Timing is important in everything: in wit, in artistic performances, in relationships and now Bill Gross, tells us, even for the success of start-up companies. Gross is the founder of Idealab, a business incubator focused on new ideas. He says, “I tried to look across what factors accounted the most for company success and failure. So I looked at five. First, the idea. I used to think that the idea was everything. I named my company Idealab…” The other four were, the execution, the business model, funding and timing.
Gross studied these five factors across many companies, 100 Idealab companies, and 100 non-Idealab companies to try and come up with something scientific about it. “I tried to rank across all of those attributes about 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, Youtube and LinkedIn. And some failures: Webvan, Kozmo, Pets.com 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.”
Gross came up with a find that surprised him, “The number one thing was timing. Timing accounted for 42 per cent 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…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.”
Gross says convincingly enough, “…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…We started a company called Z.com, 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 per cent in America, YouTube was perfectly timed. …”
Gross therefore feels, “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.”
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