8th July 2019

Would you rather be a gazelle or a unicorn?

Let’s make something clear before we start. We’re not asking if you’d prefer to be a beautiful antelope roaming the plains of Asia or Africa or a fairy-tale, single-horned horse-like creature, although you can think about that if you like!

What we’re looking at is whether you’d like your business to grow steadily year after year or for it be a huge company valued at £1bn on the Stock Market.

In business terms, gazelle companies are those that increase in size by 20% every year for at least 4 years. They’re usually at the smaller end of the business scale, having started from a low base. Unicorns, on the other hand, are privately held start-up companies with a valuation as stated above. They’ll often reach this magical figure in a relatively short space of time. You can see where the name came from.

So, is there even a question to be asked here? Doesn’t everyone want their business to be a unicorn? To answer this, let’s look at what this means in more detail.

One attribute of unicorns is they can sometimes see the huge valuation as the most important thing about their business. Their focus isn’t necessarily on doing what’s right for their customers or staff. They look for any opportunity to grow and constantly want to be bigger than their competitors.

And this attitude is often reflected in their shareholders too, who like the fact they’ll get a good return quickly on any investment. Of course, this is no bad thing if you’re an investor, so unicorns are an attractive option for many people looking for somewhere to stash their cash. Financial journalists talk about them in the same way too, which makes more people want to invest.

Gazelles’ attitude to growth tends to be more measured. They look it at as something that will happen naturally over time as their customer base increases. They’re more concerned with creating great products and offering great service rather than becoming big quickly for the sake of it.

As they grow, these companies will nurture their workforce and really invest in their people. Staff turnover will probably be lower than unicorns and people will feel more valued at work.

They can be a good bet for investors too, as long as they’re prepared to be in it for the long haul rather than the much-quicker gratification associated with unicorns. This, and the fact gazelles increase regularly in value, make them takeover targets for unicorns, and many are swallowed up by their larger counterparts – a tactic employed successfully by Airbnb on its way to becoming a unicorn.

Being a gazelle puts you in good company, as household names like Apple, Dell, Cisco, Facebook, Microsoft, Amazon, and Google were all gazelle companies when they started out. Twitter was another gazelle back in the day, and apparently offered its early employees shares with the hope they’d be worth something in the future.  By the end of its first day’s trading as a public company around a decade later, share value soared by 73% and the company was valued at $24.4b.

Being the owner of either a unicorn or a gazelle business means you’re doing something right. Both types of business show you’re successful – they just do it in different ways. Which one you’d rather be depends on what’s most important to you.