Bill gross The biggest reason startups are successful
Watch the video: The single biggest reason why startups succeed by Bill Gross
I want to share with you some amazing results from answering questions:
- What makes companies successful?
- What factors are most important for a successful startup?
I think starting a startup is one of the best ways to improve the world. By gathering a group of people with the right fair motives and organizing them into a startup, you can realize previously unattainable human potential. In doing so, achieve incredible results. But if startups are so wonderful, where do you get so many unsuccessful undertakings from? The answer to this question bothered me very much. I wanted to know what is most important for a startup’s success. Having systematized information about startups, I wanted to try to avoid the intuitive and unreliable conjectures that I had formed over the years.
I would like to know the secrets of successful companies, because I started doing business from the age of 12, when I sold candy at a bus stop in high school, in high school I made devices powered by solar energy, in college - speakers. After graduating from college, I founded software companies, and 20 years ago, I founded IdeaLab , and during this time, we opened more than a hundred companies, some of which are successful, and some are not. Failures taught us a lot.
IdeaLab is the world's first business incubator, founded in 1996 in the USA by brothers Bill and Larry Gross.
I tried to analyze the importance of factors for the success or failure of a company. For this, I chose the five most important.
First of all, an idea . I used to think that an idea is everything. I named my company IdeaLab only because I like the phenomenon of insight (insight). But over time, I came to the conclusion that perhaps the team , management and adaptability are much more important for the company than the idea.
I never thought that I would quote Mike Tyson on the TED stage, but he once said: “Everyone has a plan until he gets it in person.”I think this thesis is absolutely true for business. Particularly important are the ability of management to adapt and hold the punch. From this, I conclude that for a startup, the team can be the most important success factor .
Then my attention was drawn to business models. Does the company have distinct revenue streams? Then in my constructions, business models began to overshadow the importance of the team.
Next I paid attention to financing. Sometimes companies received significant financial injections. Maybe this is more important for success?
Then I analyzed timing (timeliness). If the idea is too innovative and the world is not yet ready for it? If it’s really early, how to bring the idea to the world? Is it that simple? And if it’s too late and there are already too many competitors on the market?
Timing is the choice of the most profitable moment.
I tried to very carefully evaluate the impact of the five voiced factors on a fairly large sample of companies. For this, I selected a hundred companies from the IdeaLab portfolio and a hundred others to try to systematize the data.
So, the top five with billions of capitals from the IdeaLab portfolio: Citysearch, CarsDirect, GoTo, NetZero, Tickets.com . Five outsiders who had high hopes: Z.com, Insider Pages, MyLife, Desktop Factory, Peoplelink .
I tried to rank according to the specified attributes participating in the sample of the company. Then he took on companies that have no relation to IdeaLab and have achieved tremendous success, such as Airbnb, Instagram, Uber, Youtube and LinkedIn .
As well as outsiders:Webvan, Kozmo, Pets.com, Flooz, and Friendster . They were heavily funded, in some cases possessed of well-developed business models, but success passed by. After analyzing the influence of five factors on the success of all these companies, I got amazing results.
The first place was taken by timing, which stretched 42%. The team and management took about the same line. And, in fact, the idea factor took only third place.
This result is not yet final, it is still impossible to say that the idea takes such a low place, but the fact that the idea loses to other indicators surprised me. Sometimes its value increased, with appropriate timing.
The last two indicators, business model and financing are also significant for me. I think that starting a business can happen without a business model that can be developed later. Financing is also important at the later stages of business development, especially in today's realities, it is quite easy to obtain it.
Let me give you some concrete examples. Consider the wild success of Airbnb. The company was ignored by many famous investors because of the peculiarities of its business model. Today, of course, the choice of people has proved the opposite, but one of the reasons for luck, along with the business model, idea, its excellent execution and management, is the timing, that is, timing.
The company fired at the very height of the recession, when people really needed additional funds, which, in turn, helped people overcome the barrier of renting their homes to strangers.
Same thing with Uber. Incredible company, incredible business model, and excellent performance. Timing was ideally laid on prepared soil, which is very, very important.
Some of the first successes of Idealab: Citysearch came when people needed web pages. GoTo.com, announced at TED in 1998, appeared when companies were looking for effective ways to get traffic. It seemed to us that the ideas were incredible, but in fact, timing was more important.
Some of the failures: having founded the media company Z.com, it seemed to us that sufficient capital, an adequate business model and the participation of celebrities would ensure incredible success. Unfortunately, the spread of broadband access at that time (1999-2000) was somewhat ephemeral, which did not allow the use of video with sufficient comfort. The company eventually flew into the pipe in 2003.
Just two years later, when the problem of encoding video using Adobe Flash was solved and broadband access exceeded the 50% threshold, YouTube shot. Z.com is a great idea, but untimely timing. From the very beginning, YouTube did not even have a business model, some may recall that the problem of resource monetization was solved only when Google bought the service, and even Google did not immediately solve this problem. That's right, but the appearance of Youtube turned out to be timely, which predetermined success.
Thus, we can conclude that, in general, management and idea are of great importance. But timing is much more significant. The best way to measure timeliness may be to analyze the consumer sector and its willingness to innovate. Despite this, the rejection of the implementation of ideas in an unfavorable assessment is not at all necessary, but an honest assessment of timeliness can give an acceptable forecast of success.
As I said earlier, I think startups can change the world and make it better. I hope that the results of my research can help to get a slightly higher success rate, which in turn will bring changes to the world, which otherwise could not have happened.