Whales Not Unicorns

I have been vocal here that I do not like the term Unicorn to describe highly valued venture-backed startups. Unicorns are mythical creatures that don’t really exist and highly valued venture-backed startups do exist. They might be rare, but they are not fictional.

A better word would be Whales. And it turns out that the Whaling industry in the United States in the 18th and 19th centuries looked remarkably similar to today’s venture capital business.

Some of my friends and colleagues have been texting and tweeting about a book called VC: An American History by Tom Nicholas. So I got it on my Kindle and the first chapter is all about the Whaling industry and its similarities to the VC business.

Here are some photos I took of the first chapter on my phone.

This is a chart that plots the distribution of returns by whaling voyage vs venture capital fund.

This is a diagram that compares the structure of the whaling industry to the venture capital industry.

And this is a chart that shows the performance of the top 29 whaling agents. This is very similar to charts I have seen that compares the performance of the top venture capital firms.

So while Unicorns are made up creatures, Whales are not. And given the similarities between a highly successful venture capital investment and a highly successful whaling voyage, I am going to start calling the big winners in the venture industry Whales. I hope it catches on.

#VC & Technology

Comments (Archived):

  1. kenberger

    In the same seas, there are also sharks.Sometimes, some of these whales jump them.

    1. Jake Baker

      Facebook? Rocket Ventures?

  2. Mike Zamansky

    So there’s got to be some VC Ahab out there somewhere.

    1. Jake Baker

      Hedge funds with aggressive terms on late stage companies

  3. Peter J. Mills

    I like this, except that the whales died. They were the hunted, not the hunters.

  4. Salt Shaker

    I like the term whales too when successful, and perhaps a blubber reference when not (as in “Company X, full of blubber.”) My 5th Grade teacher, Dr. Lenny Seidman (Searingtown Elementary), made the class sing whaling songs daily. I can’t recall why, that was Lenny’s fixation, and he had just God awful pitch 🙂

  5. Jake Baker

    I’m sure it’s not lost that the term unicorn emerged in response to arguably mythical valuations and unproven business models associated with very highly hyped start-ups as well as other firms chasing largely meaningless valuations (eg $1B value may mean “nothing” with multiple liquidation preferences on a late stage round) just to claim to be part of the club. USV seems to maintain discipline in a way that many don’t in the era of “pay anything to get in” A16Z and SoftBank investing. Love the analysis and the comparison but for many companies unicorn seems fair and probably even more apt than whale. But love the whale hunting focus – please keep venturing and journaling for us to read.

  6. JB

    I like to call them rhinos. They have horns like unicorns , but are real. Also, they are strong, fast and really hard to bring down.

  7. awaldstein

    I like it and fell deep into your whaling economy analogy as something I knew at one time,I wrote my master’s thesis on Charles Olsen, an intelligentsia poet who ran Black Mountain College for a long time. His most famous book of criticism was Call me Ishmael, so likewise the connection.Spent a ton of time thinking about whaling as an economy and culture.https://www.amazon.com/Call…(For those that don’t know BMC — http://arnoldwaldstein.com/

    1. fredwilson

      Black Mountain!!!!

  8. Yalim K. Gerger

    There are two caveats:1. Using an analogy from an industry that killed whales is not very appealing, to say the least.2. The term whales is already widely used in the crypto world to describe people with a lot of coins in their possession.

    1. Matt A. Myers

      Re: 1 – It’s fairly telling though no? VC industrial complex certainly could be argued to lead to deaths of many companies that otherwise could have been fine to doing great if they didn’t take VC money.

  9. Chuck

    I believe this also where venture capital took the term “Carry” from.

  10. jason wright


  11. Dan Cornish

    This is just another example of a Pareto distribution. All inequality stems from this mathematical fact.

  12. Matt A. Myers

    I prefer to think of unicorn as companies that are self-funded, not getting caught up in the VC industrial complex, and become large – they are mythical because you probably don’t know they exist, but they do.

  13. Matt A. Myers

    While not caring about the impact on the rest of the ecosystem..

  14. Mike

    Interesting analogy. I wonder what other industries or ecosystems might fall into this similar type of model? The discussion of the history of the Nantucket whaling industry in the book In the Heart of the Sea is fascinating. As I recall, a golden age followed by a period of over harvesting and ultimate displacement. Perhaps a lesson as well in trying to live sustainably.Looking at some of these numbers ~ 40% of VC firms return > 10% IRR. So maybe ~ 50% or so beat the S&P 500 over a 10-15 year period? Not easy to do.Also, Profit Margin and IRR are different financial metrics with IRR accouting for the power of compounding returns over time? Not to take away from the underlying analogy.

  15. zahraa afsari

    Another reminder of law curve…

  16. sachmo

    Whaling is barbaric and should be outlawed!