In response to my last post on “The Power of A Good Strategy,” I got several emails citing timing versus strategy as the top reason Facebook succeeded. These emails also came with a link to a recent Bill Gross TED talk where he found timing to be the single most important factor in a startup’s success among four other criteria that he studied:
His top 5 Factors for startup success were:
4. Business Model
If you haven’t watched it, it’s short and worth watching:
The problem I have with timing as a success factor is it very easily falls prey to survivor and hindsight bias. The bigger question is how does one quickly tell apart an idea whose time has come versus not?
Timing: The choice, judgement, or control of when something should be done.
The point of the strategy post wasn’t to pass off a holy grail secret for success but rather to share a thinking process or meta-strategy for finding problems worth solving, which involves studying your analogs and antilogs to craft a “different approach” (strategy) which you then test with through small, fast, additive experiments.
If I were to give my top predictor for success, it wouldn’t be timing but early traction.
What is Traction?
Traction is the one metric that matters above everything else, but the problem is that traction means different things to different people, and it, too, can be gamed.
It’s not enough to pick any convenient metric that happens to be going up and to the right and pass it off for traction. For instance, plotting the cumulative number of users over time has nowhere to go but up and to the right. A more sophisticated investor will see right through this facade of vanity metrics.
You have to pick instead a metric that serves as a reliable leading indicator for future business model growth. Here’s my definition of traction:
Traction is the rate at which a business model captures monetizable value from its customers.
All the companies in the success category (Airbnb, Instagram, uber, YouTube, LinkedIn) from the TED talk (and Facebook) met these criteria fairly early in life. The failed companies did not.
If you have traction, funding generally takes care of itself as does the business model. The reverse isn’t necessarily true.
You Don’t Need Lots of Resources for Early Traction
We have learned how to deconstruct traction into its component pieces, and measure for leading indicators like Facebook did. They did not need to roll out to a billion people to convince their investors they could.
If you can’t achieve the first singularity moment of your product, nothing else matters.
The singularity moment of a product is not when you write your first line of code or raise your first round of funding but when you create your first customer. You go from nothing to creating value.
Every business, whether it’s Amazon, Google, or Facebook, started this way — with one before the millions (or billions).
Once you can repeatedly do this, double down, and level up.
Taking Control of Time is More Actionable than Timing
Instead of hoping your idea is timed right, you should value your time as the scarcest resource. You can always get more money and people, but the arrow of time only moves in one direction.
“I am time, the destroyer of all.”
Here’s a short musing that is quite timely too:
Good ideas are hard to find.
And we all have lots of them.
But you can’t brute force an idea whose time hasn’t come.
The good news is that we now also have
better and faster ways for quickly vetting these ideas.
So in the short run, we will see more ideas fail than succeed.
But this is still a success in my book.
We are trading big wipeout failures
for much smaller resets.
These ideas were taking up space in your head.
There is now a free slot for your next “big idea.”
Want to put your big idea to the test?
Learn to go from idea to early traction in less than eight weeks.
Register for the next BOOTSTART course.