What is the Idealab business model
200 startups analyzed: That is the greatest success factor
What determines success and failure in startups? This is the question founders, investors, dreamers and envious people probably ask themselves quite often. You won't get an unequivocal answer from anyone, simply because it doesn't exist. Really nobody? Not quite. Bill Gross founded the Idealab incubator in California in 1996 and has supported around 100 startups since then - “Many were successful, many failed,” says Gross in his 2015 TED Talk. The startup professional believes he has found it, the key success factor.
Step 1: 5 possible success factors for startups
Gross approached the question very mathematically. The basis of his analysis were the 100 Idealab startups and 100 other startups. First, he considered 5 factors that play an essential role for startups:
- The idea
- The team
- The business model
- The financing
- The timing
He then selected the 5 most successful and 5 most unsuccessful of the 100 startups. For each of these startups, Gross rated each of the 5 success factors on a scale from 1 to 10. At the beginning of Idealab, he thought the idea was the most important thing. Over time, the team has come more and more to the fore, says Gross and quotes boxer Mike Tyson: "Everyone has a plan until they get a slap in the face". Exactly the same applies to startups. Teams have to be flexible and adaptable, because the slap in the face by the customer is pretty sure to come.
+++ Also interesting: This is what makes successful teams +++
Gross was surprised by the result
But the analysis showed something completely different. So timing is the single most important factor that makes the difference between success and failure. Gross gives examples: The idea of Airbnb was initially considered absurd to believe that some people would rent their private rooms to strangers. The timing was perfect, however, as the start fell at a time when people could use the additional money particularly well. A video platform that was ideally promoted, however, was unsuccessful because neither the browser nor the bandwidth were wide enough at the time. Two years after the project was discontinued, the technology was advanced enough and YouTube began its triumphal march.
Business model and financing least important
According to Gross ‘analysis, the identified factors contribute to the success of a startup in this order: timing, team, idea and business model and only then financing. Gross considers the business model and financing in particular to be uncritical, since both can only be secured at a later point in time.
+++ Read more: Growth Hacks: 1 million users in record time +++
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