Thursday, July 2, 2015

#Startup Science

Recently, I watched a Bill Gross (founder, Idealab) TED Talk on the factors that help make a startup successful, or otherwise. He shared some great insight on some of their many successes and failures. And he added references to companies that he had not ever been associated with.

I thought to share some of his thoughts, supported by own portfolio experience, in the hope that this will be useful to other entrepreneurs and self-employed business professionals.


Many startups seemingly fail because they could not secure a financing round. Actually, although often offered as a primary reason, funding is highly unlikely to be the primary reason for business failure.

This concept may seem somewhat counterintuitive: Startups may struggle to secure funding, but this is not the primary reason why they may not succeed. For example, many investors ignored Airbnb originally, when they embarked on a quest for funding.

Business Idea

Which brings us to the idea. Some founders think because they have a great idea, it will be easier to get funding.

However, sourcing an idea investor is rather difficult since most Venture Capitalists (VCs) and many Angel Investors may be looking for revenue, traction, run rate, revenue, scalability, etc., instead.

Many great startup ideas have failed, and several successful startups were not even really that great an idea. Not at the start anyway. Ideas, like the people who generate them, constantly evolve.

Your final product may not even have the slightest resemblance to your original idea. And that’s okay.

Business Model

No, a business model is not a requirement for success. Many successes, like YouTube, did not even have a business model at the start.

And anyway, your business model, much like your original startup idea, will also need to continuously evolve in order to accommodate shifting consumer preferences, fads, waves.

You can create the greatest business for compact disk distribution, but if no one is buying CDs, you will surely fail.


This one crops up often. Most of the time, institutional investors (VCs) will want to consider past results and successes, the track records of the management team, etc.

They will want to assure themselves - before investing - that the exec team is a powerhouse that has done it before, and will be able to do it again! However, since most startups begin with one or two people, a great team may not be a recipe for success.


This seems to be most critical to startup success. Now, it would be remiss of me to claim that timing is everything, and the other factors above are of less importance. However, timing is critical, and good timing, essential.

But, you cannot control timing. And there are many factors entirely beyond your control.

Apple crushed Blackberry with impeccable timing. Consumers were ready for new smartphone technologies. At the time, Jim Balsillie, co-founder of Blackberry had famously said, “you don’t need an app for the Web.” While Blackberry was betting on a browser as the only app one would need, more than 300,000 apps were already available for the iPhone and iPad.

Sometimes, you cannot even control time to market timing. Development may take longer than anticipated; vendors in a supply chain may delay product launch; etc.

I briefly mentioned traction above. This can refer to a growing number of regular users (e.g. Facebook), regularity of existing client reorders (e.g. when selling a product to retailers), annual SaaS user license renewals (e.g. SalesForce).

For your startup to be successful, you need all of the above, hard work, luck, and really good timing!

For regular #startup tweets, follow me @rudibest on Twitter.