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The Number One Reason Why Startups Succeed

Bill Gloss, the owner of Idealab, has helped more than 100 startups since 1996. Most of these startups were huge successes like CarsDirect, City Search, Net Zero and others. But at the same time, there were quite a few failures like Z.com, People Link and others.

So the question is what makes a startup succeed and what factors make it a failure? Why startups succeed? And why do they fail?

In order to find the answer, Bill Gloss recently listed down top five factors that contribute to the success of a startup. These factors were derived from literature mainly and from his 20 years of experience. These factors include:

  • Idea
  • Team
  • Business model
  • Timing
  • Funding

These five factors contributed to the success of a startup. In order to find out which of these factors contributed the most towards the success or failure of a startup, Bill listed 100 Idealab companies and 100 non-Idealab companies and then rated them on these five factors.

The idea was simple, to find out why startups succeed and what is the single most crucial factor that contribute to their success.

The results showed that ‘timing’ happens to be the most critical factor that was common in all successful startups in 200 companies.

why startups succeed

A Successful Startup Is All About Timing

What do we mean by timing?

Timing refers to the time when the startup is launched. The moment you start your venture and start marketing it, is said to be its timing.

Startups that are launched at the right time succeed.

For instance, Airbnb was launched at the time when recession was at its peak. It was the time when people needed money so Airbnb turn out to be a huge success. To your surprise, numerous investors turned down the offer and refused to invest in Airbnb before its launch because for them, it was a stupid idea.

Similarly Z.com, an Idealab company, was a failure. It was an online entertainment company that was launched back in 1999. It used to stream videos online but that wasn’t the right time for online streaming because of low broadband users and due to codec issues. Later in 2005, when 50 percent of the people were using broadband in USA and the codec issues was resolved by Adobe Flash, YouTube hit the market with perfect timing and it was a huge success.

Timing – is the single most important factor that can turn the tables.

Startups that are not rightly timed turn out to be failure while startups that are timed perfectly are always successful. All other factors that is, idea, business model, team and funding are not as important as timing.

Now that you know why startups succeed, what you can do?

Here is the thing, if you have a great idea and you are all ready to hit the market, wait – and see whether it is the right time to push your startup in? Is it well-timed? Does your customers need what you are about to offer them with? Is market ready to accept what you are about to throw at them?

There is always a right time for everything – wait for it because it is worth the wait.

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