Let’s talk about Bill Gross, the serial entrepreneur. As it turns out, there’s also Bill Gross the billionaire investor, but that’s not who we want to talk about. We want to talk about the other guy. The entrepreneur. This Bill Gross has personally started over 100 companies, and more than 40 of those have either gone public or have been acquired. He is the founder and CEO of Idealab, a company whose sole purpose is to churn out startups. In that role, he wanted to discover why some of Idealab’s startups succeeded while others failed. He came up with five factors that successful startups hold in common, but he missed the sixth and most important factor. To learn about the five factors he identified in successful startups, and the sixth factor that he missed, please continue reading below.
“Success seems largely to be a matter of hanging on after the others let go.”
~ William Feathers, Journalist
In order of importance, Bill Gross’ five success factors are:
Factor 5. Idea. Strange. You’d think having a good idea for a business would be the most important factor for a startup. Obviously, it is essential to start with a good business idea, but according to Gross’ research, it ranks below the other four.
Factor 4. Team/Execution. We can see why this ranks above “Idea.” What good is it to have a great idea for a business if you don’t have the right people with the right skills to bring it to life.
Factor 3. Business Model. The business model needs to be consistent with the business’ mission and with its growth potential. The business model for a small, boutique, niche player will be very different from a broad-based, fast growth company that’s expected to go public.
Factor 2. Funding. The startup graveyard is full of companies who simply ran out of money. In many cases, the founder succumbed to rosy sales projections and overly optimistic estimates for how quickly the company would achieve profitability.
Factor 1. Timing. This surprised us a bit. Not that timing isn’t important. It is. Obviously, most retailers will want to open their doors before the Christmas season, not after. A distributor of farm implements will want to hold forth before the growing season, not after harvest time. But the timing issues for many businesses are not quite so obvious
So, according to Bill Gross’ research, if we’ve got these five elements in place, we’ve got a good shot at launching a successful startup. We’ve got a good business idea and a team that can bring it to fruition. We’ve got a business model that will be a good road map to get us where we need to go, we’ve got enough cash in our war chest to get us through the tough spots, and our impeccable timing will make us all look like geniuses. So what did Gross miss?
Commitment/Determination. Starting a business is not a casual thing. A new business will be unrelenting in its demands for time, effort, and money. Murphy’s Law (“What can go wrong, will go wrong”) will be in full force. So if you’re going to start a business, your battle cry better not be “Let’s give it a try!” You might remember a scene in Star Wars when Luke was struggling to master The Force and said to Yoda, “I’ll try” to which Yoda replied, “No. Don’t try. Do or don’t do.” Or if you weren’t a Star Wars fan, maybe you remember a line from Apollo 13 when the ground crew at NASA was trying to figure out how to get the damaged spacecraft home safely and the Ed Harris character said, “Failure is not an option.” It’s like that. If you want to be an entrepreneur and start a business, it’s like that. If you can’t muster the commitment and determination to do whatever it takes, no matter what, to get the thing launched successfully, don’t do it.
If the company is at the starting gate and has all five of Bill Gross’ elements for success in place, it will still fail without absolute, unwavering commitment and determination from the founder. Even with that level of commitment and determination, success is not guaranteed, but without it, failure is. As hotelier Conrad Hilton observed, “Success seems to be connected with action. Successful (people) keep moving. They make mistakes, but they don’t quit.”