I recently came across an article on Inc.com covering the top five indicators for Startup success, which are based on the findings of Bill Gross who has studied hundreds of both successful and unsuccessful startups. The identified indicators are:
42% - Timing
32% - Team
28% - Ideas
24% - Business Model
14% - Funding
Interestingly, when comparing Bill Gross's success indicators to the top reasons why Startups fail, the leading reasons for failure are:
42% - No Market Need
29% - Ran Out of Cash
23% - Not the Right Team
19% - Get Outcompeted
18% - Pricing / Cost Issues
17% - User Un-Friendly Product
17% - Product Without a Business Model
14% - Poor Marketing
14% - Ignore Customers
13% - Product Mistimed
13% - Lose Focus
13% - Disharmony Among Team / Investors
10% - Pivot Gone Bad
9% - Lack of Passion
9% - Failed Geographic Expansion
8% - No Financing / Investor Interest
8% - Legal Challenges
8% - Didn't Use Network
8% - Burn Out
7% - Failure to Pivot
With these two studies side-by-side, and based on my experience of working with startups, founders and investors, my opinion is that although Bill Gross's conclusions might be right based on the data that he has studied, I would say that there is another order of importance (weight) of the success-factors at play:
1. Team. Having the right team, composed of different sets of skills and capabilities, complementing each other and covering all major bases, is an absolute necessity. This explains why a proven team can succeed not only with one idea but with various, but also why some teams have been able to successfully pivot their business from one direction to another when needed. Moreover, a good team is likely to overcome many of the risks and reasons why startups fail.
2. Product-Market Fit. A product for which there is a demand is an absolute necessity for a team to succeed, BUT, no matter how great an idea is, it can not be realized without the right team behind it. Also, a good Product-Market Fit encompasses more than just the product by itself, but also the business model for the product, the underlying idea and timing.
3. Access to reasonably priced capital. While many ideas can be realized with a minimum of capital, other ideas do require capital to a certain extent; and although a good team with good sales capabilities, leadership and out-of-the-box-thinking can find innovative ways to overcome some of the financial challenges a startup faces, some ideas just require capital than what the team can scrap together. For such ideas and teams to success, there must be access to reasonable priced risk-friendly capital.
4. Luck. Seriously. No matter how good a product and a team you have, and no matter how hard the team works and how dedicated it is in achieving amazing customer satisfaction; there is always a certain element of luck (good and bad) in play. I believe any successful Entrepreneur or Investor, no matter how much they credit their talents, can agree that there is always a certain degree and element of luck in play.
With this said, Entrepreneurs and Investors, mind your teams (#1), your product and customers (#2), and keep pushing ahead to deliver great products!