Bill Gross CEO of Idealab
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What makes a Startup Successful?
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Bill Gross CEO of Idealab
- 1. There has never been a better time in history to start a company * * What makes a Startup Successful? Bill Gross Founder & CEO, Idealab
- 2. I’ve been starting companies since I was 12 years old…
- 3. Started my 2nd business when I was in High School
- 4. Started my 3rd business when I was in College
- 5. I graduated from Caltech the month IBM released the PC
- 6. Began writing PC software, Tools for Lotus 1-2-3 Lotus Development acquired in 1985 for $10 Million
- 7. After seeing first Multi-Media PC, started Knowledge Adventure when my son started Kindergarten in 1991
- 8. Grew Knowledge Adventure to #3 Educational Software Company
- 9. Netscape Browser and IPO in 1995, 30M Global Users
- 10. Started Idealab as a technology incubator in 1996 Idealab is a “business” designed to create businesses
- 11. First 12 Ideas in 1996
- 12. More than 100 companies founded in our 1st 18 years
- 13. Of those 100 Companies, Idealab has: • Helped the companies raise more than $3.5B • Completed 45 successful IPO’s and acquisitions • 30 current operating companies • Experienced 50 failures • Created more than 10,000 jobs
- 14. What Matters Most To Make A Startup Successful? • Everyone is looking for a simple formula (I’m sorry) — As Peter Thiel says in his book: The next Bill Gates will not build an operating system The next Larry Page won’t make a search engine The next Mark Zuckerberg won’t create a social network • Every bold new company is new and unique, no one can prescribe HOW to be innovative • Successful people find value in unexpected places • So if I can’t give you a formula, what can I give you?
- 15. 5 Essential Elements that Lead to Success Ideas Team Business Model Funding Timing
- 16. Looked at factors of success / failure in 130 companies Idea Team / Execution Business Model Funding Timing Novelty/Differentiation “Truth” that no one else sees Competitive Moats Efficiency/Effectiveness Adaptability Clear Path to Generating Customer Revenues Raising Money for Initial Funding, Follow-on & Growth Way Too Early Early Late
- 17. Unicorn Successes and Failures
- 18. Unicorn Successes and Failures
- 19. Looked at factors of success / failure in 130 companies Timing Team / Execution Idea “Truth” Outlier Business Model Funding 42% 32% 28% 24% 14%
- 20. Top 5 Factors Leading to Failure No Market Need Ran Out of Money Not the Right Team Got Out-Competed Pricing Cost Issues 42% 29% 23% 19% 18%
- 21. Execution Matters a LOT, but Timing Really Matters Maybe even more than the idea itself! * * • Apple’s Newton • YouTube • Facebook • Instagram 1
- 22. 2 Recognize your Strengths and Build a Complementary Team • Design a structure around strengths, and balance your weaknesses by hiring complementary skills • You need multiple viewpoints to interpret your learnings wisely
- 23. You may be ridiculed for having a great idea ahead of its time All truth passes through 3 stages. • First, it is ridiculed. • Second, it is violently opposed. • Third, it is accepted as being self-evident. 3 Arthur Schopenhauer 19th century German philosopher
- 24. Summary • Startups can change the world. • I have started companies in good times and in bad • Now is definitely the best time ever to start a company Startups are understood Attracting talent has never been better Attracting capital has never been better Reaching a global market has never been easier • It’s easier than ever to START a company, but just as hard as ever to BUILD a great company • I believe if you focus on the 5 factors to make your company strong, and avoid the 5 factors that make most companies fail, you can improve your odds of success
- 25. To contact me: bill@idealab.com To follow me: @Bill_Gross
Editor's Notes
- I’ve been starting businesses nearly all my life, for more than 40 years now. My first little business was selling candy when I was in Junior High School. I’d carry candy to the bus stop in my little Pan Am bag, and sell to the kids on the way to school, and on the playground.
- When I got to High School, it was 1973, and the world, and California in particular, faced a severe oil crisis. I started thinking about how solar energy could have an impact and began making small solar concentrators and Stirling Engines. Sold plans and kits for my solar energy ideas with small ads in the back of Popular Science and Scientific American magazines. Very importantly, I learned about direct mail, and direct marketing when I was only 15. I went to the public library and ready every book I could on direct mail, and learned the mantra early, test, test, test. I tried different offers, and measured everything. You’ll see in a moment how this comes into play in my later thinking.
- When I was in college, I arrived as a Freshman, and saw some of the amazing stereo systems that the seniors had, that I couldn’t afford. But there was a student shop at Caltech, and lots of audio engineering courses, so I learned how to build my own speakers, and then after making my own for me, I began selling them to other students and professors, and then eventually all over Pasadena.
- I graduated from Caltech the month the IBM PC was released. I took all my savings and ran down to the Computerland store on Lake Avenue in Pasadena and bought one of those first machines nearly the day it came out. It was monochrome, two-floppy drives, 64k of Ram, for $5,000! And that was with no software. Basic and Pascal were extra! But I began using the computer to help me manage my business and to learn how to program.
- I started making software programs with my brother, including some tools to enhance Lotus 1-2-3, and a few years later Lotus Development acquired our little company in Pasadena. I signed a 1-year contract with Lotus, but ended up staying there for 6-1/2 years, and learned everything I could about the software industry.
- Then in 1991, my son started Kindergarten, and I left Lotus to start an educational software company called Knowledge Adventure. We took advantage of the newly shipping multi-media PC’s to make software that would help kids fall in love with learning.
- We eventually made a whole series of products, including Knowledge Adventure, Space Adventure, Science Adventure, Dinosaur Adventure, and even a school-based series called JumpStart Kindergarten, JumpStart First Grade, and so on.
- While I was running Knowledge Adventure, the Netscape browser was release, and then Netscape had their famous IPO in 1995. In no time, they had 30 million global users. That sounds like nothing now, but that was a LOT then.
- Because I saw so much potential with the browser – I felt that was another transformative time in history like we see today with mobile, I decided to start a lab, just to focus on creating companies that would take advantage of the power of the web, so we started Idealab as a technology incubator in 1996. Our goal was to be a business to create businesses.
- In 1997, we had our first 12 companies, and they all had a challenge, getting traffic. I was trying to urge all of our CEO’s to convert all of their ad campaigns into effective cost per click, to measure how well they were performing. There was no such thing as SEO or SEM back them, to get traffic you had to sign up for big portal deals, say with AOL, or Yahoo. You had to sponsor the whole Cars section for like $5m for 3 years, and then just pray that it would end up being a good deal.
- Just like the Earth is a “Goldilocks” Planet, where the conditions are just right for life, many conditions need to be just right for a startup to succeed.