Before we begin, what is a zebra startup?

“These are companies that, instead of seeking to blitz-scale their way to market dominance, fuelled by multiple venture capital fundraising rounds, prioritise profitability. Zebras also tend to be focused on equitable ownership and building sustainable businesses, and they seek to create a positive social impact, for example by providing solutions for underserved markets or prioritising employee happiness” (Source).

How the term zebra came into the startup world

It all started as a result of an essay written in 2017 called "Zebras Fix What Unicorns Break." Authors of the post Jennifer Brandel, Mara Zepeda, Astrid Scholz, and Aniyia Williams coined the term "zebra" to define a new movement that focuses on social ventures that focus on revenue generation.

In a world increasingly conscious of its environmental and societal impact, zebra startups offer a fresh perspective. Unlike their unicorn counterparts, zebras prioritize a balanced approach to growth and impact. These startups are characterized by their commitment to sustainability, profit with purpose, and addressing real-world challenges.

The problem with unicorns

For years, unicorns embodied the success of startups, driven by the quest for astronomical valuations used as vanity metrics. Their relentless focus on growth tied to an unsustainable business model leads to profitability problems and a penchant for prioritizing immediate gains over long-term stability.

Under the surface of these companies, there often lies a toxic workplace culture based on phrases such as "move fast and break things," domination and winning at all costs. This culture and its language, steeped in notions of domination and disruption, call for change. A vocabulary of restoration, cultivation and connection can replace the destructive rhetoric of "disrupt," "crush" and "kill."

Many unicorns opt for VC funding to facilitate blitzscaling, a strategy that that prioritizes speed over efficiency in the face of uncertainty. However, this ambitious trajectory often overshadows sustainability. The pursuit of sheer size can inadvertently lead to the creation of monopolies that wield excessive power, which begs the crucial question: Is there an alternative that balances entrepreneurship with equitable growth, promoting innovation and competition while maintaining a healthy environment?

Credit: Learn Biomimicry

Bad examples of Unicorns further highlight the ethical concerns surrounding this approach. Uber, for example, developed software that illegally spied on regulators and allowed drivers to evade inspections. Similarly, Juul's advertising of nicotine vaping devices to minors has fostered a market that regulators have struggled to crack down on. These cases underscore the need to recalibrate the values of startups, focusing not only on scalability at all costs, but also on positive contributions to society and adherence to ethical principles.

A Paradigm Shift

Zebra startups represent a direct response to the limitations of the unicorn model. While unicorns can charm with their vertiginous valuations, zebras introduce a paradigm shift in entrepreneurship. They prioritize sustainable growth over rapid expansion, ethical practices over aggressive strategies, and social responsibility over pure profit. Zebras seek harmony between financial success and positive impact on communities and the environment.

Addressing Problems with Purpose

Zebra companies are both black and white: they are profitable and make a positive contribution to society. This unique combination of profit + purpose defines the essence of zebras.

They are those ventures that don’t conform to rapid hyper-growth of the unicorn model, those that resist the urge to scale fast, recognizing the importance of sustainable growth over unsustainable expansion. Zebras demonstrate that success need not come at the expense of ethics or long-term profitability.

This doesn’t mean they have limitations when it comes to scalability; on the contrary, they can experience rapid growth while remaining conscious of their impact on society and the environment.

At the heart of zebra startups lies a fundamental commitment to solving real-world problems. These companies are dedicated to addressing critical issues such as healthcare accessibility, income inequality, and environmental sustainability, problems that cannot be solved by an app and VC funding. By aligning their business goals with the pressing needs of society, zebras are able to move beyond conventional models of success to become catalysts for meaningful change.

Zebras that "made it"

The success of zebra startups is not a theoretical concept, but is exemplified by the companies that have embraced this philosophy.

An example of this model is Basecamp, the software company known for bootstrapping, not surprisingly. In this article, Jason Fried, Founder & CEO at 37signals (makers of Basecamp), explains why they choose profit over growth at all costs.

Etsy is another case study of a zebra startup. By empowering independent artisans and promoting sustainable consumption, Etsy has not only built a successful business but also contributed to a more inclusive and conscious economy.

Patreon, another core member of this group, has revolutionized the way creators receive support in the digital age. By providing a platform for fans to contribute directly to the efforts of their favorite creators, it creates the foundation for sustainable income for artists.

Comparison of zebra model and unicorn model for startups

Business model is the key

Absolutely, the zebra startup movement is based on an innovative approach to business models. This move away from the traditional startup norm (which prioritizes rapid user acquisition over sustainable viability, results in the endorsement of models that seamlessly integrate profit and purpose.

In an era when social and environmental considerations are gaining their space, Zebras emphasize a harmonious ethos that not only fuels financial prosperity but also fosters beneficial social influence. Through their emphasis on power and resource sharing and adherence to ethical business practices, zebras are shaping a new business framework that aligns strongly with the sensibilities of today's discerning consumers.

How zebras approach funding

Unlike traditional startups, which often rely heavily on Venture Capital, zebras approach funding differently. Rather than succumbing to pressure from VC partners, many zebras prefer to bootstrapping. Alternatively, they turn to community funding, crowdfunding platforms, or impact investing to fuel their missions. This distinctive approach to funding allows zebras to prioritize sustainability, community well-being, and impact growth in equal measure.

Credit: Midjourney

Investment in Stripes

In the investment world, more and more VCs are recognizing the importance of channeling investments into zebra startups. The focus on social and environmental responsibility is in line with evolving consumer preferences and the growing desire for ethically conscious businesses. Initiatives such as Zebras Unite are driving this paradigm shift, offering financial support to startups that harmonize profit and purpose. This shift in investment trends could mean the dawn of a revolutionary transformation in the startup ecosystem. Ultimately, investing in a zebra ecosystem has the potential to outperform a portfolio composed primarily of unicorns, offering lasting benefits over the long term.

“I actually think that an entire new community of people with different businesses, agendas and value systems will flourish under a different model”- Caterina Fake, Flickr co-founder (Source)

The Zebra Movement

The zebra movement represents a profound shift in entrepreneurial values that goes beyond individual startups. The movement advocates ethical entrepreneurship, collaborative efforts, and meaningful innovation. Emphasizing cooperation over relentless competition, zebras perceive business success as a collaborative effort to address global challenges rather than a zero-sum game. This movement not only reshapes industries, but also redefines societal expectations of business conduct.

Credit: Midjourney

Cultivating a Zebra Ecosystem

In today's startup landscape, for every success of 1 unicorn, 99 other startups may face failure. However, there is still hope for companies that may not possess the ability to scale abruptly but still aspire to substantial growth. The alternative is companies that embrace a smaller but profitable trajectory that allows them to self-sustain and thrive.

The zebra startup concept has the potential to fuel a more robust and sustainable startup ecosystem. By meticulously balancing social impact with financial results, zebras offer a path to sustained growth. When these startups gain momentum, they have the power to inspire other companies to adopt similar value systems, thus creating a positive ripple effect across various sectors. A zebra-focused ecosystem actively supports a more balanced and ethically conscious approach to entrepreneurship.

Shaping tomorrow

The emergence of zebra startups indicates a transformative moment in the trajectory of the ecosystem. Through their redefinition of success models, cultivation of ethical practices, and dedication to tackling tangible global problems, zebras represent a viable path to lasting growth and constructive influence. This zebra movement exemplifies the profound potential of entrepreneurship as a driving force for positive change. It paints a compelling picture of a future in which corporate prosperity coexists harmoniously with social responsibility, charting a course toward a more balanced and impactful tomorrow.