hectocorn

What is a hectocorn?

A hectocorn is a company with a valuation exceeding $100 billion. In some cases those are referred to as super-unicorns, in some other cases, those are called tech giants, or big tech.

Hectocorns vs. decacorns

Where an hectocorn is a tech giant, that has passed $100 billion in market cap, a decacorn is a large tech company, still in a scale-up phase, which has reached $10 billion in market cap.

Hectocorns vs. unicorns

Where hectocorns are tech giants who are already in a mature stage of growth, a unicorn, is a tech company that is still in the stage of fast iteration, where it looks at exponential ways to enable its growth.

Also referred to as a “super- unicorn” by TechCrunch, hectocorns are rare with only a few born every decade.

Like unicorns and decacorns, it is important to remember that hectocorns are entities whose valuations are based on their growth potential and not on financial performance.

The top five hectocorns

The top five hectocorns are all tech companies in some shape or form, with every major technology wave producing one or more new members.

For example, Intel is associated with the era of the semiconductor in the 1960s while the dawn of the internet in the 1990s propelled Google to where it is today.

With that in mind, let’s take a brief look at each of the top five below.

Meta business model

facebook-business-model
Facebook, the main product of Meta is an attention merchant. As such, its algorithms condense the attention of over 2.91 billion monthly active users as of June 2021. Meta generated $117.9 billion in revenues, in 2021, of which $114.9 billion from advertising (97.4% of the total revenues) and over $2.2 billion from Reality Labs (the augmented and virtual reality products arm). 

Under the old name Facebook, Meta was both the first decacorn and hectocorn with a $100 billion valuation before the company went public in 2012.

The company’s extreme pre-IPO valuation was based on several factors. Facebook had a globally engaged user base with significant monetization potential and a platform that was infinitely scalable.

Today, that platform’s infrastructure powers countless websites from which the company collects valuable user data.

Amazon business model

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Amazon has a diversified business model. In 2021 Amazon posted over $469 billion in revenues and over $33 billion in net profits. Online stores contributed to over 47% of Amazon revenues, Third-party Seller Services,  Amazon AWS, Subscription Services, Advertising revenues and Physical Stores.

Amazon’s hectocorn status is due to diversification. Indeed, the company has a dominant, established position in virtual assistants, cloud services, video streaming, retail, and tablets, to name a few. 

In many of these industries, Amazon is still in the early stages of growth. Amazon AWS, for example, posted 36.5% year-on-year growth in the first quarter of 2022 with revenue over the same period totaling $18.44 billion.

Microsoft business model

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Microsoft has a diversified business model, spanning from Office to gaming (with Xbox), LinkedIn, search (with Bing), and enterprise services (with GitHub). In 2021, Microsoft made over $168 billion in revenues, of which over $52 billion came from Server products and cloud services and $39.8 billion came from Office products and cloud services. Windows generated over $23 billion, Gaming generated over $15 billion, LinkedIn over $10 billion, and search advertising (through Bing) over $8.5 billion. 

Like Amazon, investors see growth potential in Microsoft’s Azure cloud service.

While Azure is second only to AWS, Microsoft has been able to close the gap in recent years and in some quarters has posted revenue exceeding its biggest rival.

Microsoft is likely to remain in a favorable position as the remote work trend necessitates that enterprise software and tools shift online.

This will be helped by the company’s foresight to introduce cloud versions of Microsoft Office and other productivity tools as early as 2011.

Apple Business Model

apple-business-model
Apple has a business model that is broken down between products and services. Apple generated over $365 billion in revenues in 2021, of which $191.9 came from the iPhone sales, $35.2 came from Mac sales, $38.3 came from accessories and wearables (AirPods, Apple TV, Apple Watch, Beats products, HomePod, iPod touch, and accessories), $31.86 billion came from iPad sales, and $68.4 billion came from services.

Apple is the most valuable company in the world and, at one point in 2018, was a so-called “kilocorn” with a valuation north of $1 trillion. 

Apple was also the first publicly-traded company to achieve a $3 trillion market capitalization in January 2022.

To put this number into perspective, Apple’s market cap exceeds the gross domestic product (GDP) of six of the world’s richest economies such as India, France, and Italy.

Alphabet business model

google-business-model
Google is a platform, and a tech media company running an attention-based business model. As of 2021, Alphabet’s Google generated over $257 billion in revenues. Over $209 billion (over 81% of the total revenues) came from Google Advertising products (Google Search, YouTube Ads, and Network Members sites). They were followed by over $28 billion in other revenues (comprising Google Play, Pixel phones, and YouTube Premium), and by Google Cloud, which generated over $19 billion in 2021.

Alphabet’s inclusion on this list is no surprise, with more around $150 billion of company revenue coming from online advertising alone.

Like many similar companies, Google has benefitted from the COVID-accelerated shift toward digitization and eCommerce.

Several strategic partnerships and acquisitions are helping Google expand its cloud footprint around the world, while mobile search, autonomous transportation, and healthcare are enormous addressable markets with further growth potential.

Key takeaways:

  • A hectocorn is a company with a valuation exceeding $100 billion. Also referred to as a super unicorn by TechCrunch, hectocorns are rare with only a few born every decade.
  • Hectocorns are entities whose valuations are based on their growth potential and not on financial performance.
  • The top five hectocorns are Meta (Facebook), Amazon, Microsoft, Apple, and Google. Facebook was both the first unicorn and hectocorn, while Apple is arguably the most valuable both in terms of private valuation and market cap.

Read Next: Unicorn, Decacorn, Amazon Business Model, Apple Business Model, Meta Business Model, Microsoft Business Model.

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