Why Timing Matters in Startups
Timing, in startups, as in life, is everything.
I’ve been reflecting recently on how true this is. History is littered with examples of companies that got everything right — solid idea, strong team, great model, plenty of capital — but went to market either too early or too late. They missed the window of opportunity.
This was the topic of a talk given in 2015 by legendary entrepreneur Bill Gross. Bill is the founder of Idealab, one the world’s longest running startup incubators. 150+ companies, 45+ IPOs/acquisitions. Quite a record.
(More on IdeaLab here and why I think their breakthrough energy companies are worth your attention in a follow-up post)
With so much winning under his belt, no doubt Bill and IdeaLab have had some losses as well. So I reckon he has a decent understanding of why some ideas succeed and why some fail.
For the talk, Bill performed a micro-analysis of all the companies he had been involved in building over the last 20 years. He looked at the standard top-5 factors for success across all those companies. He judged that timing, by far, was the most important factor for success.
Here’s the key slide.
(Team + Idea) x Timing
You need to start with a winning idea. You then need a great team that has the skills, experience, and willing to execute on that idea. But if your timing is off, your likelihood of success is significantly reduced.
If you’re too early, your customers won’t need or may not understand what you’ve made. If you’re too late, any number of alternative market realities could have come to pass. The timeline has forked.
Why business model is less critical for success
“You can start out without a business model and then add one later if customers are demanding what you are creating.”
A classic truth. Focus on what your customers want and build it for them. So long as you are not too wide of commercial reality, you’ll find a way. And if it’s a digital consumer product, just add advertising! ;-)
Funding: The Least Critical Factor?
“If you are underfunded at first, but you are gaining traction, especially in todays age, it’s very, very easy to get intense funding.”
Historically low interest rates and sustained enthusiasm for disruptive technology companies have meant there is a ready supply of cheap capital available to founders. But barriers to raising the right funding from the right partners do still exist, irrespective of runaway product traction.
HQ geography is undoubtedly a barrier, for example — think Silicon Valley vs. Nairobi. And the warm intros many venture funds prefer, act as a prejudice filter (race, gender, and economic background).
But all things being equal, if you are well positioned and gaining traction, the funding challenge is probably not the hardest to solve.
Timing Matters
This is a great reminder for teams and entrepreneurs trying to get their amazing product to market. Be honest with yourself about whether you have the timing right, no matter how much you love what you have made.
