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I Am Recode’s Unicorn Beat Reporter, Cue Laughter, by Carmel DeAmicis

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Perhaps unicorn is a hype word, but it still matters, because every investor wants to invest in unicorns.

The place to start, for anyone who knows anything about unicorns, was with Cowboy Ventures’ Aileen Lee. The former Kleiner Perkins Caufield & Byers partner actually seems to be the one who coined the term back in 2013, when looking for a snappy, concise way to describe the billion-plus valuation club for a study she was doing on their similarities.

“I was using ‘home run’ or different things and came out with unicorn,” Lee said. “It made the whole thing more readable.” She said she liked that it captured a “mythical quality” and that it was rare.

She knew the word wasn’t perfect and even included a footnote to the study admitting that. But “unicorn” was precisely the right imagery at the right time, and it quickly spread.

“It’s been co-opted into a marketing tool,” Lee said. “This is becoming something to aspire to.”

Floodgate investor Mike Maples, who came up with the word “thunder lizard” in the 1990s to describe startups with wildly disruptive ideas, has seen this happen before. “What happened to the term unicorn is what happened to the term ‘pivot,'” he said. “A bunch of other people appropriated it for their own interest, but the initial analysis was on point.”

But, said Maples: “The point is to have a dialogue about what’s a truly disruptive idea and what’s not. I’ve gotten pressured to say what’s the difference between thunder lizard and a unicorn, that a thunder lizard has an exit and a unicorn doesn’t?”

Nonetheless, Maples thinks “unicorn” is a good placeholder, and he blamed the media for its role in the overhyping of it. Some reporters admit that we’re guilty as charged.

Scott Austin Carmel DeAmicis unicorn hype tweet

Some other reporters suggest that maybe the problem is with the word unicorn itself. Among the other terms being floated to replace it include mammothselephants, home runs or hungry hungry hippos.

Hippos? Really? Let’s be honest, any metaphor chosen would likely be met with ridicule. What people are really deriding is the current market environment, where money is equated to influence and innovation.

In truth, we’re reacting to the fact that these company’s values are judged partly on promise, on a good sales pitch and on a charismatic leader and perhaps not on fundamentals like great products. And since the internal metrics are hidden from the public’s gaze, we have no real way of knowing how accurate these valuations are.

In that way, these billion-plus companies really are mythical unicorns, whose existence is tenuous, created by our imagination and held there by the power of our minds.

That’s why there are those who think there shouldn’t be a word for billion-plus companies at all — that classifying them exalts them to god-like status and encourages behavior like valuation inflation.

Brad Brooks, CMO at new unicorn DocuSign, is one of them. “I hate the term,” Brooks said. “This fascination with the whole subject defocuses on what these businesses are doing that are so unique.” DocuSign’s valuation has been reported as $1.6 billion, but according to Brooks the company doesn’t use it for recruiting or marketing purposes.

Perhaps the biggest problem with the word unicorn is that its prestige has worn off, as the number of companies saying they have a horn too grows by the week. There are herds and herds of them at this point — 85 by some counts — neighing and braying in the hipster Blue Bottle coffee shops scattered around San Francisco.

With such an ever-growing group, how many of these valuations are based in reality, and how many are based on hopes and dreams? Will many unicorns drop dead in 2015, as Bill Gurley predicted? How will their deaths — or survival — impact business partners, the flow of funding and employment in the tech industry? What can we learn from both the failures and the successes?

These are some of the questions I’ll seek to answer on the unicorn beat at Re/code.

As for the creator of the word? Lee cautions would-be fundraisers against chasing the fantasy. “If you can’t sustain that valuation or grow it then you’re in a really bad place,” Lee said. “There’s plenty of entrepreneurs who understand the dark side.”

Maybe so, but consider another new term that has emerged from the first, since the value of so many unicorns has exploded. Now they are “decacorns,” startups that are valued at $10 billion or more.

Fascinating that no one involved seems to be aware of the gender dynamics in calling something a "thunder lizard" (so male!) versus a girly "unicorn".

Also no one knows that a thunder lizard is a brontosaurus whereas everyone knows what a unicorn is.

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