There is little debate about the fact that doing startups is hard. You need to understand how to read users’ needs, be able to sell, to create a brand, to hire and fire, to create a company culture.
Fortunately, for some of the topics above, there are many sources that try to help us navigate through all of it. (For SaaS founders, Saastr is the best place to start!)
Even if you nail all the components above, there is a big factor that is much more intrinsic, impossible to measure and instinct-based by nature - getting your timing right.
I first came across Bill Gross’ TED talk on the reasons startups succeed, I was shocked that the number one reason was… timing.
You can get mentors to help you develop a hiring strategy, but only you and your co-founders can understand if the timing is right for your startup to succeed.
To succeed, it means that you developed the right technology, found the right set of clients willing to pay the right amount of money to get value from your product. If you’re too soon, nobody will buy it - Check the renaissance of startups from the 2000 bust that are now feasible, given the ubiquity of internet and mobile phones, for example. If you’re too late, your product has been surpassed by better technology or better companies.
Goldilocks zone for startups
If you’re familiar with basic astronomy, you probably heard of the Goldilocks zone, which is a layer on space that has the perfect distance from a star, making life possible. Too close to the sun and it’s too hot, too far away and it’s too cold.
For startups this Goldilocks zone is a moving target, so it’s even harder to predict its success on the go to market time.
You need to find a set of technology stack that you can develop, while there is a need in the market. Here’s a recent example: If you’re building a mobile app, there are so many today that you need a really strong reason to succeed. If you’re building a bot of any sort, you’re taking a bet that that will become an interesting platform. There’s always a big leap of faith that the founders need to have, and they need to communicate it through their vision since day one.
So when you’re pitching your startup, can you explain why you’re in your Goldilocks zone - i.e. why it’s the perfect timing for your company to succeed?
Image credit: Planetary Science
Everything gets commoditized
All of us that work on the technology sector like to look at traditional companies based on commodities as a boring, purely transactional businesses. Truth be told, you can make a lot of money if you’re selling the right commodity, and tech is no exception.
Every technology, when it is deployed in a market, becomes a commodity. We just don’t think of it that way. AWS was a huge technological leap, today it’s the standard. And Amazon makes a huge amount of money with it. Fortunately for them, it’s incredibly difficult to replicate.
Mobile phones, in my view, can also be considered a commodity nowadays - You can buy all the components pretty easily and assemble on one piece of hardware. Contrary to the AWS example, it’s very easy to replicate, so the margins are almost non-existent. (Unless your product is NOT a commodity, like the iPhone, that has a much bigger brand value)
So you have to launch a product before it becomes a commodity that is deployed to all organizations or a great majority of the population.
Our biggest challenge when developing a new business is on being able to read the market, understand its near-term flaws and develop technology to correct it. In the mid to long term, if we stop evolving to make sure we stay in our Goldilocks zone, we can become a low margin commodity that makes it impossible to compete.