4 Questions That Help Forecast a
Startup’s Future
They’re
mainly about customers.
EXPERT OPINION BY HOWARD TULLMAN, GENERAL MANAGING PARTNER, G2T3V
AND CHICAGO HIGH TECH INVESTORS @HOWARDTULLMAN1
Aug 12,
2025
It turns out that it’s
pretty easy to measure how well a relatively new startup is doing and, because
such a large percentage of them rarely survive for more than a year, a lot of
the evaluations take care of themselves. There are no skid marks in the startup
world – one day you’re here, and the next, you can be gone. It’s not hard to
track top line revenue growth and customer acquisition, but it’s a lot more
difficult – given the limited time they’ve been around – to get any kind of
solid qualitative idea of how they’re connecting with their target customers,
how sticky their customer connections are, and how the long-term demographics
of their customers will look. Getting a good idea of the expected spend per
customer over time is also a very important data point.
It’s becoming
increasingly clear that understanding and evaluating the viable businesses that
have survived the pandemic will require a different set of metrics and a closer
look to determine the answer to several important questions before any
prospective investor should consider further funding or any kind of M&A
activity. Some of these companies stuck around and survived for no good
reason other than the good fortune of raising a large war chest right before
COVID hit. Others are still alive in a manner of speaking, but they’re really
treading water as they rip through one-time and click-baited customers who will
never be back. I’d add to this population all those “entrepreneurs”
hanging by a thread who are running the hundreds of “social” flow businesses
that are living and dying at the mercy of the major platforms and their ad-tech
and boosting algorithms. A couple of flicks in the switches and code and
they’ll all be toast.
On the other hand, I’ve
seen thriving businesses such as the wine and spirits auction company Unicorn Auctions that
I wrote about here a few weeks ago with an expanding model and
all the right new metrics. These guys seem to be an ideal case study and
example of the new metrics that will really matter, both for their enterprise
and for many other mid-stage companies looking to smartly build their
businesses and soundly secure their futures.
There are four central
questions to be answered and, as you might imagine, they’re mainly about
customers.
1. Do they understand
how the demographics of their customers have changed over time?
As I mentioned in my
earlier article on Unicorn, they are capturing more transaction data and
personal information about their customers than the whiskey and wine
manufacturers and distributors will ever have. Data these days is everything.
This continually expanded knowledge base helped to identify a dramatic shift
and some refined thinking about who their customers were and some changes in
tactics as well. Their base assumptions, initial impressions, and operating
strategies were that their typical collector/customers were higher-end affluent
Boomers and Gen Xers and their focus, marketing and web presence were targeted
to enthusiasts and collectors.
The updated data,
however, showed that almost 70 percent of their current customers were Gen-Zs
and Millennials, which was a major change in the customer base. These younger
customers turned out to be consumers as well as collectors and traders and
Unicorn will likely to do more than 100,000 transactions this year for bottles
costing less than $100 in order to meet thousands of their new customers where
they’re at and quickly and easily provide what they need.
2. Do they understand
how the needs and objectives of their customers have changed over
time?
As almost always
happens, the entrepreneur’s best guesses as to what the target customers will
want and need are quickly altered by their actual behavior when the rubber
meets the road. Life would be so much easier if consumers would only act as we
expect and behave the way we planned. The key to eventual success is the
continued ability to identify emerging trends and desires, react to them by
adapting your offerings, and get your responses in front of the buyers and
sellers as soon as possible.
While the Unicorn
founders envisioned buyers primarily seeking rare, expensive and “collectible”
bottles, it quickly emerged that two of the most critical drivers were (a)
access to products that weren’t readily or easily available in the buyers’
local markets; and (b) price. The most active players on Unicorn’s sites
realized that they could acquire bottles more inexpensively through the
auctions than if they bought the same products at retail. Especially for
everyday consumers, looking to spend around $50, the main concerns were ease of
access, convenience, and one-stop shopping and delivery.
3. Are they adding new
typical customers who are keepers and are they growing each customer’s
spend?
Nothing is more
important these days than customer satisfaction which drives increased
retention and avoidance of churn. Unicorn is enjoying tremendous new user
growth – around 1000 organic sign-ups per week – and this flow is largely
driven by powerful word of mouth based on prior customers’
experiences as well as a flywheel and networking effect which is inherent in
any successful two-way market. Happy customers tell their friends.
Right now, about 15
percent of each week’s spending at the auctions is from new users and – most
importantly – these newbies stick around and typically more than 70 percent of
them make a second purchase within a month. In addition, more than half of what
they buy in their first three months ends up sitting in the Unicorn vault for
months or longer as the initial consumers turn into collectors, gifters, and
traders.
4. Are they developing
deeper connections and expanding their service offerings to their current
customers?
Since its inception,
Unicorn has paid out over $150 million to sellers as its weekly auctions have
continued to grow. They now regularly move about 5000 bottles each week at
their Sunday evening events. But only a very small percentage (less than 10
percent) of their most loyal and longest-standing clients has ever sold
anything. This would ordinarily be a concern in terms of overall sales volumes
but, in addition to offering a very substantial upside growth opportunity, the
impact is considerably lessened because in the most recent several quarters,
more than 50 percent of the sellers in the main auctions were newcomers to the
site who had never sold anything before. Here again, the composition of the
customer base continues to change in multiple directions.
In addition, Unicorn has
already begun to expand its offerings and to create loyalty programs and
special events – working jointly with distributors and manufacturers – to
provide unique access and experiences to their best customers and to further
develop the overall wine and whiskey community which they have created.
The bottom line is that
every business I know needs to be asking themselves these same four questions
to make sure that they’re on the right growth path, that they’re totally
focused on meeting and exceeding the desires and demands of their customers, and
that they constantly upping their game to stay far ahead of the
pack.
There’s a reason that
unicorns are rare.
