Why is it Important for Startups to follow the Camel Model?

The world has changed. Covid-19 has caused a global recession. Business leaders, innovators, entrepreneurs and investors are all bracing for a long stretch of very tough conditions in the global market.

How can new businesses and founders of all kinds survive in such conditions? Many are not prepared.

A Harvard Business Review report makes a clear point. The growth-at-all-costs approach, which the Valley’s top players are very good at, works only in the strongest bull markets and the best conditions. Conditions today are tough, so what should startups do?

Author Alex Lazarow said in the Harvard Business Review report, “But consider what I call the “Frontier”: those business ecosystems outside the Bay Area bubble, where startups have less access to capital or trained startup human capital, and where, especially in many emerging markets, they are more susceptible to severe and unpredictable macroeconomic shocks. Instead of the unicorn, the camel is a more fitting mascot.

Camel can survive for long periods without sustenance, withstand the scorching desert heat, and adapt to extreme variations in climate. They survive and thrive in some of Earth’s harshest regions.”

Startup camels can teach us how to survive a crisis. They show how companies can keep growing and sustain themselves in the hardest situations. They do it by focusing on balanced growth, taking a long-term view and diversifying the business model. Here is how they do it.

Focus on the Long Haul

As founders often say, it takes 10 years to become an overnight success. It takes time for the market to shift consumer behaviour. So survival becomes the main goal. This gives the business time to build the right product and the operations it needs to scale.

“Competition will exist. But the race is about who will survive the longest, not about who goes to the market first,” said the report.

The report gave the example of Quizlet. In May of this year, Quizlet raised a $30 million Series C round that valued the company at $1 billion. The company took no funding until 2015. That year, after 10 years in business, it raised a Series A round of just $12 million. It took its time getting there, following a slow-but-steady approach to growth.

Focus on Resilience

In some sectors, it is hard to scale at lightning speed. Sometimes you need to dig deep and build the full stack of supporting structures. To reach its scale, Flipkart also had to build its entire logistics and supply chain network.

The report gives the example of Frontier Car Group, a well-known car platform. It first launched in five markets, each serving as a regional hub. The product took off in some countries but not in others.

The company learned valuable lessons along the way and closed the markets where it did not see a fit. Had it put all its resources into the wrong country, it might not be around today.

These startups build multiple business lines, products and an ecosystem of services from day one. 

“As we prepare for the tough challenges ahead, the answers won’t be found within Silicon Valley’s insular bubble, but by learning from camel at the Frontier, who have had the solution all along,” said Alex. 

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