In the world of startups, a unicorn is used to refer to a company with a market cap greater than $1 billion. A decacorn, the latest benchmark, is what it sounds like in that it's a company with a market cap greater than $10 billion.

While unicorn status is just one measure, valuations are an important yardstick for cities and countries. How many big new companies are you creating? That is a critical question because, presumably, these big new companies are going to create a bunch of new jobs and generate a lot of new wealth for people.

This recent blog post by Elad Gil is a great summary of what's happening in the world from this perspective. The raw data is also available if you'd like to dig deeper.

Here are the number of new unicorns since October 2020 by city:

Silicon Valley, not surprisingly, continues to dominate, followed by New York.

Here is a breakdown for the United States as a whole:

Miami and Austin have been in the news a lot over the past year and their startup scenes may very well be on the rise relative to other US cities. But it's interesting to see other smaller cities on this list, like Salt Lake City, who are, at least right now, holding their own.

I found this last set of two charts particularly interesting:

They are showing unicorn count (first) and unicorn market cap (second) as a percentage of their respective countries. For example, Silicon Valley is sitting at about 47% and 51%, respectively. So about half of all unicorns in the US have originated from this geography.

But for most other cities on this list, the percentage is much higher and, in many cases, it is 100%. (Silicon Valley is perhaps relatively low because the US has lots of other big and important cities.) For me, this shows the continued dominance of cities. If you're building the next great unicorn or decacorn, the data tells us that you're probably doing it in a big city somewhere. And I don't see that changing anytime soon.

Wired's oral history of how the London startup scene came to be is a good reminder that, typically, a city needs some great big exits (acquisition or IPO) to really kickstart an ecosystem. In the case of Silicon Valley, you could perhaps trace things back to Fairchild Semiconductor (1950s). But a more recent example of this phenomenon would be the PayPal Mafia, whose members have gone on to found Tesla, LinkedIn, YouTube, and other companies that you may have heard of.

Put simply: success begets success. When a startup does really well and the founders and employees of that company get rich, it is likely that many will go on to found/fund other successful companies in that same city. In the case of London, that catalytic startup was arguably Skype (at least according to Wired). Microsoft acquired the company in 2011 for $8.5 billion, giving birth to the Skype Mafia. Of course, that wasn't the only ingredient, but it sure helped (excerpt from Wired):

Since 2008, according to data compiled by Dealroom.co, the UK has created 60 unicorns (tech companies valued at $1bn or more) – 35 per cent of the 169 created across Europe and Israel. In the past three years, the UK has created more unicorns (25) than France, Germany, the Netherlands and Sweden combined (19). And London has produced 23 unicorns with a combined value of $132bn, compared with Berlin’s eight, worth $32bn.

The world has changed since Skype was founded. It's now cool to be doing a startup. But given that every city seems to be trying to establish a thriving startup scene, I think it's valuable to point out just how important a single big exit can be, not just for the people within the company, but for the broader city. Easier said than done, right?

Photo by Benjamin Davies on Unsplash

A couple of days ago I wrote about a documentary series called Real Scenes. It’s a fascinating series that examines the electronic music scene in a bunch of different cities from New York to Berlin to Tokyo. 

What’s fascinating about these films is the inside look it gives you into how these “scenes” develop. Berlin, for example, is absolutely on fire right now. It has a thriving startup scene and a reputation for being a major force in the world of electronic music.

How did that happen?

The documentary leads you to believe that Berlin was able to establish itself as, arguably, the techno music capital of the world by having lots of empty buildings and nobody cracking down on squatters after the Berlin Wall fell. Quite literally, the scene appears to have started as a result of illegal techno parties being thrown in abandoned buildings. 

It’s a perfect and perhaps extreme example of Jane Jacobs’ famous line that new ideas require old buildings. The rents are simply too high in new buildings for anything experimental. Landlords naturally prefer to rent to triple-A tenants who will pay the highest rents. And who can blame them. 

But just like there’s tremendous value in incubating new startups before they’re even close to turning a profit, there’s obviously value in empowering new ideas, new concepts, new retailers, and new businesses to flourish within cities. 

I’m not exactly sure how that could be done in the context of new developments, but it’s on my mind right now as a result of some discussions I’ve been having with some incredibly smart and ambitious people in this city.

So today I’d like to turn it over to you. How could we make it so that new ideas flourish even in new buildings? Since investment naturally drives up rents, does that mean it will always put pressure on those crazy instigators who just need cheap space?