The Rise of the X-Unicorns

KR Colour
Karthik Reddy

Disha 2
Disha Sharma

S1 E1
Reading Time
8 minutes

When first introduced into venture parlance, the definition of a Unicorn was strictly limited to a privately-held company valued at over $1 billion within a decade of its existence. In 2013, this definition applied to only a few Indian companies such as InMobi and Flipkart. It is now becoming clear that India is birthing new variants of this mythical creature — the zebras, the hippos, and the rhinos of the venture kingdom and we’re calling them X‑Unicorns’. In this series, we celebrate founders who play it by their rules, taking unconventional, or even long-drawn-out paths to get there.

This transcript was AI-generated and went through multiple rounds of proofreading. However, there might be a few errors that may have slipped through the cracks.

Disha: We think the traditional meaning of 'Unicorn' is outdated. When Aileen Lee first coined the term 'Unicorn' more than a decade ago, she identified 39 companies globally that were under the age of 10 and had crossed the 1 billion mark in valuation.

Disha: In 2021, India alone produced 44 Unicorns. In fact, last year, some estimates suggested that one in four Unicorns globally come out of India. Despite all this talk of Unicorns, we still feel the term is a little misunderstood. Blume is now trying to expand the definition of a Unicorn beyond those two initial markers. Karthik Reddy calls them the X-Unicorn. It's not your usual pink little horse with a horn. We now see a battle-hardened rhino, a zebra which earned its stripes, and a cute but fierce hippo. In fact, the artwork that embodies this idea is up at the Blume headquarters in Mumbai and never fails to get noticed by visitors.

Disha: In the upcoming podcast series, we are talking to founders running these X-Unicorns. We will speak to them about the courage and resilience it took to keep going when there was little external validation. You'll hear from a founder who spent a decade before getting any recognition, and another who faced over 300 rejections before the first VC noticed. Our first episode comes out next week. Stay tuned for more. So Karthik, what came first, the idea or the artwork?

Karthik: Definitely the idea. It was brewing in my head for some time that it's like time we showed them. It was a little bit of that emotion, right? And it was inspired by just the grit, resilience of Fund One portfolio, to be honest. So partly they were reaching a decade in existence as a portfolio and they were mostly written off by the ecosystem as, yeah, also ran small companies. What's the big deal? And each one of them was like charging back onwards and growing horns in a sense and wanted to sort of give a shout out to them I guess in my head. And then just as a lot of things converge fatefully and become a believer in fate and certain counts when things have to happen they happen. There was a COVID charity auction and Tanuja who have actually seen her work at galleries, her work pops up and these are actually the prints of these animals which are you know, which I don't know what her idea was, but to me it felt like it was almost took the thought out of my mind, of my head and celebrated the idea that we have too much sort of cuteness attributed to one single idea of a Unicorn, whereas that's not how the world works. And I had to kind of get it, but I was secretly hoping that there wouldn't be crazy bidding on it and I got lucky. And so the artwork just emerged and came to office.

Disha: Yeah, you're calling them the X-Unicorns, but what does the X, here mean?

Karthik: So I think a lot of things in Blume tend to have multiple meanings. Partly inspired by the idea that we were just, we've just completed Blume Day X, which was our 10th anniversary. It was just a milestone for us. The reason we've gotten this far is clearly because of our origins in Fund 1. As I said, the thought came from championing what the Fund 1 companies have gone through and delivered. But most importantly, I think the idea was to attribute the analogy to X-Men and X-Women. So I'm a huge fan of the franchise. I've always liked the idea that you can have, you know, mutants and curious people having superpowers of their own kind, rejected by society, but misunderstood by society, and yet overcome those challenges to actually do good for society. And so it is a combination of a little bit of everything. And so, you know, when you're looking for a term that sort of identifies with what you want to say, this just spouted out. So that's where the X-Unicorns come from.

Disha :How are you making these distinctions or mutants as you called it for Unicorns?

Karthik: I think it goes back to, you know, you'd reference something in the introduction around where the term comes from, right? So Aileen Lee, to her credit, coined the term, but had actually people forget that she had very well outlined definitions of what a Unicorn is. And we've forgotten them along the way because it's cool for the media to just out up numbers and have a headline which calls them a Unicorn. But a lot of them don't actually define fit that exact definition, by the way. You have to be a private company which is less than 10 years old. There are some companies which are more than 10 years old. But cross a billion dollar mark and they will be stamped on the newspaper headline saying that Unicorns. So I think in that sense, I was trying to create categories of folks who don't fit the description. These are not blue-eyed, pedigreed, get every round at a very systematic basis every year or two and rapidly scale to a Unicorn status in five six years, it was more like, you know, they can go sideways, they might almost die, they might have to like, you know, survive on bootstrap for three years or four years in between, might take more than 10 years. How does it matter if you're building a phenomenal company? How do all these definitions matter? So in that sense, they're not like normal, you know, human beings which have a defined set of limbs and perfectly, you know, shaped organs. They could be built a very different height to survive. could have built a very different set of horns to survive. And I think that's the celebration of the term and that's where the sort of mutant analogy comes from.

Disha: So the term was due for a rebranding exercise?

Karthik: I think so. I don't think the world is giving it enough credit. Not that I need the credit, but I'm just saying the world has to appreciate the fact that this is not textbook build out. At one point it was considered a rarity when they were 40. When the term was coined originally, now we have 800 or a thousand. or whatever the count is. And I think the uniqueness of large chunks of them is being, you know, understated. And I think it's important to set role models of that nature. For example, women founders building Unicorns is not as common, but I think they need their own championing, right? They go through a different set of challenges. They go through the same set of challenges, but they also have an additional set of challenges. Companies in deep tech go through a different set of challenges. But to singularly stamp all of their journeys with one term feels relatively underwhelming and short-sighted. So yes, it's a milestone marker, but it doesn't do justice to the journeys.

Disha: Do you think the investor community is also to blame here because they didn't back enough unusual ideas earlier? Because most of this growth we see is in the last five, six years. So people could sometimes question why a VC would fund such edgy businesses. How do we explain this change of heart?

Karthik: No, I think I feel it's the other way around. I feel like VCs of the past used to actually fund edgier ideas. I think what's become fashionable is to try and get scale and growth at an unrealistic pace, right? And so people are chasing business models which can fit that unrealistic pace at one level. And I would argue the number of mistakes you would make in that path would be as many as picking fundamentally great technologies and building them the right way and slowly. So post the coining of the word Unicorn, I would say the market has gotten more corrupted than what it was before that. I think venture build out in the 70s, 80s in the US was very first principles and fundamentally the right way to build great venture backed companies, take risks you know that traditional markets wouldn't. It's kind of telling that if every Tom, Dick and Harry is trying to take venture risk, then there's something wrong, then it's become mainstream. And so yes, the base of technology automatically creates a larger scope for market expansion. So the Unicorns are not simply a function of venture funding, but also market opportunities have grown. So tech has penetrated every facet of life. And that means that the traditional businesses are relatively disadvantaged to actually take advantage of these technology changes because they're not used to building in that fashion. So both the pace and the tools that they use to build are very different from how the new age businesses build. As a result, new age businesses will grow faster. I won't be surprised if the number of Unicorns further keeps the space or grows faster There's nothing wrong with it. New capital formation, disrupting old models, expanding markets. India can't be at this GDP for another 10 years, right? So it has to double at some point. And that means a lot of that value creation can belong to the new tech enabled Unicorns. So it's inevitable that there will be increased pace. It's inevitable that there will be more capital. I just feel like venture capital can't afford to be lazy and be looking for formulas and has to appreciate that a significant portion of classic legendary companies you know are built through unconventional paths. And if you don't realise that and have a fair share of them in your long-term winners, I think fundamentally, either you've gotten lucky in between and you won't survive long-term, or you won't be a great venture franchise. It's my humble take. I'm sure that there are enough will disagree with me, but I would like to believe that we are building to our beliefs on the space.

Disha: One last question. What did companies wanting to become Unicorns learn from these X-Unicorns?

Karthik: A lot of things. I think the love for doing this podcast came from that. I would want each entrepreneur listening in to pick up at least one or two facets from each story and each journey. And I haven't written or documented each one of them, but undeniably resilience, ability to sort of build without formulas around borders, markets, talent, hiring, biases that exist around you know gender, the fact that you're an Indian company and can't go and conquer the world. Only a certain venture path allows you to build that Unicorn. All of these myths have been busted by one or more examples in our series that we're putting together. So I truly, truly hope that they serve as inspiration for even if you've been fortunate and riden the traditional Unicorn path, I would like to believe that there is at least a handful of learnings from on each one of these wonderful entrepreneurs that we're going to present.

Disha: Thank you all for checking out X.Unicorns. This podcast is the Blume Ventures offering and we will be releasing a new episode every Tuesday. Our sound engineer is Shrey Tewari and our producer is Vedanth Naik of Manic Pod Studios. Cheers.