What factors actually matter the most for startup success?

Ask most founders what makes a startup succeed and they’ll say the idea. The research says otherwise.

Bill Gross, founder of the startup incubator Idealab, looked at hundreds of companies — both Idealab’s and others — and ranked five factors by how much each explained the difference between success and failure. He shared the results in his TED talk, The single biggest reason why start-ups succeed.

Here’s the ranking, from most to least important:

Timing
Team and execution
Idea
Business model
Funding

Timing comes first

The number one factor was timing. It accounted for 42% of the difference between the companies that succeeded and the ones that failed.

Team and execution came second. The idea — how different and unique it was — only came third.

That doesn’t mean the idea isn’t important. But it’s surprising that it wasn’t the most important thing. Often, a good idea only mattered when it arrived at the right moment.

Why business model and funding rank lowest

The last two are business model and funding.

It makes sense for the business model to rank that low. You can start without one and add it later, once customers are clearly demanding what you’ve built.

Funding is similar. If you start underfunded but you’re gaining real traction, it becomes much easier to raise money — investors follow traction.

Timing in the real world

Take Airbnb. Plenty of smart investors passed on it, because they thought no one would rent out a room in their home to a stranger. People proved them wrong.

Airbnb had a good idea, a good business model and great execution. But one big reason it took off is timing: it launched during the global financial crisis, when many people badly needed extra income. That need helped them get over the discomfort of letting strangers stay in their homes.

Uber is another example. An incredible company with a strong business model and great execution — but its timing was just as important. It launched when lots of people were looking for extra money, which made it much easier to get drivers onto the platform.

What this means for you

Execution matters a lot. The idea matters a lot. But timing might matter even more.

The best way to judge timing is to look honestly at whether customers are actually ready for what you’re offering. That’s the hard part. When you love your idea, it’s tempting to push it forward and explain away weak results. Don’t. Be brutally honest about what the market is telling you.

Startups can change the world. Getting the timing right gives yours a much better chance of doing it.

Thanks for reading!