3 questions to understand if your startup is too early

The most important ingredient in the recipe for a successful startup is timing. For every breakout success, there are thousands of startups that launched too early or too late, and were unable to last long enough to find Startup Valhalla.

Bill Gross, CEO of Idea Lab and founder of 100 startups, 7 of which have achieved valuations of over $1b, agrees that timing is the most important part of succeeding- more important than the founding team or the right investors- and responsible for 42% of a startup’s success.

Most often, timing can only be analyzed in hindsight. But entrepreneurs should still be aware of the risks of starting too early, and approach founding a company with a thoughtful conversation about timing.

RISKS OF STARTING TOO EARLY

If you start your company too early, the technologies you need to leverage may not be fully developed, and your customers may not be ready for your product.

Your potential customers have lived through enough hype cycles to be wary of buying into certain products too early. Technology hype cycles have tricked companies into early investments in the past, like when in 1958 headlines preached that ‘within ten years a digital computer will be the world's chess champion,” inspiring and early AI frenzy.

Clearly, this promise of technology, like many others, didn’t come to pass. So customers wait to see proof points.

This is an entirely justified response, and it’s one of the most frustrating truths of starting a company too early.

QUESTIONS TO HELP IDENTIFY YOUR TIMING

So before launching on the already challenging mission of starting a company, you should ask yourself 3 questions to take a good hard look at whether your timing might be too early.


1. Does a solution like yours exist anywhere else in the world?

Contrary to popular lore, entrepreneurs rarely create something the likes of which have never been seen. Even the most ambitious technology companies had some sort of predecessors. Google wasn’t the first search engine- it actually started 4 years after Yahoo. The iPhone wasn’t the first smartphone- Nokia had been making internet-connected phones since 2001.

If nothing like your solution exists in any form, proceed with caution. It could mean either that it’s been tried unsuccessfully, or that no one else (including many smart people) have wanted to give it a try.

If it’s the former, you should analyze that attempt and understand what went wrong. Did the failed entrepreneurs choose the wrong market? Were they missing a key industry insight? Has a crucial technology developed since their attempt?

If it’s the latter, and no one has really given it a real try before, is that because you’re the first to have thought of this idea (possible, but unlikely)? Or has something in the market (regulatory, technological, etc) changed recently that would allow you to succeed?

This was the case for Uber, which built it’s app-based ride-hailing service in 2009, shortly after the launch of the Apple App Store. No one had imagined a tech-based solution to taxi cabs before, because it was impossible until new technology, mobile internet and the app store, came around. Uber’s launch was perfectly timed, as they rode the waves of technological improvements without which their business model wouldn't have worked.

2. Is your solution as it works today especially helpful?

All startups are pitching MVPs with slow webpages, poor UI, and missing features. Often, it will take years to get to a product that people really and truly love beyond what they have today. But your product, with all of its many flaws, has to entice customers today.

Airbnb is a great example of this. They started as Airbedandbreakfast.com, with a janky website, few listings, and a lot of confusion about why anyone would ever sleep in a stranger’s home.

What they had on their side was product-timing fit. In other words, their janky solution was sufficient to solve a problem on day 1 of operations. By launching around the time of the Democratic Presidential Debates, they had the benefit of thousands of people traveling to concentrated locations, without the hotels to serve them. By launching in the midst of a recession, they had hosts who were looking to make some extra money and guests who wanted to save money.

So even though Airbnb was a long way from the seamless, ubiquitous experience they offer today, their timing allowed them to have a market at the time of their launch, with an unfinished product.

3. If you had 24 months and double the resources, would the solution you create be better than the status quo?

Customers will only put up with a broken solution for so long, and most investment rounds don’t look further than 1-2 years into the future. The right sales team can “sell the dream” to early customers, and a well-oiled customer experience machine can keep people engaged even as tech promises go unkept (which they always will be). But if you don’t deliver something of true value within a short time frame, you’re too early.

This is one of the many challenges that a company like Theranos faced. Their ambitious goal, to do 500 blood tests off of a single drop of blood, excited investors like the Walton Family and venture capitalist Tim Draper and customers like Walgreens and Safeway. Walgreens, to use one example, put Theranos equipment in over 40 stores. They were okay putting up with the technical inadequacies of the product, but only for just over 2 years before they canceled the partnership and sent Theranos into a downward spiral.

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If you answered 'no' to any of these questions, it doesn't mean you're doomed. Starting early has its advantages. If you can live through the inevitable winters and survive the challenging, lean years, once the pieces fall into place you’ll be the venerable genius in a crowd of young startups, gaining market share on the back of your sacrifice.

So if you find that your startup is too early, stay lean, be laser-focused, and go slow, and don’t worry about premature growth. Build your core technology, work with a limited set of important customers, set expectations, and hunker down. Hopefully soon (but maybe not too soon), you’ll be rewarded.