Be a Camel
In the wake of COVID-19, the global recession that resulted, and the end of the “free money" era, news of another once-celebrated startup Unicorn struggling to adjust to the new reality headlines every day.
Unicorns are wonderous beasts but very fragile and susceptible to unpredictable macroeconomic shocks.
Instead of celebrating Unicorns, we have a passion for Camels. Camels can survive for long periods without access to water, withstand vicious heat and adapt to extreme variations in climate. There’s a good reason why we have over 1 million feral camels in the Australian outback!
At Continua, we look for software companies with the same characteristics as these Camels, minus the spitting. Well-run, resilient businesses can sustain themselves and grow in adverse conditions by pursuing three strategies: executing balanced growth, taking a long-term outlook, and weaving anti-fragility into their business model.
More balance and less cash burn
Camels understand that the economic climate goes through cycles and take a balanced approach to growth that has three key elements.
Price properly. Camels prioritise getting their pricing right and charging customers for the inherent value of their products, viewing pricing not as a growth barrier but as a feature reflecting market position and quality.
Cost-conscious. Camels manage their cost structure throughout their life cycle, delivering an important cost advantage. Whether it be new hires or investments in sales and marketing, these commitments are only made when the impact on revenue and profitability is well understood. Managing costs prudently means that the Camel has the resources available to grow when the timing and opportunity is right.
Camels play the long game
Economic cycles move up and down, competitors come and go and customer needs change over time. Camels understand this and ensure they are built to respond to these changes but think long-term. At Continua we think in decades when talking about the future of our companies.
“We don’t care about being first to market, but we want to make sure that we are the most sustainable and profitable operator in the market that we choose to operate in.”
Smart camels don’t confuse cost management with conservatism. Managing your cost structure and focusing on profit improvement provides the resources you need to grow. Coupling these behaviours with a sustainable growth mindset means the business (or Camel? I’m getting confused with my metaphors!) is well placed to grow profitably over the long term.
Camels are resilient
Businesses with a camel mentality put effort into building out their systems, processes, people, and products so that there is no single point of failure that puts them at risk and the business is able to scale and support its growth objectives.
A fully grown adult dromedary camel can run at up to 65km/h in a sprint and sustain speeds of up to 40 km/h. Camels can grow at impressive rates when the time is right! When water is available they can consume 200 litres in 3 minutes. They have been built to last longer and withstand a harsh environment. We like to buy businesses that have a camel mentality.
Camels ftw.