Unicorns are a beautiful myth — but are unicorn startups a myth, too? At first glance, the answer is “no.” The definition of a unicorn startup is a company with a $1 billion valuation. Uber is a unicorn startup. Airbnb is a unicorn startup. Facebook is a unicorn startup. So are WeWork, Spotify, Stripe, and a couple hundred other companies you probably haven’t heard of. Those are real companies that have achieved “unicorn” status, so that means unicorn startups are real, right?

Well, not quite.

First, let’s talk about how we get to that $1 billion valuation. There are a few different ways to determine the valuation of a startup but, basically, it’s what your investors believe your company is worth, based on the metrics your company has compi...