I’m Really Excited To Share With you Some Findings That Really
Suprise Me About What Makes Companies Succeed The Most, What Factors Actually Matter The Most for Startup Success. I Believe That the Startup Organization Is One Of The Greatest Forms to Make World a Better Place. If You Take a Group of People with The Right Equity Incentives And Organize Them In a Startup, You Can Unlock Human Ptential in a Way Never Before Possible.
You get them to achieve unbelievable things, but if the startup organization is so great why do so many fail, that is what i wanted to find out. i wanted to find out what actually matters most for startup success and i wanted to try to be systematic about it avoid some of my instincts and maybe misperceptions i have from so many companies i have seen over the years. i wanted to know this because i have been starting businesses since i was 12 years old (bill gross), when i sold candy at the bus stop in junior high school.
To high school, when i made solar energy devices, to college when i made loudspeakers and when i graduated from college i started software companies, and 20 years ago, i started idealab, and in the last 20 years ago we started more than 100 companies, many successes and many big failures. We learned a lot from those failures so i tried to look across what factors accounted the most for company success and failures, so i looked at these five.
THE IDEA
I used to think that thr idea was everything i named my company idealab for how much i worship the ‘aha’ moment when you first come up with the idea.
TEAM
I came to think that maybe the team, the execution, adaptability that mattered even more than the idea, i never thought i’d be quoting boxer mike Tyson on the TED stage, but he once said everbody has plan until they get punched in the face. And i think that is so true about business as well, so much about a team’s execution is its ability to adapt to getting punched in the face by the customer, The customer is the true reality that’s why i came to think that the team maybe was the most important thing.
BUSINESS MODEL
Then i started looking at these five business model, does the company have a very clear path generating customer revenues? That started rising to the top in my thinking about maybe what mattered most for success.
FUNDING
Then i looked at the funding, sometimes companies received intense amounts of funding, maybe that is the most important thing? and then of course the timing is the idea way too early and the world’s not ready for it?. Is it early, as in, you’re in advance and you have to educate the world? Is it just right? Or is it too late and there’s already too many competitors? So i tried to look very carefully at these five factors across many companies. and 100 non-idealab companies to try and come up with something scientific about it.
So first, on these idealab companies the top five campanies. Citysearch, Cars direct, GoTo, Netzero, Tickets, those all become billion dollar successes and the five companies on the bottom Zcom insider pages, mylife, desktop factory people link. We all had high hopes for but didn’t succeed. So i tried to rank across all of those attributes how i felt those companies scored on each of those dimensions, and then for non idealab companies i looked at wild successes like Airbnb and instagram and Uber and Youtube and Linked and some failures.
The bottom companies had intense funding, they even had business models in some cases, but they didn’t succeed. I tried to look at what factors actually accounted the most for success and failure across all of these companies, and the results really surprised me, the number one thing was timing. Timing accounted for 42 percent of the difference between success and failure. Team and execution came in second and the idea the differentiability of the idea, the uniqueness of the idea that actually came in third.
Now, this isn’t absolutely definitive it’s not to say that the idea isn’t important but it very much surprised me that the idea wasn’t the most important thing. sometimes it mattered more when it was actually timed. The last two business model and funding, made sende to me actually, i think business model makes sense to be that low because you can start out without a business model and add one later if your customers are demanding what you are creating and funding i think as well, if you are underfunded at first but you are gaining traction especially in today’s age.
It’s very easy to get intense funding so now let me give you some specific examples about each of these so take a wild success like airbnb that everybody knows about. Well that company was famously passed on by many smart investors because people thought.
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