Many industry giants, now household names, were once snubbed by both customers and investors. But some stuck it out, and their patience has paid off handsomely. Here are just a few examples:

• Once a humble no-code website builder, Notion had to make a pivot to avoid sinking. Today, it boasts a staggering 20 million users and a mind-boggling valuation exceeding $10 billion. 
• Figma, initially flirted with the idea of being a mere meme generator, has transformed into a "Photoshop in your browser" and is now on Adobe's radar for a jaw-dropping $20 billion acquisition. 
• Slack, valued at a hefty $26 billion, was born out of Glitch's game chat before it left nothing but its ashes. 

So, when a company faces hard times, how can you tell if it has unicorn (or even decacorn) potential? Conversely, how do you spot the cracks in a seemingly flawless facade?

These age-old questions are at the core of venture capital, and at Uniborn, we're on a quest to bring you the answers.

Negative indicators

Let's start with the downside. Chances are, the startup you're eyeing won't hit the big leagues if:

• The founders have a track record of running projects that follow the same old formula, essentially mimicking the previous experience.

• The team lacks balance, perhaps drowning in scientists who struggle with the business side of things or drowning in salespeople without the technical know-how.

• There's a revolving door of employees or partners.

• Financial matters are handled with less-than-accurate assessments, not to mention the occasional intentional fudging of numbers. 

• There's puzzling spending, with no clear purpose, much like that memorable alpaca video.

And let's not forget (I mean, forget) teams that cannot clearly articulate the unmet needs they are here to solve or teams that show early signs of roughness towards one another.

Positive indicators

In this article, we've thrown around terms like "unicorn" and "decacorn" to highlight the capabilities of a project. However, let's not forget that "horns" are often just about valuation, and a momentary high price tag does not always translate into real value and lasting success.

So, let's turn our attention to the qualities that make projects not just expensive but truly valuable. Drawing insights from Lenny Rachitsky's (angel investor, newsletter, and podcast author) conversations with over 20 remarkable B2B startups (like Canva and Retool) and 17 major marketplaces (including Airbnb and Uber), as well as his review of 50 thriving B2C companies (think Coinbase and Apple), we can glean some valuable lessons.

You can start getting excited about a startup's potential (with a fair amount of confidence) if you notice at least one of the following signs:

• You sense a love-it-or-hate-it reaction — a deep, passionate response to an idea in the market.

• You observe genuine interest pouring in for a product from unexpected sources (not from CTO mom).

• Pure interest aside, people are willing to open their wallets for a pilot project (and these people are not founders' classmates, either).

• Users are continuously engaged with a product or service. Or, if the LTV is short by design, they'll actively recommend it.

• After your first meeting with the founders, you feel like you’d love working for them if you had no other business.

In short, this is not what the support group should look like. (Image: Dugout, OneFootball)

We believe it's critical to focus on ideas that can create these outcomes. As Lenny puts it, promising concepts arise from problems that are (1) important to a large enough audience, (2) unsolved or poorly solved by existing solutions, and (3) deeply troubling to the founders.

That doesn't mean the startup you are interested in should partake in your catharsis. In fact, less than one-third of winning B2C startup concepts, much like their B2B counterparts, came from founders who project their problems onto the targeted startup.

Also, innovation doesn't always demand rocket science. Surprisingly, over half of the most triumphant consumer business ideas seem clear-cut — just think of Twitter or Tinder. I mean, what's more straightforward than blogs or dating services, right?

Let's borrow from Lenny's wisdom again: "No matter which path you take, you are looking for two things: pain and pull. Pain tells you there’s an opportunity to solve a problem, and that it’s important. Pull tells you that you’re actually solving the problem."

To validate an idea effectively, dive into conversations with potential customers. For instance, top-tier B2B startup founders typically surveyed around 30 potential clients before hitting "Eureka!" Yet, in the realm of B2C, customer chats on this topic are far less effective.

Subtle yet uplifting hints

Here's another nugget from Lenny (we're sticking with him today): approximately 20% of prosperous B2B startups and roughly 25% of B2C startups in his studies had only one founder.

But before you rush to dismiss solo-founded teams, let us share some insight. We recently explored whether success depends on the number of founders. Granted, we discussed investors, but the data was all about founders. And if you're too busy to click the link, here is the short version: the ups and downs of solo and team efforts are quite comparable, as are their achievements and setbacks. The skewed statistics and misconceptions mainly stem from stereotypes.

Here are a couple more intriguing findings:

• The majority of founders lacked specialized skills or prior experience in the problem area they tackled. In B2C, just under 33% of founders had domain-specific knowledge.

• Around 40% of B2B startups shifted their focus at least once before landing on a winning idea, often going through multiple changes, with some pivoting as many as ten times. In the B2C sphere, the landscape is less turbulent, with a pivot rate of about 20%.

You may laugh at teams like this, but consider what Apple and Starbucks once were. (Image: Memelogy by Dagobert Renouf)

"Even the most triumphant members of the startup clan, such as Coda, Airtable, and Miro, went through a three to four-year journey. This fact should reassure newcomers that there are valuable lessons with every stumble and setback," says Dmitry Samoilovskikh, founder and CEO of Uniborn.

Here he adds: "At Uniborn are not yet on par with the industry giants, and my own projects have secured a few million — not hundreds of millions (for now haha) — euros in investment. But I've come a long way and have experienced both sides of the VC spectrum: as a founder of several startups and as an angel investor in others."

Cover image: Unsplash