Growing a successful startup takes time, talent, and solid business acumen. It is well-known in entrepreneurial circles that approximately one quarter of venture-backed startups will find long-term footing in their respective industries, and 50 per cent of those will make it past their fifth anniversary. These statistics don’t mean only 25 per cent of all entrepreneurs have worthwhile ideas. While it’s understandable why some people want to tie the future of a startup venture entirely to the idea behind it, the ultimate success or failure of a startup is actually driven by a complex and diverse set of factors, decisions, and circumstances.
There are two main reasons why coming up with a great idea is less vital to entrepreneurial success than most people think. The first is that an idea itself doesn’t tell you anything about how a company will be managed. The second is that ideas and timing can never be divorced from one another when it comes to entrepreneurship.
Ridesharing apps offer an illustrative example of this phenomenon. As long as the concept of taxis has existed, there have been numerous flaws with execution of the service. In many cities, they are either prohibitively expensive or too sparsely available to be a reliable mode of transportation for people who need them regularly. When you add in the various regulatory issues, potential for corruption, and widespread customer complaints, it becomes clear that the traditional taxi industry has been ripe for competition from an innovative competitor for many years.
While the idea behind ridesharing services is inherently innovative, until recently the timing wasn’t right for the idea to take hold. This is both because the technology that makes the process economically feasible is relatively new, and because people are just now becoming comfortable with the possibilities created by the digital economy, as exemplified by this amusing tweet:
It is clear that timing is crucial when it comes to the ultimate success or failure of a company. In fact, in a study of 200 startups, timing was found to be the most important factor related to success in 42 per cent of the cases, the most of any single factor. Ideas can still be powerful even when the timing isn’t right, but when you combine the two, you have the potential to create a business that revolutionizes a marketplace and leaves a lasting impact.
TED Talk by Bill Gross: The single biggest reason why startups succeed