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Timing - crucial factor behind failure and success of startups

Team YS & Sanchit Khera
20th Jun 2017
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Timing or what most Indians ignorantly refer to as “luck”, in its most rudimentary business understanding, implies the decision to allow the project or product to enter the market. It reflects upon how much forecasting was taken into account to allow customers to partake in and accept the startup and adopt the behavior that is suitable for its existence.

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Bill Gross and his team at Idealab has been studying the startup phenomena and has some enlightening research  on the topic. His team studied the top startup stories and what really made them successful in the long run. He filtered for parameters like good team, funding, size of the market, scale and skills of the industry players, to determine that there is one essential factor that decided the fate of the startup – which was “timing”.

Whether it’s giving your room away to strangers at Airbnb (during financial crisis and re-election in the US), or ordering a taxi on an app (mobile boom in the US, lower job-satisfaction, etc), Bill denotes timing as the key factor in determining if the innovation will do well and become the unicorn that everyone dreams of.

Even something as tiny as Slack was built during the time of pre-existing competitors, but took off to unimaginable scale due to its perfect timing and great brand and design.

Timing accounted for 42% of the difference between success and failure, states Bill, an investment expert.

Knut Haanaes, professor at IMD business school and consultant at BCG, suggests that the reason for startups to fail, is the incapacity to do a balancing act between “being too innovative” and “doing the same thing”.

The perfect startup according to Knut is the one that balances the existing conditioning of the customers with something that’s innovative. At the core of his supposition, is the basic dilemma of “timing” again. Since its critical to time a specific innovation, the market-fit of the MVP (most valuable product) becomes the critical parameter of the speed of the delivery to market.

In his seminal book, “Your strategy needs strategy”, Knut, and several professors from Harvard Business Review, argue that if a startup enters the market too late, the chances of it beating the incumbents lowers radically and not incrementally.

Clayton Christensen, a Harvard Business professor, suggested something similar when it came to innovation in general. He recommended that the idea of offering something better for something cheaper came at a price much greater than the threat of competitors lowering their price as well. He suggested that when the timing is right, the market will adopt your innovation as a part of their own eco-system and deliver value to that particular niche or system.

Let us now focus our attention to Jio launch, a phenomena that was India-centric and shook the establishment by the roots. Had the consumer mindset not been overarchingly frustrated with increasing costs and unethical practices of the incumbent players, the industry would not have been ripe for disruption. They also took advantage of the poor availability of data in rural or semi-rural sections, lack of real clarity in offerings and low focus on customer service differentiation.

Reliance Jio snagged 72 million paying customers to switch over to its network service within months of going live (now at 108 million). The timing was so perfect that regularity bodies had to study the impact it had on the business eco-system in India. It tried to study the over-arching dilemma this presented to the telecom industry in general.

Standard economics took over from there. That is, when one competitor lowers prices on the same level of quality, the industry colludes and merges together to strengthen its core offerings.

Petri Lehmuskoski, founder of Gorilla ventures and one of the biggest investors in the Fintech space, suggests that sometimes startups fail to realize that pre-mature scaling is one of the biggest disasters a startup can face early on. Petri goes about to denounce the idea that money is now the source of growth itself. Referring to startups he funded, he says the new entrants always realized that things around them changed every quarter. Giving them a chance to scale up in economically bad times taking full advantage of “timing” in the country they operated in.

So all said and done, timing has been conceived by many as either the Achilles' heel or the harbinger of success and catering growth in leaps and bounds.

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