What's the Secret to Startup Success? Timing.
Most entrepreneurs have heard the commonly cited statistic that 90 percent of all technology startups (and let’s face it, the majority of modern startups are technology based) fail. Some fail because their products didn’t end up being what they thought it would. Some fail because they ran out of money. Others fail simply because their revenues couldn’t grow fast enough.
But these causes of death don’t exactly illustrate what went wrong for the startup during the course of its life, much in the same way that listing a heart attack as a cause of death doesn’t directly indicate an unhealthy lifestyle that may have led to it. Like with human life, some startup deaths come out of nowhere and can’t be helped, and some are both predictable and preventable.
We all know that there’s no shortcut to success, and there’s no magic formula that can create the “perfect” startup, immune from the 90 percent death rate constantly looming over the heads of entrepreneurs. However, there’s one factor that rises above all others in importance: the timing of the business.
In a recent TEDTalk, serial entrepreneur Bill Gross introduces a quandary that has been plaguing him for years. Both within and outside his organization, he’s witnessed dozens, if not hundreds, of different businesses grow from just a hint of an idea to full-fledged enterprises standing and developing on their own. He’s seen a number of different successes during his tenure, and he’s seen a lot of failures, and as you would imagine, some ideas he thought were perfect turned out to be flops and some he thought would be flops turned out to be quite successful.
Dirven by curiosity, Gross examined dozens of different companies, evaluating them on a point scale in each of five different categories he felt were at least partially responsible for determining a startup's success. They included the strength of the idea behind the company, the plan on how the idea would be executed, the amount of capital the business was injected with, the people who were running the show, and whether the idea launched at a time when audiences were both ready for it and interested in it.
If you saw the headline of this piece, you won't be surprised to learn that timing turned out to be the factor responsible for the greatest number of successes among Gross’s selection sample. And while the idea and the funding might make more sense -- after all, how can you find success with a bad idea or without any money to help you grow? -- the timing aspect represents the greatest make-or-break point in a startup’s development.
Imagine a business where everything else is perfect: You have a great idea, a theoretically brilliant business model, a talented team and enough funding to get the ball rolling. But if your idea comes too early and consumers aren’t ready for it, they won’t readily adopt your system. If your idea comes too late and there are already a number of different competitors in front of your target audience, you won’t be able to squeeze in.
Imagine the other end of the spectrum. Everything else is lacking: You have an OK, but not great idea, a business model with a few holes, a few dedicated people who don’t know exactly what they’re doing and barely enough funding to keep the lights on. But your release is timed perfectly. People have a strong need for your idea and they’re ready for it, but you’ve come along before anybody else has.
You could expect to see strong initial sales, which can help you flesh out your business model and provide you enough cash to negate your funding issue. At that point, you’d be able to hire a better team, and eventually, your idea will evolve and get better with the support of your users.
Timing can’t be ignored, and it can’t be substituted just by paying more attention to the other elements of your business. Certainly, having a good idea, business model, team and available capital can all increase your chances of success, but without that critical timing factor, you’ll inevitably end up failing -- or at least struggling.
The biggest downside to this is that there’s no scientific process for determining the timing of your idea. You can use market research to figure out the personas of your target demographics, and competitive research to see what your competition is like, but for the most part, timing comes down to a gut feeling and a little bit of luck.
Still, hit the timing right, and everything else in your business will fall into place in due time.
Entrepreneur Editors' Picks
These Co-Founders Are Using 'Quiet Confidence' to Flip the Script on Cutthroat Startup Culture and Make Their Mark on a $46 Billion Industry
My 7-Year-Old Daughter Started Selling Eggs. Here's What She Taught Me About Running a Startup.
Why You Need to Become an Inclusive Leader (and How to Do It)
Career Transitions You Can Make in Your 40s and 50s
Billionaire Naveen Jain Is an Expert at Disrupting Fields He Has No Experience In. His Secret Sauce for Building Multi-Million Dollar Companies? 'You Have to Come as Naive.'
4 Principles to Develop Next-Level Leadership at Your Company
This Filipino American Founder Is Disrupting the Beverage Aisle by Introducing New Flavors to the Crowded Bubbly Water Market