Why does start-ups fail? The team is not smart enough? Not dedicated enough? Execution is weak? Bad idea? Lack of funds? No, the most important reason – not the only reason – but the most important reason start-ups don’t get off the ground is that they got their timing wrong.
Let me give you a couple of examples. Some of the hottest start-ups in Silicon Valley is location-based services, like MyTown, Foursquare and Gowalla. The idea is that you use your phone to ‘check in’ to a physical place, for which you are rewarded with badges or virtual goods, and your location is shared with your friends. Some venues reward people that ‘check in’ often with free drinks or other rewards. A whole bunch of start-ups has entered the ‘location space’ lately and they are raising a load of money.
You know what? I developed Foursquare 6-7 years ago. Well, not precisely, we worked on a somewhat similar location based service. And we were probably not the first and certainly not the only one. There has been hundreds of other companies around the world working on all sorts of variations on the location check in idea since then. With little luck. Now, suddenly these services starts getting million+ users.
Why does it ‘suddenly’ seem to work now? Because the time is right. The idea has been there all along, great teams has worked on it, some of them with plenty funding. Were all of those companies led by people with no ability to execute and no stamina? Not very likely.
Timing has a lot to do with external factors so let’s look at the external factors back then: Phones did not have GPS. You could get location data but at a cost. The few mobile operators that could deliver charged from 0.2 to 0.6 USD for each location look-up. There were no unlimited data plans, and data cost varied wildly. There were no way for the service to tell the user how much it would cost, and mobile plans data was just stupid expensive. The result was that most people were afraid to use the phone browser, let alone download anything. There were no Facebook, and no way to leverage users existing online social networks. The mobile phone screens were small, the phone browsers were abysmal, only high-end phones could even render HTML. There were no appstores, no touch screens, mobile advertising were early experiments, the list goes on.
We and those other companies were too early. The world was just not ready. In hindsight it looks like we was doomed from the beginning, right? Well, please forget hindsight. Running a start-up company is about overcoming obstacles every day of the week. Entrepreneurs don’t want to hear that ‘the time is not right’. We’ll make the time right! We are creating the future, goddammit. Not waiting around for it to happen. And entrepreneurs, optimistic as we are, always believes that general progress will fix today’s problems 6 or 12 months down the road when the product is ready to launch. Sometimes it will, sometimes it won’t.
It is not just a matter of having enough smart people, enough companies working on the problem simultaneously. One woman can have a baby in nine months but nine women can’t have a baby in one month. The same story can be told about a hundred precursors to Twitter, YouTube and 99% of all the juggernauts. Either they hit the right time with the right product by insight or by chance. Or they managed to stay around and keep developing until the time was right.
There are advantages to being early, but no advantages to being too early. If Flipboard had launched a year ago, it would have had to be a web experience for a laptop and would have been met with a yawn. Instead they created a really compelling iPad experience and were able to launch it early. iPad is a new device with a lot of promise and people are eager to see what this will bring. Flipboard now represents the new look, the new interface, the new style to go with the new device. Which means they had to work towards an tablet form factor without knowing what Apple would launch. I think these guys understand both product and timing. What would have happened it Apple did not launch a tablet? Or if the tablet sold poorly? Regardless of how great the team is they would have to linger in obscurity until the money ran out or the external factors came together to enable the right product at the right time.