Danielle Morrill, CEO, Mattermark participates in Unicorn Idol during Fortune’s Brainstorm Tech 2015, pitching her startup idea to 3 judges in front of an audience of seasoned tech professionals. Photo: Fortune Brainstorm Tech | FlickrCC.
Unicorns all have one thing in common: for the most part, all 140 companies classified as unicorns–meaning they’re valued at $1 billion or more–are tech startups with expertise in computer science fields. They can quickly outpace traditional industries because unicorns are business-to-customer oriented rather than B2B, like traditional industries. But what if those great powers worked together to do what no other unicorn does: make hardware?
Venture capital is beginning to invest in hardware, especially as 3D printing becomes a scalable production. Market disruptors tend to have specializations in computer science, while traditional industries have expertise in legal, scientific, and engineering backgrounds. It can be incredibly difficult for a 3rd party to come in and change the market. KKR’s Henry Kravis notes that unicorns are slowing down, especially because their 3-5 year maturation cycle is so fast.
Making hardware might be the next best thing for unicorns. That industry is booming. For their part, crowdfunding sites Kickstarter and Indiegogo showed that the public will fork over money in exchange for the promise they’ll receive new electronics in the mail several months later, according to Fortune—and people are warming up to hardware over software companies.
Y Combinator, a seed accelerator, has already had some success with the hardware they’ve produced. A water-efficient showerhead raised $1.3 million on Kickstarter as well as some venture from Apple. Self-driving car company Auro is doing well, as is a delivery program called Flirtey.
There could be a lot of money to be made in a hardware unicorn, but there is another noticeable absence in the current list of unicorns: not a single one of them comes from the oil and gas industry. A traditional industry, any new oil and gas company would take ten to fifteen years to mature, whereas unicorns only take 3-5 years. Additionally, oil and gas corporations just take more to build, and they tend to have more cracks in their structure when they try to adapt.
But some kind of digital oil and gas company could be the next great unicorn—a startup whose hardware is an ideally renewable and always necessary. Additionally, unicorns come from industries that are disrupted over and over, but the oil and gas industry has remained pretty stagnant.
If the blooming power of the unicorn startup could be combined with the solidity of a traditional industry, with something like a kind of digital oil field, it might be the revamp current and future unicorns could need—and a necessary shakeup to keep traditional industries moving forward.
