Welcome to a new regular feature B2Bnn is debuting today! With TED Talks Takeaways, we’ll sum up the main points in new TED Talks presentations ideal for business leaders, tech watchers and social media mavens.
Our first installment looks at this six-minute presentation from Idealab’s Bill Gross where he discusses the five elements of start-up success.
Gross is the CEO of Idealab, a business incubator focused on new ideas. An entrepreneur since high school, he helped create GoTo.com, the first sponsored search company. He also created the Snap! search engine, which allows users to preview hyperlinks.
During the Talk, he began, “I believe that the startup organization is one of the greatest forms to make the world a better place. If you take the right group of people, with the right equity incentives, and organize them in a startup, you can unlock their potential and make them achieve unbelievable things.”
Gross then wondered what exactly it takes to unlock that potential in entrepreneurs. He had five factors in mind and decided to run an experiment by taking 100 successful companies and 100 unsuccessful companies and ranking them on all five factors. The factors were: the idea, the team, the business model, funding, and timing.
As a long-time entrepreneur, Gross has a good idea for what it takes to start a business, but the results of his experiment were a little surprising. As it turns out, the most important element in making a start up successful is the timing. The big question is, can the market complement what your business has to offer?
“Execution definitely matters a lot. The idea matters a lot. The timing might matter even more, and the best way to assess timing is to look at if the consumers are ready for what you have to offer them; to be honest about it, and not be in denial about any results that you see,” said Gross.
Timing took up a 42 percent share out of the five measured success factors. The team was second at 32 percent, then the idea at 28 percent. The business model and funding took the fourth and fifth spots with 24 and 14 percent respectively.
The reason they ranked low is because a company may not even need a business model at first (think YouTube) because you can come up with one after the business proves that it’s viable. As for funding, Gross says that it’s easy to get funding once a company starts getting traction.
Gross cited Airbnb and Uber as prime examples of companies that became raging successes because they came along at the right time. When Airbnb was released during the height of the recession investors thought that no one would ever use it because people don’t want to rent their homes to strangers. But at the time, due to the recession, people were looking for ways to make a little more money and Airbnb turned out to be a great way for a lot of people to supplement their income. The same holds true for Uber.
If start-ups really can make the world a better place like Gross believes, and there is evidence to say that they do, they would all do a little better to make sure the market will respond to what they’re doing and be honest about whether or not their timing is good, before they move forward with designing a business plan and searching for funding.
We also run a Podcast Recapper column, where we break down the key takeaways from B2B podcasts.