Business Opportunities On Internet For India

i'm really excited to share with you some findings that really surprise me about what makes companiessucceed the most, what factors actually matter the mostfor startup success. i believe that the startup organization is one of the greatest formsto make the world a better place. if you take a group of peoplewith the right equity incentives and organize them in a startup, you can unlock human potentialin a way never before possible.

you get them to achieveunbelievable things. but if the startuporganization is so great, why do so many fail? that's what i wanted to find out. i wanted to find out whatactually matters most for startup success. and i wanted to tryto be systematic about it, avoid some of my instinctsand maybe misperceptions i have from so many companiesi've seen over the years.

i wanted to know this because i've been starting businessessince i was 12 years old when i sold candy at the bus stopin junior high school, to high school, when i madesolar energy devices, to college, when i made loudspeakers. and when i graduated from college,i started software companies. and 20 years ago,i started idealab, and in the last 20 years,we started more than 100 companies, many successes, and many big failures.

we learned a lot from those failures. so i tried to look across what factors accounted the most for companysuccess and failure. so i looked at these five. first, the idea. i used to think thatthe idea was everything. i named my company idealabfor how much i worship the "aha!" moment when you firstcome up with the idea. but then over time,

i came to think that maybe the team,the execution, adaptability, that mattered even more than the idea. i never thought i'd be quotingboxer mike tyson on the ted stage, but he once said, "everybody has a plan, until they getpunched in the face." (laughter) and i think that's so trueabout business as well. so much about a team's execution is its ability to adapt to getting punchedin the face by the customer. the customer is the true reality.

and that's why i came to think that the team maybewas the most important thing. then i started lookingat the business model. does the company have a very clear pathgenerating customer revenues? that started rising to the topin my thinking about maybe what matteredmost for success. then i looked at the funding. sometimes companies receivedintense amounts of funding. maybe that's the most important thing?

and then of course,the timing. is the idea way too early andthe world's not ready for it? is it early, as in, you're in advanceand you have to educate the world? is it just right? or is it too late, and there'salready too many competitors? so i tried to look very carefullyat these five factors across many companies. and i looked across all 100idealab companies, and 100 non-idealab companies

to try and come up withsomething scientific about it. so first, on these idealab companies, the top five companies -- citysearch, carsdirect, goto,netzero, tickets.com -- those all became billion-dollar successes. and the five companies on the bottom -- z.com, insider pages, mylife,desktop factory, peoplelink -- we all had high hopes for,but didn't succeed. so i tried to rank across allof those attributes

how i felt those companies scoredon each of those dimensions. and then for non-idealab companies,i looked at wild successes, like airbnb and instagram and uberand youtube and linkedin. and some failures: webvan, kozmo, pets.com flooz and friendster. the bottom companies had intense funding, they even had business modelsin some cases, but they didn't succeed.

i tried to look at what factorsactually accounted the most for success and failure acrossall of these companies, and the results really surprised me. the number one thing was timing. timing accounted for 42 percent of the differencebetween success and failure. team and execution came in second, and the idea, the differentiability of the idea,the uniqueness of the idea,

that actually came in third. now, this isn't absolutely definitive, it's not to say thatthe idea isn't important, but it very much surprised me thatthe idea wasn't the most important thing. sometimes it mattered more whenit was actually timed. the last two, business model and funding,made sense to me actually. i think business modelmakes sense to be that low because you can start outwithout a business model and add one later if your customersare demanding what you're creating.

and funding, i think as well, if you're underfunded at firstbut you're gaining traction, especially in today's age, it's very, very easy to getintense funding. so now let me give you some specificexamples about each of these. so take a wild success like airbnbthat everybody knows about. well, that company was famouslypassed on by many smart investors because people thought, "no one's going to rent out a spacein their home to a stranger."

of course, people proved that wrong. but one of the reasons it succeeded, aside from a good business model,a good idea, great execution, is the timing. that company came outright during the height of the recession when people really needed extra money, and that maybe helped people overcome their objection to renting outtheir own home to a stranger. same thing with uber.

uber came out, incredible company,incredible business model, great execution, too. but the timing was so perfect for their need to get driversinto the system. drivers were looking for extra money;it was very, very important. some of our early successes, citysearch,came out when people needed web pages. goto.com, which we announcedactually at ted in 1998, was when companies were looking forcost-effective ways to get traffic.

we thought the idea was so great, but actually, the timing was probablymaybe more important. and then some of our failures. we started a company called z.com,it was an online entertainment company. we were so excited about it -- we raised enough money,we had a great business model, we even signed incredibly greathollywood talent to join the company. but broadband penetrationwas too low in 1999-2000. it was too hard to watchvideo content online,

you had to put codecs in your browserand do all this stuff, and the company eventuallywent out of business in 2003. just two years later, when the codec problemwas solved by adobe flash and when broadband penetrationcrossed 50 percent in america, youtube was perfectly timed. great idea, but unbelievable timing. in fact, youtube didn't even havea business model when it first started. it wasn't even certain thatthat would work out.

but that was beautifully,beautifully timed. so what i would say, in summary, is execution definitely matters a lot. the idea matters a lot. but timing might matter even more. and the best way to really assess timing is to really look at whetherconsumers are really ready for what you have to offer them. and to be really, really honest about it,

not be in denial aboutany results that you see, because if you have something you love,you want to push it forward, but you have to be very, very honestabout that factor on timing. as i said earlier, i think startups can change the worldand make the world a better place. i hope some of these insights can maybe help youhave a slightly higher success ratio, and thus make something greatcome to the world that wouldn't have happened otherwise.

thank you very much,you've been a great audience. (applause)