Swot Analysis Of Startups

Strengths

 Boldness: since you have nothing to lose, as a startup you can experiment all you
want and lose very little. Most recently I validated the need for a FinTech School with
$160 and 9 days worth of moonlighting. Cheap experimentation is a tool, but the fact
that I have nothing to lose leads to boldness in approach. As a side note, tech startups
in CA typically believe that if you are not embarrassed by your first launch, then you
launched too late. For large corporations with a lot of brand equity at stake, that's
simply not the case. 
 Agility: small teams, focused resources, little bureaucracy & hierarchy and sticky
notes instead of lengthy requirements (i.e. scrum vs. waterfall SLDC) are among
some of the elements that yield a higher speed of execution for startups vs. large
companies.
 Access To Talent: strong founding teams benefit from having the ability to attract top
talent which in turns breeds more top talent and weeds out poor performers over time
(See Attraction, Selection, Attrition Model). Similarly, a startup has an unparalleled
ability to align incentives with its employees. Examples include 1) emotional (e.g.
Mission, Vision & Pride == MVP), 2) financial (e.g. founder stock) and 3) intangibles
(e.g. cool titles, skill variety, t-shirts).
 Fresh Culture: as the saying goes, "culture eats strategy for lunch". Also a pic is
worth 1000 words.

Weaknesses

 Fragility: a startup can implode anytime due to lack of funding, a founder dispute or
simply people losing interest in the idea or market opportunity.
 Cash Balance: lack of financial resources to solve distribution and critical mass in
terms of adoption to get to revenue is one of the most frequent reasons why startups
fail.
 Hardship = The Physical, Emotional & Financial Tax: startups are hard on
everyone given the daily grind and major obstacles that every successful entrepreneur
most endure. There's easily over 300 "Nos" before getting a "Yes" for funding.
Entrepreneurs also have a higher than average divorce rate so this career choice for
the person and venture can sometimes cost a pretty emotional and monetary penny.
 No Name: Every startup needs to figure out a way to open up doors and for some, this
can be more challenging than others. Personal and professional networks can make a
huge difference. Hustle is a must.

Opportunities

 Unlimited Upside: disruption potential is unlimited if the stars are aligned properly
(let's not forget the element of luck here) and execution of course. Examples here
include Air BnB, Uber, Facebook and Google which redefined the world as we know
it and generated billions of dollars in return to its founders and investors. In some
cases, billions in terms of social wealth.
  Ride A Wave: The ubiquity of the smart phone gave birth to many new products and
services (including FinTech). As an example, without a smart phone, Instagram
wouldn't exist. Waves refer to inflection points generated by catalysts for change.
Recent examples include the onset of FinTech as a permanent change shaping the
Financial Services industry and many startups are surfing that wave. Hyper-growth
fueled by regulatory changes (e.g. JOBS Act on Fundraising) can also generate major
tsunamis of innovation as well.
 Greenfields: As a startup, developing new markets with new or redefined products is
quite common, but pioneering can sometimes turn into the threat of getting arrows on
your back. Refer to Prosper vs Lending Club in terms of reactions to the SEC probes
and set backs.
 Learning: How to translate data and lessons into money? You fail, learn and iterate at
the speed of light which gives startups an unfair advantage. The ability to learn fast is
an opportunity every startup exploits. 

Threats

 Brain Rape: this is very common when unknown parties wave an "investor or partner
flag" just to learn from you with no real intention of realizing an investment or
partnership. You get to waste your time training a new competitor and get $0 revs or
investment in return. For humor,watch this video from HBO. From personal
experience, I know it's real and very common. 
 Legal: frivolous lawsuits from patent trolls or otherwise dirty players who can't beat
you except for suing you. Sometimes founders sue each other as a result of a bad
breakup which can lead to implosion.
 Compliance: regulators don't care that you are small as an alibi to break the law. Sure
you can push the limits as the 1st to do something new but you can also get shutdown
for sometime if you don't comply. Criminal charges may apply. 
 No exit: you built it, were the 1st, proved a new business model and solved a problem
but a copy cat with significantly more resources creates a competitive product and
steals your cheese leaving you with no exit or payoff.