Translator: Luan Morina Reviewer: Helena Bedalli I'm really excited to share with you some research that has surprised me about what makes companies do it, what factors really matter for initial success. I believe startup organizations are one of the greatest forms of making the world a better place. if you get a group of people with the right boost capital and organize them as startups, you can find human potential in an impossible way before. You push them to achieve incredible things. But if a startup is great, why do many fail? This is what I wanted to find out too. I wanted to learn what matters most for their success. And I wanted to be systematic about that, Avoid some of my instincts and misperceptions I had from so many companies I have seen over the years. I wanted to know this because I started businesses since I was 12 years old when I was selling candy at the bus station in elementary school, in the middle, when I was making solar energy equipment, in college when I was a vocalist.
And when I graduated from college, I started a software company. And 20 years ago, I started Idealab, and in these 20 years we have started more than 100 companies, with many successes and many failures. We learned a lot from these failures. So I tried to find out which factors most affected the success and failure of the company. So I looked at these five. First, the idea. I thought the idea was everything. I named my company Idealab that I adored so much "aha!" the moment the idea first arises. Over time, I started to think that maybe the team, the execution, the adaptation, were more important than the idea. I never thought I would quote boxer Mike Tyson at TED, but he once said, "Everyone has a plan, until they punch in the face." (Laughter) And I think that applies to business as well.
How important is the execution of the team so important is the adaptation to be punched in the face by the consumer. The consumer is the reality. And I came to the conclusion that the team was probably the most important thing Then I started looking at the business model. Does the company have a clear path to revenue generation by consumers This got me to the top of my mind for perhaps what he needed most for success. Then I looked at the funding. Sometimes companies receive strained funding amounts. Maybe this is more important? And of course, time. Is the idea early and the world unprepared for it? Is it too early, as it were, to be premature and have to learn the world? Is it right? Or is it too late, and there are already too many competitors? So I tried to look carefully at these five factors across many companies.
I looked through all 100 Idealab companies, and 100 non-Idealab companies to try to find something scientific about it. First, these Idealab companies, top five companies – Citysearch, CarsDirect, GoTo, NetZero, Tickets.com – all became billion-dollar successes. And the five companies at the end – Z.com, Insider Pages, MyLife, Desktop Factory, Peoplelink – we all had hopes for them, but they did not succeed. I tried to list the attributes of all of these how I felt they had succeeded in every dimension. And then for non-Idealab companies, I looked at wild successes, like Airbnb and Instagram and Uber and Youtube and LinkedIn. And some failures: Webvan, Kozmo, Pets.com Flooz and Friendster. These companies had huge funds, even business models in some cases, but they did not succeed. I tried to look at which factors mattered most for the success and failure of these companies, and the result really surprised me. The first thing was time. Time accounted for 42% of the difference between success and failure. Second place went to the team and execution, and the idea, the variability of the idea, the specificity of the idea, took third place. Now, that's not definitive, We can not say that the idea is irrelevant, but, it really surprised me that the idea was not the most important.
Sometimes it was more important when it was on time. The last two, business model and financing made sense to me. The business model makes sense to be so low because when you leave without a business model add one later if customers ask what you are creating. And funding, I think, if you are underfunded at first but gain attention, especially nowadays, it is very easy to find financing. Now, let’s look at some specific cases about these. Get a success like Airbnb that we have all heard of.
That company has been overlooked by many wise investors because people thought, "No one would rent the house to foreigners." Of course, people were wrong. But one of the reasons it succeeded, in addition to good business model, idea, good execution, it's time. The company appeared immediately at the time of the review when people needed money, and it helped them overcome their reluctance to lend the house to a stranger.
Same with Uber. Uber appeared, incredible company and business model, excellent execution. But, the timing was so perfect for their need to bring drivers into the system. Drivers wanted to make more money; this was very important. One of the initial successes, Citysearch, appeared when people searched the web. GoTo.com, which we announced under TED in 1998, was when companies were looking for cost-effective ways to get traffic. We thought the idea was good, but, time was probably even more important. And some of our failures. We started a company called Z.com, it was an online entertainment company. We were excited for him – We raised a lot of money, we had a good business model, we recruited great Hollywood talent to join the company. But broadband penetration was low in 1999-2000. It was hard to watch video content online, had to place codecs in your browser similarly wide, and the company went out of business in 2003. Just two years later, when the codec problem was fixed with Adobe Flash and when broadband penetration increased 50% in America, YouTube was in perfect timing.
Ideas, but also incredible time. In fact, YouTube did not even have a business model when it launched. She was not even sure she would succeed. But he had found the time for beauty. So, as a summary, is that execution matters a lot. The idea matters a lot. But, the right time even more. And the best way to determine the time is to see if customers are ready for what we offer you. And if we're honest about that, not to be in denial of the results you see, because if you have something you want you want to push it forward, but, you have to be very honest, about the time factor. As I mentioned above I think startups can change the world, make it a better place. Hope some of these can help you have a higher success rate, and do something brilliant to come into the world that would not have happened otherwise.
Thank you so much you were wonderful audience. (Applause).