Timely launch of a startup


Bill Gross is one of the founders of Pacific Investment Management, as well as the founder of the well-known technology incubator for startups, Idealab. In fact, since 1996, he has created 150+ companies, 45 of which have made an exit (IPO or sale). At a recent speech, he told his audience the key factors in the success of startups: 

At first, he mentioned the points he believed were most important for the success of any startup in order of importance:
1) Great idea 
2) Quality team
3) Good business model
4) Adequate funding
5) Having the right launching time.

Then, he analyzed several successful and unsuccessful startups that were created in his company, Idealab, and across the world.

The impact of factors on success turned out to be different than he originally thought:
1) Right or “lucky” launch time - 42%.
2) Good team/completion - 32%
3) Idea - 28%
4) Business model - 24%
5) Financing - 14%

It turns out that the idea does not play as much of a key role as first though. Much more important is the moment the product is launched.

Furthermore, he says that you can start without a business model and adjust to it later if there is a demand for the product, and even If the startup is underfunded at first, there will be no problems attracting investments later, if the product grows rapidly.

AirBnB appeared in the midst of recession when people needed money and agreed to rent out their apartments to strangers.Uber also appeared at a good moment when drivers were actively looking for an opportunity to earn extra money.

Z.com failed due to the fact that in 1999-2000 high-speed Internet was not widespread and it was hard to watch videos online and install codecs in browsers. Two years after Z.com failed, Adobe Flash solved the problem with codecs in browsers, and broadband internet had become more widespread, used by 50% of Americans. At that moment YouTube appeared, which at the time, had no business model for making profits.

As you can see, all factors play an important role, but the most important is the time your product hits the market.

The best way to assess timeliness is to test the hypothesis that the market is ready to buy a product before it is launched. This is exactly what CustDev with hypothesis testing is for. 

Author - Alexey Shashkov