5 Factors That Determine Startup Development

Bill Gross has been opening companies and small businesses since he was 12 years old. He started by selling candy, eco-projects, worked with software, and finally headed his own business incubator.

Years later, he took the accumulated experience as a basis and decided to find out what made young projects successful. This is how 5 factors emerged that formed the basis of the study.

  1. Idea
  2. Team
  3. Business Model
  4. Financing
  5. Launch Time

Each one individually was important for launching a project. In particular, Bill Gross believed that everything depends on the idea; without a good team, you won’t launch a startup, and without a business model, you’ll go with the flow. Constant investment and efficiency seemed equally important to him — not to miscalculate the launch moment and not to miss your novelty and relevance.

Which factor turned out to be more important?

Results of the analysis of data from 200 different companies

During the study, Bill Gross assessed companies taking into account the 5 factors listed above. He gave each startup a score from 1 to 10 on the following points: idea, team, business model, finances, and launch time.

He added 100 companies to the list from the Idealab incubator, and another 100 were chosen from those presented on the market.

The top hundred "excellent" startups were Citysearch, CarsDirect, and others. They are valued at a billion dollars. And the list was closed by failed projects like Z.com and Insider Pages.

In the second hundred, the leaders were housing and taxi booking services, video hosting, and social networks. The bottom of the rating were companies that failed despite funding. After calculating the scores, we were able to derive statistics and make surprising conclusions.

The success of a startup depends 42% on the right choice of launch time. Another 32% is due to a close- knit team. The idea is only 28% of success, although Bill Gross was sure of the opposite. As for the business model, it brings a startup closer to success by 24%. And the smallest amount depends on funding - 14%.

Examples of success that illustrate the factors

Here are a few examples:
  • Airbnb
In addition to a good strategy and idea, the company benefited from good timing. The marketplace was launched during a period of economic stagnation - although people were afraid to rent out their apartments to strangers, they forgot about their fears, because they needed money.
  • Uber
A similar situation. Both the idea and the business plan were top notch. But the right timing turned out to be more significant. During the period of decline, drivers were looking for ways to earn extra money.
  • Citysearch
Everything is very simple here - the project arose in response to a need. Web pages were needed, and the need was acute.
  • GoTo.com
Also arrived on time. The startup appeared at a time when everyone was interested in ways to attract traffic.

A case of failure from Bill Gross's portfolio

Bill Gross also gives an unsuccessful example from experience, when timing did not allow an innovative idea to take off. We are talking about the online entertainment platform Z.com. It appeared in 1999 and, despite an excellent business model, existed until 2003. The company failed because broadband Internet was not widespread at the time of launch. People had to install codecs, and they refused to use the resource.

Two years later, YouTube appeared without any business model. Broadband Internet at that time was available to 50% of users, and the Adobe Flash program forever solved the problem of installing codecs. It is obvious who was more successful.

Summarizing the analysis, Bill Gross concluded that a lot depends on execution. However, the main factor of success is to appear on the crest, choose the most advantageous time for the launch. Even if the idea seems "hot" and you want to start working with it immediately, you need to soberly assess whether the consumer is ready for innovation or not. The right choice of moment will increase success many times over.
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