Great Ted Talk by Bill Gross, founder of IdeaLab and legendary entrepreneur. He has performed an analysis of start up companies that he and others have formed, to try an establish the main reasons why start ups succeed and fail and what is the secret to starting a business. It’s definitely worth 7 minutes of your time if you are thinking about starting a business or complaining that you cannot get funding. It’s also as interesting in respect of valuation – in fact I came across this TED talk at a forum I recently attended regarding valuations and IP, where the audience was asked how they make a valuation of a start-up and many of the rocket scientist valuers in the room who worked for VC’s said there was no model at all, basically a guess, but that they often used as a basic indicator criteria used in this talk.
It’s not exactly rocket science analysis (I wouldn’t go to the moon in a rocket built out of this type of analysis for sure), but Gross states, in his opinion, the 5 main criteria needed for starting a business, being ; idea; team; business model; timing; funding and then goes on to rank start-up businesses based on these criteria and to look at successful start ups and failures and which criteria matters most.
The results are interesting, not least because I speak to many potential entrepreneurs who complain about their brilliant business plans not getting funding or the lack of access to funding.
It turns out that, according to this analysis, the secret to good business is the same as the secret to good comedy……timing. Timing, meaning is the technology there, is the need there at this exact time, do all the parts of the idea match and are they able to unite at the time of launch. Is it too early – the tech or need is not yet there, or is it too late and there is too much competition. Be clear here that this generally applies to tech start-up’s, not traditional brick and mortar businesses, but could equally apply to them – eg don’t start a new business at the peak of the market. The business model and funding come a distant last in the criteria – implying that if you are right on the timing, then bootstrap it, build it in your garage and customers and funding will come. Go for it and good luck. And if you need a hand, give us a call.
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