The criteria for determining a company as a unicorn in the current year 2024 is based on a company that is newly established, not exceeding 5 years, also known as a startup, with a company valuation exceeding 1 billion US dollars, and has not yet gone public.
It can be seen that the general characteristics of unicorns seem to go against the natural lifecycle, as most companies follow a three-stage growth pattern. This includes the startup phase, where the company begins, followed by a growth phase where it becomes profitable, then reaching a peak in the mature phase before eventually entering the decline phase.
Successful businesses often have a valuation exceeding 1 billion US dollars during the growth (Profitable) or mature phase, rather than in the startup phase. It may also be necessary for these businesses to rely on stock market investments to reach the 1 billion US dollar valuation.
Comparing a business to a person, it is like a child that grows faster than other kids in the class, excels on its own without needing anyone to teach it. However, like a person, a business also goes through different stages. A child may excel in learning compared to other children, but who can predict whether this child will succeed in life when they grow up? No one can answer this question. Just as people generally admire children with exceptional abilities more than the average child, investors also tend to favor companies that grow rapidly, like unicorns, without having to wait long.
What about POP MART ?
POP MART was founded in China in 2010 by Wang Ning.
The current popular products within POP MART are collectible art toys, which have contributed to the company's business being valued at $25 billion US dollars. However, the value of POP MART's business comes from its total equity.
Although POP MART entered the Hong Kong stock market in 2020, the company has actually been established for more than 20 years. Additionally, during the start-up period between 2010 and 2015, Pop Mart's business value was less than $1 billion US dollars. This indicates that Pop Mart did not qualify as a unicorn company during that time.
Indeed, even though POP MART may not be classified as a Unicorn, it can be considered a "Super Camel"
What is camel?
Adapting strategies is something that camels can do better than unicorns.
The camel can adapt to walking through the hot, scorching desert during the midday, while the desert sand may turn cold and harsh during the nighttime. The camel can continue the journey because it has stored enough food and water for its crucial journey. On the contrary, if a unicorn wants to walk through the desert, it needs abundant preparation before the journey. This means having lush green grass, abundant flowing streams along the way, and most importantly, a long rainbow to serve as inspiration and motivation. Only then can the unicorn embark on its journey.
The harsh realities that POP MART has had to face from the past to the present, such as the COVID-19 pandemic, supply chain disruptions from certain countries, or intense competition from domestic producers in the same product category, notably China, which excels in producing goods at low costs, can be described as POP MART facing pressure from all sides.
How has POP MART managed to overcome these challenges ?
According to the research by Wu, Peiyao, "Marketing Analysis of POP MART" (2020), it was concluded that POP MART makes business decisions based on data analysis.
POP MART focuses on launching new products based on the popularity of IP-based pop toys, which are beloved characters by fans, such as Dimoo, Molly, Monster, etc.
This is an example of how POP MART's business decisions are influenced by data analysis. It helps the management make informed choices and avoid making decisions that may result in more negative outcomes than positive ones. Without the proper collection and analysis of data, POP MART would not have grown to its current stature.
POP MART thus operates its business much like a person who chooses to ride a camel instead of a unicorn. This is because the nature of a camel emphasizes the ability to generate profits over the ability to grow.
By looking at the gross margin of approximately 61% and the fact that POP MART holds more cash than debt on its balance sheet, it can be inferred that POP MART sells its products cleverly to a group of customers or fans who love Art Toys. This has resulted in POP MART generating profits. Although it may not grow rapidly like a unicorn, it is a steady and resilient company that is not easily susceptible to failure.
If POP MART chose to conduct business according to the unicorn mentality, then POP MART may have opted to expand its business by selling everything or investing heavily in building its own platform. This could potentially have a negative impact on its profitability.
P (Profitability) 85 points
C (Customer Satisfaction) 100 points
G (Business Growth) 53 points
Noted
Despite having a highly profitable rate, POP MART has limitations in increasing its revenue. Although there is a global customer base satisfied with POP MART's products and almost no criticism from buyers on social media, the reason why POP MART is unable to produce enough products to meet customer demand is because they intentionally produce fewer items than the demand (Supply < Demand). They do this to make their art toys appear valuable and create competition among fans to collect them. This strategy has resulted in a low Business Growth score of only 53 for POP MART.
Summary
Being a unicorn, besides meeting various requirements such as reaching a company valuation of 1 billion US dollars quickly, is a dream for many business owners. However, this dream comes with a high level of risk, just like the behavior of unicorns, which are agile and fast-moving creatures. If you miss your chance, you might end up falling behind and lying on the ground with the unicorns.
In the real business world, even entrepreneurs like Wang Ning, the owner of POP MART, and myself, as a business owner, choose to ride the camel, whether consciously or unconsciously. This is because we hope our companies or businesses can stay with us for as long as possible, no matter what challenges we may face.
There is another option that can potentially make a company reach a valuation equal to or greater than a unicorn, with low risk, although it may take longer to achieve the goal compared to unicorns. That option is the Super Camel or the Camel, which can create significant value. Its value is not limited to just 1 billion US dollars, and there is no time limit on how long the company has been established.
Camels are not measured by the size of a company's valuation, but rather by the business's ability to generate high profits more than its growth potential. Therefore, choosing a mythical creature to ride is an important decision that business owners, like you, must carefully consider.
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