Founder Insight gives you feedback from the startup trenches.
In addition to his role at Red Rocket Ventures, George is a mentor for the Chicago Founder Institute, which is currently accepting applications for the upcoming Autumn semester. If you could benefit from expert training and advice to launch a startup in Chicago, click here to learn more and apply today.
Below, The Importance of Timing and Luck for Your Startup, has been republished;
"Today, we are going to tackle the third of the three major points: timing and luck.
This is one of the most important elements for success, but is hardest to identify and control. There are a few pieces to the timing puzzle: (1) market timing; (2) economic conditions; (3) execution speed; and (4) knowing how long to ride the wave.
Market timing is basically being in the right place at the right time. I will use MediaRecall, my past company, as an example. MediaRecall had built the fastest, cheapest solution to digitize large archives of film and video content, for publishing on the web. The business was launched in 2006, well before online video started to take off, so the big film archives had not yet began to think about digitizing their archives. So, the company struggled to build a sales pipeline until 2009, post the rapid success of sites like YouTube and Hulu and all film archives scrambling to find a way to get their archives monetizing online. Had MediaRecall launched in 2008, it would have saved two years of burn rate. But, you are never that smart to time the market. So, just make sure there is solid customer interest for your product, before investing too heavily in your business (e.g., the lean startup principle). But, launch early enough to be the first to market, and beat any potential competitors to the market.
Economic conditions are entirely out of your control. I will use my other past company, the adventure travel website iExplore, for this example. iExplore launched its site in February 2000 in the peak of the dot com boom. And, then the dot com bubble burst in March 2000, a month later, making it immediately an uphill slog right out of the gate. Had we launched three years earlier, riding the momentum of the dot com boom wave would have made it much easier to grow the business. Or even worse, nobody could have predicted 9/11/01 and the negative impact that event would have on both the economy overall, and especially the travel industry. It almost took iExplore out of business entirely. All you can do here is to keep your business nimble, so it can easily scale up or down, based on external market conditions. And, when times are good, run as fast as possible to build your coffers for the downtimes.
Execution speed simply means build your business at light speed, be a first mover (if you can) and continually exceed the efforts of your competitors. And, better yet, using Google or Amazon as an example, continue to widen your lead over your competitors to make the gap insurmountable. Never get "comfortable" with your success. Continually have a sense of "controlled paranoia", pushing your research and development efforts and sales and marketing tactics to new heights in each year. The turtle never wins this race, if the rabbit keeps clearly focused on continued and accelerating growth with their competitors further and further back in their rear-view mirrors.
And, on the sell side of your venture, it is important you know how long to ride the wave. Don't make the mistake of the riding the story too long. Somethings may change to hurt the business (e.g., market conditions, competition) that will result in a much lower sale price, had you sold at an earlier time. And, equally important, the prospective buyer of your business will want to see upside on their investment. They will not want to buy a story that they perceive has reached its full potential.
And, overriding all of this? Luck! So, carry your four leaf clovers and rabbit feet in your pocket at all times!"
Want to hear more from George? Check out his blog, Red Rocket VC, and apply to the Chicago Founder Institute where he will be mentoring this Autumn. Final application deadline is this Sunday, October 20.