Inspired by Bill Gross’ TED talk ‘The Single Reason Why Startups Succeed’, BDO’s Marc Loftus was interested to see if a general consensus had been reached by commentators as to the standout factors that influence the success of a startup.
There is a plethora of literature and opinions out there on the topic of startup success or failure, underpinned by an understanding that the ultimate success or failure of a startup is driven by a complex and diverse set of factors, decisions & circumstances.
Having been involved with eGroup and Perth Angels in WA for a number of years, this author has been privileged to hear many successful entrepreneurs, innovators and investors share their journeys from concept all the way through to IPO and beyond.
A common thread in these presentations is an acknowledgement that it is often the failures as much as the successes that have provided the most learning opportunities, with Bill Gross referencing Mike Tyson’s quote:
‘Everyone has a plan until they get punched in the face’.
The point here is that the ability to bounce back from the lows that come with a failure or set-back and the tenacity to regroup, adapt and put yourself and the idea out there again, is a very important skill and mantra to adopt.
This especially when faced with statistics like:
- 9 out of 10 startups eventually fail
- 80 per cent of startups crash and burn within the first 18 months
Top 5 Reasons Startups Succeed
In Bill Gross’ presentation, he contemplates five important factors, and ranks them accordingly:
- Timing: 42%
- Team/Experience: 32%
- Idea: 28%
- Business Model: 24%
- Funding: 14%
It’s all about Timing!
Interestingly a fair few of articles on this subject give top pegging to the team and their collective experience, likening it to the oxygen for any startup.
Certainly achieving success in the fast-paced world of innovation and tech is not something that can be done alone, with many entrepreneurs crediting their success to the strength and expertise of the team.
But Bill Gross’ research points to timing being the most important factor. You can be early or too late. Most likely you will be. Too late is just too late. Good bye. It’s been done. The market opportunity’s gone. Too early is better than too late, but it’s still hard. There is nothing more important that timing.
Case studies supporting this theory include the take off of Airbnb and Uber during the height of the US recession in 2008. Earning extra money by renting out properties and sharing ‘rides’ with complete strangers had not been seriously contemplated before but was embraced when suddenly unemployed people needed a quick gig to earn money (such as driving their car or renting out spare rooms).
A similar story can be told for YouTube, its release perfectly timed with Adobe flash solving the codecs issue that was being experienced when broadband penetration was low and streaming of video and audio would take 3 to five times longer than it does now.
Timing also comes into the equation as a function of the hectic pace of the startup arena, where failing fast is the order of the day, flying in the face of conventional wisdom where you try to hang on for as long as you can in the hope of turning things around.
Like many things in business (and indeed life!), there is, unfortunately, no magic bullet for success, but armed with a great idea, a respected and highly experienced team, a market that is ready to adopt your idea/technology, a sound business model and access to capital, the odds are more likely to be in your favour.
But, like telling a good joke, it could be all about timing…
~~
BDO is a Sponsor of Startup News.
About Bill Gross
Bill Gross is the founder of Idealab, a business incubator focused on new ideas. (He’s now the chair and CEO.) He helped create GoTo.com, the first sponsored search company. He also created the Snap! search engine, which allows users to preview hyperlinks.
Gross has been an entrepreneur since high school, when he founded a solar energy company. In college, he patented a new loudspeaker design, and after school he started a company that was later acquired by Lotus, and then launched an educational software publishing company. Now, he serves on the boards of companies in the areas of automation, software and renewable energy.
