PitchBook, CrunchBase, Angel List, Forbes, Entrepreneurs, Inc. and many others tried in the past to quantify what factors make a startup successful. Some focused on the idea, the team, and some other things, it has been an ever changing list of things.
Now, to all this add Idealab’s list of factors or factor accounts the most for a company’s success or failure? They say they took a very quantitative approach to analyze companies they have worked with and funded, and others that they have not hadn’t. They reviewed over 100 Idealab companies and over 100 non Idealab companies. Companies like Flooz, YouTube, Uber, Shopify, Pets.com, Instagram, Airbnb, Kozmo, LinkedIn, Uber, Friendster and more. They looked at a five key factors that they deemed important to get to the one factor that accounts for a startups success. Here is what his research found:
Startup Funding: Impacts mere 14% success ratio.
Business Model: This attribute accounted for a 24% success ratio.
Startup Idea: We always said ideas are dime a dozen, many claimed it to be the deciding factor, but ideas only accounted for a 28% success ratio among the companies that were reviewed.
Startup Team: Besides our views about the idea thing, we concentrated on the ability of the Team to lead and execute. But amazingly, according to IdeaLab the startup team fell short, accounting for only a 32% success ratio.
Market Timing: Accounting for whopping 42% of the difference between success and failure, timing is the winner according to this IdeaLab new study of the factors making a startup a success.
Here is Bill Gross’ TEDx talk and transcript on this subject matter: https://www.ted.com/talks/bill_gross_the_single_biggest_reason_why_startups_succeed/transcript?language=en