Execution/Team Risk 

Of the three major risk areas, execution/team risk remains the only real issue in building a company. In particular, how will the enterprise organize itself to maximize performance? Can it find the right talent to execute its goals? Can it properly leverage technology and information to create a unique and sustainable advantage and business model? 

Answering these questions correctly is the key to building a successful Exponential Organization. For this reason, we need to look more closely at each of the steps in building a powerful and effective ExO.

Lee’s Unicorns

In 2013, Aileen Lee published an extensive overview in TechCrunch of US-based software startups with a market value of more than $1 billion—a group of companies she called “Unicorns.”

These days, the concept of a Unicorn is more expansive. But Lee’s findings are even more relevant for classic vertical markets and sectors as well. While we recommend reading her entire article, Lee’s key findings as they pertain to ExOs are as follows:

• It takes more than seven years, on average, before a “liquidity event.”

• Inexperienced twenty-something founders are outliers. Companies with well-educated thirty-something co-founders with a history together tend to be most successful.

• The idea of a “big pivot” to a different product after startup seems to occur rarely. Most successful Unicorns stick to their original vision (i.e., their founding MTP).

We have found a strong correlation between ExOs and Lee’s Unicorns. In fact, using our diagnostic, most of Lee’s Unicorns score well above the ExO threshold score. Their relatively young age means these Unicorn companies have been leveraging new information streams, have a low cost of supply, and embrace community—and thus can scale. Most have achieved their current heights by following some combination of the 12 steps described in the next section.