The Fortune 500’s Unicorn Hedge


Andrew Kuchling | Flickr

How much is that unicorn in the window? Forget about fearing a tech bust, writes 500 Startups’ Dave McClure (Medium) — our next bubble trouble is likely to be in the world of old-line global public companies. These firms are only beginning to realize how thoroughly their universes are changing, and how that change could cut their value. So they’re adopting what McClure calls “the Unicorn Hedge” — the strategy of buying up and assimilating billion-dollar startups, their people and their ideas. The procession of these acquisitions — Unilever and Dollar Shave Club, Walmart and Jet, GM and Cruise — shows no sign of slowing down. What’s driving such deals? The hedge is an effort to buy a little piece of the future, in case these big companies’ stake in the present gets a sudden mark-down. (The accelerating tango between BigCos and NewCos is a focus of our upcoming NewCo Shift Forum in February.)

Fortune smiles on 50 big social-change innovators. Pharma heavyweight GlaxoSmithKline tops Fortune’s second annual “Change the World” list of 50 $1 billion-or-more revenue companies leading the charge in looking beyond a profit-only mindset. The magazine says “shared-value thinking” is going mainstream: BigCos are “moving beyond often-fuzzy notions like sustainability and corporate citizenship, and instead making measurable social impact central to how they compete.” Yes, they’re doing this without sacrificing “disproportionate shareholder returns.” And a lot of them are hiring. Fortune selects its list according to an impressive methodology, yet the rankings still seem a little opaque. The list is probably most useful simply as a compendium of the wide spectrum of approaches companies are adopting, from nonprofit partnerships to corporate governance remodels to clean-tech investments. What Fortune leaves out is a sense of the fertile interplay between these mega-companies and the nimble startups and NewCo ecosystems that so often introduce the innovations the giants run with. Oh, and of course, whatever those same giants might be doing that cancels out their well-intentioned efforts.

Time to retire the term “technology industry.” It no longer makes sense, writes Anil Dash. When we use the term to encompass companies pursuing businesses as disparate as auto leasing (Uber), condiments (Hampton Creek) and TV-show production (Amazon), we’re not only inadequately describing the reality of today’s marketplace; we’re inviting trouble by expecting lawmakers, the media and the public to understand them as part of some mythical monolithic Tech Industry. For instance: Calling Facebook a “tech company” makes it that much harder to understand and react to its many roles as “an information broker, an agent of government surveillance, a media publisher,” and whatever business it will move into next week. Every new company is a “tech startup.” We could all use some more specifics. As our John Battelle wrote earlier this year, “The tech story is over. We won. Now what?”

The Bay Area startup boom is spilling over to cities across the West. For too many employees, it costs too much to live in San Francisco and the surrounding region. So growing companies are expanding to cities in Arizona and other western states, where workers can manage saner lives and raise families if they want (The New York Times). This raises two big issues: One, can companies avoid the potentially demoralizing caste-system split, where prestigious high-paid work is concentrated in Silicon Valley and more routine back-office jobs get banished to the remote offices? And two, will firms have to manage messy culture clashes between liberal-minded workforces and the more socially conservative regions in which they’re settling?

“Office politics” don’t have to be dirty words. When it comes to corporate politics, the less the better, right? But “politics” understood more broadly — not as scheming for individual advantage but as the flow of influence within an institution — never goes away, even in the most harmonious workplaces. So we might as well get comfortable with understanding just how political capital works inside organizations (Kellogg Insight). Titles and official duties are just the tip of the iceberg; reputation, social ties and cultural influence rule more than we realize.

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