NEW INC. MAGAZINE COLUMN FROM HOWARD TULLMAN: 4 Questions That Help Forecast a Startup's Future

 

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.  

NEW INC. MAGAZINE COLUMN FROM HOWARD TULLMAN

 

How to Grow Your Business by Constantly Raising the Bar

Too many new startup founders think the quickest and most consistent path to continued growth is customer acquisition.

 

EXPERT OPINION BY HOWARD TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH INVESTORS @HOWARDTULLMAN1

Jul 22, 2025

 

Unicorn Auctions, one of the fastest growing companies in Chicago, started from a single auction of select wines and liquors drawn from a local seller’s collection and has grown into a 75-person company with inventory worth more than $100 million. Photo: Courtesy Company

 

The best entrepreneurs know that we are living today in a “what have you done for me lately” world where every client, customer and consumer are always looking for more—and they don’t want to wait. Better, faster, safer, cheaper, easier, and ideally free. But these days, in many cases, even free isn’t cheap enough. Smart solutions, cost-effective alternatives, and seductive offers are just a click away. So, to compete successfully, you’ve always got to be raising the bar. It’s not easy, but it is an unending and unavoidable challenge.

Too many new startup founders think the quickest and most consistent path to continued growth is customer acquisition. They get on a very expensive treadmill of conquest marketing, where they’re always chasing new business. This may work for a while, but it’s costly and takes their minds off the most important goals: consistent, organic growth and very high retention—keeping customers happy so they’re not going anywhere else.

Perhaps more importantly, the cheapest path to new bottom line growth can be going deeper with your existing clients and customers—they’re already in the house, easily addressable, and familiar with your offerings, rather than looking exclusively for new business. I’ve always called this strategy “knocking on old doors” and I can assure you that there’s not a single business out there that has successfully and fully saturated their current customer base. We’re talking about billions of dollars of business just waiting to be captured.

The absolutely best market research you can do is to ask your customers what additional services and support they need and then figure out how to address and solve those demands. Eliminating obstacles, friction, and pain points seems less sexy and exciting than clanging the “new sales” gong, but it ultimately results in ringing the company’s cash register more often.

It’s also important to understand that your new offerings don’t have to be perfect on day one. Start by borrowing the generic tools and basic technologies that are already out there. You can ride someone else’s rails at little or no cost. It’s cheaper, faster, and smarter than trying to build your own boat at the beginning and over-investing scarce resources before you know whether there’s interest and a serious economic opportunity. It doesn’t hurt to grow slow for a while. In fact, by putting basic offerings out there and reacting quickly to user feedback – good or bad – you actually make your customers into collaborators and partners in the development and delivery process that creates some commitment, ownership and loyalty on their part, which you simply can’t buy otherwise.

But if you’re not careful, it can also be a slippery slope. There’s always an infinite customer demand for the unavailable (“If it only cost a dollar, tasted like chocolate, and cured cancer, I’d buy a bunch.”) They want it all and they want it right now. So, move deliberately, but don’t promise too much or get too far out over your skis. You can learn a great deal by looking, asking and listening – then move ahead, ideally by under-promising and over-delivering. Meeting successive and unmet demands builds momentum. Filling the service and access gaps cuts down on friction. Providing smart and simple follow-on solutions to obvious pain points is a great way to keep raising the bar and growing your business.

Unicorn Auctions is one of the fastest growing companies in Chicago and a perfect example of the iterative improvement process of incrementally building out your business to continue to meet an increasing number of the needs and desires of your core customers. What started a few years ago from a single auction of select wines and liquors drawn from a local seller’s collection has grown into a 75-person team now holding weekly auctions every Sunday night, serving over 100,000 customers, and holding inventory in its vaults worth more than $100 million.

What is so interesting about the Unicorn story is that, in retrospect, everything they’ve developed and added to their core business seems obvious, but none of it existed in a vertically integrated fashion for the wine and spirits industry until these guys built it on the fly—and largely by bootstrapping the business for several years. They now have an end-to-end set of offerings—buy, sell, store, evaluate and transport any and all of these items—anywhere in the world. And they‘ve been profitable from the beginning.

It started with the fact that almost all of their early customers were stuck with bottles and boxes of whiskey – jammed into apartments, homes, garages, and the occasional storage locker – without any accurate or accessible inventory of what they had and basically no idea of what the items were worth. These were generally affluent men who had everything they wanted and nothing they needed. Cars, clothes, condos and cribs, watches and Wagyu filets, and eventually bourbon and fine wine for their cellars. But not a clue about what to do with it. Providing a simple digital collection management system was the first step in moving all these valuable assets from an offline and often frustrating mess to an online set of manageable and marketable assets.

Once the early collectors started to realize the value of what they had accumulated, they developed an interest in buying and selling these items, which led to the earliest Unicorn auctions – built on a third-party platform—which the guys developed just to get the business started. As soon as the sales began, the clients realized that the logistical challenges were substantial—the bottles were valuable, fragile, temperature-sensitive—and, of course, often still stuck in their man caves, basements and wine racks.

So, Unicorn stepped in to manage all the aspects of the buy, sell and delivery process and, in no time at all, it also became clear to their clients that storing their collections in Unicorn’s vault made a ton of sense from a safety, security, and ease of access standpoint. One of the trickiest aspects of collecting consumables is that, if you’re foolish enough to actually consume the stuff, all the accrued value (apart from a roaring good time and an intense hangover) is gone. Neil Young wrote a song in 2007 about this problem called Ever After. He described the plight of the collector who had “got so many boxes that he’d never open, ‘cause the minute he did they’d lose their value.”

This fact, and the reality that a huge percentage of their clients’ inventory was already sitting in Unicorn’s own vaults, led to the next breakthrough for Unicorn – turning these bottles of bourbon into digital assets – which could be freely bought, sold, traded or gifted without ever moving off the shelves in the vault. Each weekly auction “sells” about 5,000 bottles of liquor.

Today, an enormously high number of monthly transactions are fully virtual and hundreds of the highest valued bottles of whiskey have been bought and sold multiple times (at ever increasing values) in online digital transactions where the actual product never moves an inch. Talk about ideal logistics.

Even more important than the logistical efficiencies and far more valuable in the long run are the vast amounts of data that the Unicorn systems capture regarding buyers’ preferences, individualized transaction volumes, product selections, pricing, demand, geographic disparities, etc. which not only drives the scope and accuracy of its valuation algorithms, but also is critical information which the manufacturers and distributors of all the whiskey, wine and other spirits in the U.S. don’t have.

Amazingly enough, in our hyper-invasive culture where we believe that every organization, agency and entity we deal with in any capacity captures every conceivable piece of data about our actions, preferences and behavior, the leaders in the liquor industry know absolutely nothing about who their end purchasers are because of an antiquated, multi-level and tiered distribution setup which has been around forever. This keeps them from offering the kind of customized, compelling and convincing experiences to their individual major customers and collectors that every other major industry offers as a matter of course.

Unicorn, on the other hand, knows virtually everything of substance about the parties on both sides of every transaction it processes, and the company is just beginning to collate, assemble and analyze all that information in formats which will be invaluable to the industry’s manufacturers, distributors and retailers.

As I often say, data is the oil of the digital age. Unicorn will be able to provide marketing, merchandising, and manufacturing direction and event, engagement and loyalty guidance to the entire liquor industry as it increasingly becomes the marketplace and market maker for the world of whisky and wine.