One Reason Why Miami And Texas Still Need The Unicorn Link

With all the migration, of corporations and financiers, from Silicon Valley to “greener” (lower tax) pastures, the hope in places like Miami and Texas is that they will blossom into the next Silicon Valley and create the next unicorns. I was recently interviewed on the possibility that Miami could blossom. Can it?

The movers written about have been corporations, such as Oracle, successful VCs, such as Keith Rabois, and the one and only Elon Musk who cannot be categorized. Here are some factors that could affect the fate of Miami and Texas.

Corporate Moves: Corporations move around the country and the world all the time and create a lot of jobs when they locate branches or relocate headquarters. That can be very good for the areas they move to, for new employees and for a lot of real-estate agents. And it can create a lot of secondary jobs for those who serve the new businesses and their employees. Corporate moves can also raise home prices – which is not always good news for lower-income communities. Should we worry about the homeless when new jobs can be created? That’s the billion-dollar question.

Venture Capital: Does a new area blossom, from an entrepreneurial desert into a unicorn valley, when VCs show up? VCs can invest around the country from wherever they are located – and have done so. Why don’t we have other areas with lots of unicorns, like Silicon Valley? A few VCs moving to Miami is not likely to do much, unless they are also able to attract or develop unicorn ventures. This is where the myth of VC is a problem – the reality is that VCs do not invest before Aha! – when the potential of the venture is evident. VCs can give you a million reasons why a venture is not right for their capital from Idea to Aha, but they don’t invest their millions before Aha!

Ventures are “raised” from Idea to Aha by skilled and dedicated entrepreneurs who push forward despite the odds. VCs get involved after the entrepreneur has brought the venture to Aha. Aha’s can be:

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  • Strategy Aha, when the strategy of the venture shows the potential to be a unicorn and VCs are attracted like bees to honey. This is what happened to eBay and Apple. Pierre Omidyar and Steve Jobs, respectively, brought the venture from Idea to Aha, when the VCs came. About 12 VCs rejected Apple before Aha!
  • Strategy and Leadership Aha, when the strategy of the venture and its leadership show the potential to be a unicorn. This is when VCs invest without demanding a change in CEOs. Most unicorn-entrepreneurs delayed VC or avoided it to stay in control.

Technologies: One of the most common myths in venture development is that the key to success is the technology. This is the reason why many business schools and pitch competitions focus on the idea. Based on this assumption, the proximity of world-class research institutions is considered a boon. But the question is whether unicorns succeed due to the technology or the entrepreneurs. Only 1% of billion-dollar entrepreneurs succeeded due to the technology. 99% succeeded based on their strategy and execution, i.e., based on entrepreneurs’ skills.

Entrepreneurs: Entrepreneurs are the foundation of unicorn ventures. This is one of the key areas where universities can make a difference – but the edge is in the business school where the entrepreneurs can be taught unicorn skills. It is not in the technology schools, unless of course, they develop a cure for cancer. Consider Jobs, Gates, Dell, Walton, Bezos, Zuckerberg, Chesky, Kalanick, and on and on. They all succeeded due to their unicorn-development skills. Business schools can train entrepreneurs to take-off without VC –because they will not get VC before Aha. This means that business schools need to shift their focus and their curriculum from the idea and VC to skills and smart strategies.  

MY TAKE: If Miami and Texas and the rest of the U.S. really want to develop unicorns, they need to do more than attract rich VCs and other wealthy persons seeking a tax shelter. They need to develop unicorn-entrepreneurs who can take advantage of the potential capital from these investors. They should focus on the jockey, not the horse. To develop the next Apple, they need the next Jobs. To develop the next Amazon, they need the next Bezos. Instead of business plan (or pitch) competitions, they need unicorn-skills competitions to develop the catalyst behind the venture – the entrepreneur. The genius is not in the idea that can be imitated, or the VC who came after the potential was evident. It is in the entrepreneur who used smart skills and strategies to get to Aha! Is that asking too much of the entrenched venture capital and entrepreneurial education industries?

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