Welcome to the first post of my monthly (for now) blog about Unicorns. But first to all my colleagues who are not in the Tech space, a Unicorn is not a mythical magic horse with a single horn. In Silicon Valley where I live, Unicorns can only mean one thing: a startup that has achieved a valuation of $1 billion or more. They are called Unicorns because a $1 billion valuation for a startup was once so rare and unattainable, they were thought to exist in myth only. Yet today, the technology industry is filled with billion-dollar startups.
The use of the word Unicorn, to describe a type of startup, began in November 2013, when Cowboy Ventures founder Aileen Lee wrote a TechCrunch blog post to discuss the phenomenon. At that time there were 39 such companies from the past decade. Now according to research firm CB Insights there are more than 140 startups that have been valued at $1 billion or more by venture capitalists. Many wonder if this rapid increase in the number of Unicorns means we are again in a “dotcom bubble”. Others point out that unlike the highly speculative, high-risk of the companies from the “dotcom era”, many of the new Unicorns are revenue generating, high growth opportunities.
Bubble or not, the billion dollar valuation seems to be here to stay as long we have break out public companies like Facebook. After the dotcom crash, Silicon Valley venture capitalists became extremely conservative. Investors kept valuations low and tried not to overcapitalize their companies. That strategy lasted until Facebook came along. All of the cautious investors who passed on investing in the company early, because it was too expensive at $250 million or $500 million, were left scarred and paranoid when it went public in May 2012 with a market cap of $104 billion. So venture capitalists now reason that if a startup is going to be worth billions of dollars in a few years, why not just give the company a $1 billion valuation now?
It also doesn’t hurt that American corporations have massive stockpiles of cash on their balance sheets. Facebook set a precedent when it paid $19 billion for instant-messaging startup WhatsApp in March of 2014, then followed it up a month later by spending $2 billion for virtual reality headset maker Oculus VR. Also in 2014, Google paid $3.2 billion for smart thermostat maker Nest and Apple acquired headphone maker Beats for $3 billion.
I am not the only analyst who thinks Unicorns are to stay. TechCrunch, Fortune and the Wall Street Journal are all maintaining Unicorn lists. But what they are lacking is some analysis about whether these Unicorns are really worth it. Enter the SWOT analysis. By assessing the Strengths, Weaknesses, Opportunities, and Threats of these Unicorns, this blog should provide you, the reader, with some clarity. At a minimum, I hope this blog helps you think about how to make SWOT assessments for internal, competitive, or strategic purposes.
Venture Intelligence and Analysis 