggest social problems were the world’s 4 billion people living in poverty, children dying amid unhygienic conditions in Africa and the number of rapes of women in India. Social assistance for these issues had traditionally come organisations. However, Adams said social entrepreneurs could help by funding solutions.

So, my original question: should unicorns give their money back before they die? scheduled for those failed ventures could be redistributed to those with the greatest potential to succeed (the unicorns).

Once unicorns reach a certain tier of success, they should be obliged to repay the investment, with the funds distributed to social causes of the world: poverty, education, security and health. Doing so would stimulate social change throughout business globally. That burden of responsibility must be shouldered by every businessperson, including me.

We need to think how we can help the world become a better place and how we can help identify potential true unicorns around us. Start-ups have the opportunity to reinvest their banks and community kitchens.

Over time, ironically, I have realised that all good things take time. There is no easy money made overnight. Not for Facebook and Uber, not for me solutions are not the responsibility of one person or one company or one government. We all must start to take small actions immediately.

GIVING BACK

I started on my return from Silicon Valley by committing to becoming carbon neutral, a goal my company think that was too hard, my business too small to make an impact, that diesel buses could not change. We could and we did.

My bus tour and charter company cent carbon neutral bus charter transport service in Australia, under the Australian Government’s Carbon Neutral Program. The Blue Mountains Explorer Bus arm of the tourism operator/transport service global solution is not to relocate the citizens of Earth to Mars.

Jason Cronshaw is managing director of tour and coach company Fantastic Aussie Tours (fantastic-aussie-tours.com.au), which owns the Blue Mountains Explorer Bus sightseeing fleet and Christian Fellowship Tours international tour company. Jason has a Master of Business Administration from the University of NSW, is a non-executive director of Tinpac packaging company, and is president of Blue Mountains Tourism.