I was at a startup incubator event a few weeks ago. We saw live pitches by six startups. Chatting to folks afterwards and the question came up – how do you determine which startups will be successful? Obviously this is a difficult question – if we could easily determine the answer then we could all make millions! Instead it seems like mostly black magic. But there must be some startup success factors we can use to get some indication… these are the typical startup success factors:
Startup success factors
- The idea
This is determining if the startup idea solves a real problem that the customer will pay for (or some variation on this, depending on your business model). There has to be a real path to revenue.
- Can it scale in the market?
Determine the size of the potential market and whether it can be reached.
- Timing
Determine if the market is ready for this product. Sometimes startups are too early and conditions aren’t suitable yet for it to be successful.
- Competitors
Assess the competitors in the space to determine if they are likely to be too challenging. If there are no competitors this raises the question of it is a real problem that customers experience and also means the company is likely to have to do some customer education to get business.
- Team
Look at the people in the startup – determine if they have the necessary skills, experience and grit to get there. Grit is defined as courage and resolve or strength of character. Do they have what it takes to make this startup work? Will they learn from mistakes and pivot when necessary? Have they demonstrated the ability to succeed before?
My take on it
I believe that the team is the most important. The other indicators are useful but team plays the biggest role in my opinion. People with entrepreneurial tendencies coupled with strong determination will find a way to be successful. You may have heard the saying that ideas don’t matter as much as execution which echoes this focus on people.
What can you do to improve your chances?
Using this advice about the importance of team, there are specific things you can do to improve your chances of success:
- Focus on your team to ensure you have the right type of people on-board – look for tenacity, experience and grit.
- Learn more about entrepreneurship – read the E-Myth book and see if it resonates with you.
- Generalists – as a startup company you need people who can wear many hats and do whatever is needed in the situation at hand. As your company grows, you will also need specialists but generalists are usually the way to start out.
- Passionate people often demonstrate grit – if they love what they are doing, they are likely to be more motivated, work harder and probably see results.