Zebras don’t want to be unicorns; understand startups that prefer to grow slowly

“Zebras Fix What Unicorns Break,” wrote four female entrepreneurs in a blog in March 2017. The new animal in the startup universe names companies that don’t seek monopoly or risky investment, but sustainable growth, profit shared with employees and diversity.

The animal also named the cooperative founded by the authors: Zebras Unite. “Zebras, unlike unicorns, are real”, explains Mara Zepeda, interviewed by sheet, referring to the nickname of companies that exceed $1 billion in value. When in danger, they band together and their stripes confuse the predator. “What makes zebras strong is that they’re together.”

To participate in the cooperative, companies, organizations or enthusiasts must buy a part of it and contribute annually. Members then access closed events, product discounts, possible dividends and “the right capital for your business”.

For Zepeda, the current big tech scandals, such as the one carried out by Facebook in the 2016 US elections, are “absolutely” related to the companies’ investment model. “There are large technology companies that were financed with venture capital and oriented to business models that fundamentally affect democracy”, he criticizes.

What does Zebras Unite do and stand for? We are a US-based cooperative that currently has more than 20 international sections. We are creating the culture and capital for the new economy by supporting founders with a different profile and who are building good businesses for the world.

And what is the new economy? The new economy can be defined in many ways. I would say that some principles revolve around the solidarity economy.

It prioritizes participatory and democratic ventures in its decision-making processes. It’s about reimagining the corporate structure so that it can serve social gain rather than purely financial profits, enriching a small group of investors and shareholders.

You talk a lot about diversity and question the risky investment model. Are these two questions related? The movement started with an article we wrote on a blog called “Zebras Fix What Unicorns Break.” This text was in response to a trend we were observing: only certain types of companies were being remunerated and recognized. From Silicon Valley, focused on exponential growth and competition for monopoly.

We saw very different companies being born. They prioritized sustainable growth, cooperation and participatory governance. Many of these companies are founded by women, underrepresented among CEOs, or by people who simply don’t feel motivated to raise a unicorn.

And why zebras? Zebras, unlike unicorns, are real. They’re black and white—for profit and for purpose—and they have a competitive advantage when they’re trying to escape predators like lions. They get together in a herd and this herd has so many different stripes that it ends up confusing the predator, it doesn’t know where to attack. What makes zebras strong is the fact that they are together.

Companies are not going to slow down together. Someone who decides not to accept the model you criticize can be defeated by a more aggressive company. How can your idea work? Well, we are not interested in playing this game. If you have a company looking to build a “winner takes all” model, then you are interested in a unicorn that dominates the market through monopoly.

The founders we support recognize that they are stronger together. We create the conditions for more people to thrive. Instead of the Silicon Valley unicorn, which concentrates decision-making power and ownership in the hands of a few, we created stronger and more resilient corporations in the form of a cooperative, distributing ownership and governance rights to the people who create value in that company. Employees, for example. In the case of platforms, it could be users.​

Do you believe this model is unethical on any level? I think ethics is very personal. I would say that my ethics are not interested in income concentration, so venture capital is not aligned with me. It is also not in line with the solidarity economy, which values ​​equality, environmental sustainability and cooperation. This kind of growth has a huge impact on the environment, and economic inequality has a huge impact on our society.

But there are certainly many people who see risk investing as a tool to generate wealth for people who have been excluded from the financial sector. The belief is that this prosperity will spill over into local communities, into other founders.

Can you talk about the consequences of this model for the economy? We are seeing the consequences with Facebook. There are large technology companies that were financed with venture capital and oriented towards business models that fundamentally affect democracy.

We say the business model is the message. If your business model is advertising and data mining, and you’ve raised capital on that growth trajectory, then it’s a high-speed train. The consequences will only increase. And that obviously leads to massive wealth inequality, the destruction of democracies, a state of data surveillance, addiction, incredible mental health challenges, and the depletion of the social safety net—because these companies aren’t being taxed. The ramifications are so pervasive that, as we look at these scale models, we begin to see the huge social consequences of prioritizing this type of business and investment.

Are the scandals we see today in technology companies related to their investment model? Absolutely. This type of investment generated these companies. And now there’s so little oversight, transparency and accountability, that it’s obviously a huge problem.

We are talking about company acceleration, but the mental health of these entrepreneurs is often affected as well. What do you attribute this to? I think I can only speak from my experience. I’ve raised $1 million of venture capital and the stress is too high to live up to the expectation and deliver the return on that money. If you got $1 million, investors are looking for $10 million back. This kind of pressure is really debilitating and especially difficult for underrepresented founders.

X-ray

Mara Zepeda

Co-founder and director of the Zebras Unite cooperative, she is CEO of Switchboard, a platform for schools and universities to connect their students