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Posts Tagged ‘Bill Gross

 Can a single reason explain success of a start-up?

I’m really excited to share with you some findings that really surprise me about what makes companies succeed the most, what factors actually matter the most for startup success.

I believe that the startup organization is one of the greatest forms to make the world a better place.

If you take a group of people with the right equity incentives and organize them in a startup, you can unlock human potential in a way never before possible. You get them to achieve unbelievable things.  (Is Organizing human potential what makes a better world?)

But if the startup organization is so great, why do so many fail? That’s what I wanted to find out.

I wanted to find out what actually matters most for startup success.

And I wanted to try to be systematic about it, avoid some of my instincts and maybe misperceptions I have from so many companies I’ve seen over the years.

0:59 I wanted to know this because I’ve been starting businesses since I was 12 years old when I sold candy at the bus stop in junior high school, to high school, when I made solar energy devices, to college, when I made loudspeakers.

And when I graduated from college, I started software companies.

And 20 years ago, I started Idealab, and in the last 20 years, we started more than 100 companies, many successes, and many big failures. We learned a lot from those failures. 

 I tried to look across what factors accounted the most for company success and failure. So I looked at these five.

1. First, the idea. I used to think that the idea was everything. I named my company Idealab for how much I worship the “aha!” moment when you first come up with the idea. But then over time, I came to think that maybe the team, the execution, adaptability, that mattered even more than the idea.

I never thought I’d be quoting boxer Mike Tyson on the TED stage, but he once said, Everybody has a plan, until they get punched in the face.” (Laughter) And I think that’s so true about business as well.

So much about a team’s execution is its ability to adapt to getting punched in the face by the customer.

2. The customer is the true reality. And that’s why I came to think that the team maybe was the most important thing.

3. Then I started looking at the business model.

Does the company have a very clear path generating customer revenues? That started rising to the top in my thinking about maybe what mattered most for success.

4. Then I looked at the funding. Sometimes companies received intense amounts of funding. Maybe that’s the most important thing?

5. And then of course, the timing.

Is the idea way too early and the world’s not ready for it? Is it early, as in, you’re in advance and you have to educate the world? Is it just right? Or is it too late, and there’s already too many competitors?

I tried to look very carefully at these five factors across many companies. And I looked across all 100 Idealab companies, and 100 non-Idealab companies to try and come up with something scientific about it.

So first, on these Idealab companies, the top five companies — Citysearch, CarsDirect, GoTo, NetZero, — those all became billion-dollar successes. And the five companies on the bottom —, Insider Pages, MyLife, Desktop Factory, Peoplelink — we all had high hopes for, but didn’t succeed.

 I tried to rank across all of those attributes how I felt those companies scored on each of those dimensions. And then for non-Idealab companies, I looked at wild successes, like Airbnb and Instagram and Uber and Youtube and LinkedIn.

And some failures: Webvan, Kozmo, Flooz and Friendster.

The bottom companies had intense funding, they even had business models in some cases, but they didn’t succeed.

I tried to look at what factors actually accounted the most for success and failure across all of these companies, and the results really surprised me.

The number one thing was timing.  (This finding is already known. And it is the main factors that made the Old money of billionaire dynasties)

Timing accounted for 42% of the difference between success and failure.

Team and execution came in second, and the idea, the differentiability of the idea, the uniqueness of the idea, that actually came in third.

This isn’t absolutely definitive, it’s not to say that the idea isn’t important, but it very much surprised me that the idea wasn’t the most important thing. Sometimes it mattered more when it was actually timed.

The last two in the ranking, business model and funding, made sense to me actually.

I think business model makes sense to be that low because you can start out without a business model and add one later if your customers are demanding what you’re creating.

And funding, I think as well, if you’re underfunded at first but you’re gaining traction, especially in today’s age, it’s very, very easy to get intense funding.

So now let me give you some specific examples about each of these.

So take a wild success like Airbnb that everybody knows about. Well, that company was famously passed on by many smart investors because people thought, No one’s going to rent out a space in their home to a stranger.”

Of course, people proved that wrong. But one of the reasons it succeeded, aside from a good business model, a good idea, great execution, is the timing.

That company came out right during the height of the recession when people really needed extra money, and that maybe helped people overcome their objection to renting out their own home to a stranger.

Same thing with Uber. Uber came out, incredible company, incredible business model, great execution, too. But the timing was so perfect for their need to get drivers into the system. Drivers were looking for extra money; it was very, very important.

Some of our early successes, Citysearch, came out when people needed web pages., which we announced actually at TED in 1998, was when companies were looking for cost-effective ways to get traffic. We thought the idea was so great, but actually, the timing was probably maybe more important.

And then some of our failures. We started a company called, it was an online entertainment company. We were so excited about it — we raised enough money, we had a great business model, we even signed incredibly great Hollywood talent to join the company. But broadband penetration was too low in 1999-2000. It was too hard to watch video content online, you had to put codecs in your browser and do all this stuff, and the company eventually went out of business in 2003.

Just two years later, when the codec problem was solved by Adobe Flash and when broadband penetration crossed 50 percent in America, YouTube was perfectly timed.

Great idea, but unbelievable timing. In fact, YouTube didn’t even have a business model when it first started. It wasn’t even certain that that would work out. But that was beautifully, beautifully timed.

In summary, execution definitely matters a lot. The idea matters a lot. But timing might matter even more.

And the best way to really assess timing is to really look at whether consumers are really ready for what you have to offer them. And to be really, really honest about it, not be in denial about any results that you see, because if you have something you love, you want to push it forward, but you have to be very, very honest about that factor on timing.

As I said earlier, I think startups can change the world and make the world a better place. I hope some of these insights can maybe help you have a slightly higher success ratio, and thus make something great come to the world that wouldn’t have happened otherwise.

Patsy Z and TEDxSKE shared a link.
Bill Gross has founded a lot of startups, and incubated many others.
And he got curious about why some succeeded and others failed.
So he gathered data from hundreds of companies, his own and other people’s, and ranked each company…|By Bill Gross


Entrepreneurial Wisdom from Bill Gross

What’s most important for the success of your project?

Is it the team? funding? timing? idea? business model?

Recently I heard Bill Gross, one of the most brilliant entrepreneurs of this century, offer a compelling answer – one that changes my views on the formula for success.

This blog is a summary of Bill Gross’ excellent talk.

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5 Key Success Factors

Bill investigated how five key factors affected the success of the 125 companies in his portfolio at Idealab and 125 companies outside of his portfolio.

The factors he considered were:

    1. The Idea: How New is It? Is there a unique truth in the idea? Are there competitive moats you can build around it?
    2. The Team and the Execution: How efficient is the team? How effective is it? How adaptable?
    3. The Business Model: Do you have a clear path to revenues?
    4. The Funding: Can companies that can out money-raise others succeed where the others would fail?
    5. The Timing: Are you too early? Just early? Too late. Right on time? Did that matter a lot?

    Of these 250 companies, Bill picked 10 in each category: five companies that turned into billion-dollar companies, and five that everyone thought would be billion-dollar companies but failed.

    The question: Which variables accounted more for successes?

    What was the MOST Important Factor?

    The No. 1 thing that mattered was TIMING.

    Timing accounted for 42 percent of the successes relative to failures.

    No. 2 was team and execution.

    No. 3 was the idea.

    No. 4 was business model, and last was funding.

    The Explanation

    Funding: Much to the disappointment of the venture capital business, funding as a key success factor came in last. As Bill explains, “Funding mattered the least because you can make a company succeed even if you don’t raise the money.”

    Business Model: The business model ranked low because you can start without a business model. Take Facebook and Twitter, both of which launched without a revenue model.

  1. Some of the best companies add their business model after they find product market fit and demonstrate rapid growth.Idea: You morph the idea. The market is going to change your idea. Here Bill Gross quotes the famous business philosopher, boxer Mike Tyson: “Everybody has a plan until you get punched in the face.”

    As Bill points out, the way the market actually reacts to your first product is a lot like getting punched in the face. Your plan may be good, but it’s going to change.

    Team and Execution: The team is the one that has to look at the market and adapt their product to what they see. If you don’t have a good, complementary team, it’s just not going to happen. But, it’s not the most important factor.

    So why did timing come out on top?

    Timing is Everything

    Sometimes you might have a great idea, but the market just isn’t ready for it. And sometimes, the timing is just right to launch your business.

    Take Airbnb as an example – everybody thinks Airbnb is an incredible business model.

    It is a good business model, BUT “the Airbnb model” had been done multiple times before Airbnb became successful.

    One of the things that accounted for Airbnb’s huge success is that it came out right when the huge recession hit around the world… People needed extra money badly. People were willing to rent out their rooms or their homes.

    Similar timing helped Uber.

    SpaceX was founded and then the Columbia Space Shuttle accident left the U.S. without a reliable launch vehicle.

    So what can you do about it?

    Knowing how critical timing and market acceptance is to your business, what do you do?

    Two options…

    First, you should actually look at your business, the uptake of your product, and the dynamics of the marketplace of your customer to see if they are really ready for what you have.

    If not, adjust your offering to be what they actually need, right now.

    Second, adjust your burn rate (how much money you spend) so you can last long enough so you’re there when the market is actually ready for what you have

  2. Let’s create a world of abundance

    It’s incredible that we now have the data to analyze and rank order the success factors of startups.

    Beyond timing, funding, team… there are many others worth considering, including the proper use of exponential technologies (e.g. 3D printing, cloud computing, A.I., sensors, etc.) and use of the crowd (crowdsourcing, crowdfunding, etc.).

    This is the sort of content and conversations we discuss at my 250-person executive mastermind group called Abundance 360. The program is ~88% filled. You can apply here.

    Share this email with your friends, especially if they are interested in any of the areas outlined above.

    If you’d like to view Bill Gross’ incredibly eloquent talk (which he gave both at DLD and TED), here is a link to Bill’s talk. It’s brief and very worth your time:

    We are living toward incredible times where the only constant is change, and the rate of change is increasing

Patsy Z shared on FB via Peter H. Diamandis

There is nothing more successful than an idea whose time has come!! Indeed…

What’s most important for the success of your project? Is it the team? funding? timing? idea? business model?
Recently I heard Bill Gross, one of the most brilliant entrepreneurs of this century,…




March 2023

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