Why Do Some Startups Succeed?

The 5 Top Reasons Startups Succeed

Are you interested in launching an AI startup? How about Marketing AI or launching a digital marketing agency?

If you’ve thought of buying an early stage startup with potential, you’ll need to come up a regimen to evaluate it. In that evaluation process, you might overrate or even misunderstand what will be successful. You’ll need to develop or create a weighted algorithm to help measure them.

This process would be valuable whether you want to buy, or whether you want to capture the perfect model for your own startup.

There are startup opportunities happening all the time but most fail. It’s better not to fail.

What’s Essential in Building Your Startup?

Some entrepreneurs talk about their “idea”, that the idea is the point and is the seat of business and sales success. Yet, cynics will point out that ideas sound good on paper, but they’re a dime a dozen and everyone has tried it. They’ll say it’s the other factors that determine whether it’s viable.

And others still, believe execution is the key thing regardless of the marketing opportunity and need for it in the marketplace. Some cite a solid business idea, great product/market fit, superior talent, healthy work culture, and supportive mentors and then there’s the funding too. Others too will point solely and marketing and sales and how that will take even the weakest business model to the top.

These certainly will contribute, but what we want to know right now, is what are the core foundational factors that create a business the market wants to be a customer of? We need clarity and avoid wasting time and money. And of course, a digital marketing audit can help provide that insight.

Market Research and Real Demand

You might agree that a key reason business startups succeed is because there is a true demand for the product. And is there a way to serve that market need? Your market research has to underpin whatever idea or purpose might be driving your ambition.

But if you’re going to commit to launching a new company, you’ll want to be sure you’re aware of what actually creates a successful startup. You can round up the usual suspects, and these 5 supposed factors are what the founder of IdeaLab cited initially in his study.

Bill Gross’s 5 Key Success Factors

Bill Gross, well known founder of Idealab studied 200 startup projects throughout the decades he and his company have been associated with. These 5 top factors were the object of study:

He also found what he believed were the reasons for failure and we have to assume that it’s the lack of success factors. His company IdeaLab has launched 150 start ups through his business incubator, 45 of them achieving an IPO. That’s pretty impressive.


In this Youtube video he discusses those 5 key factors which accounted for company success and failure. He explored many possibilities but worked through the issue to its essentials.

Market Timing is Number One

So there you have it, he found market timing was the number one factor. Entering a market during a technology wave backs that up. Getting in at the right time essential. So it’s not your idea, but rather that you got on the market wave at the right time, just like a surfer gets on the right wave going to shore.  For instance, right now AI marketing is a wave rising up.  Yet there are endless problems holding back enterprises and small businesses from succeeding with Marketing AI initiatives.

One issue he doesn’t describe is marketing and reach to customers. That’s taken for granted but it shouldn’t be. If cost per lead is $100 for instance, all of a sudden the whole business isn’t viable. Market reach is often thrown into the execution and funding box, but lots of excellent startup products fail because they neglected marketing.

Keep in mind that when selling, it’s your customer base and reach that’s being purchased. Because the company who buys your startup may just want to get rid of your business (kill zone).

Opportunities stem from this frustration. Helping small business adopt AI marketing solutions is very important. Some companies are building AI marketing platforms and drawing clients into exist on those platforms. They’ll need to be sold on the benefits.

What is the opportunity for AI marketing startups? Consider the David vs Goliath fight that small businesses face with the Big Tech opponents, who lie in wait within the kill zone. From reduced exposure on Google and Facebook, small business are getting squeezed out and nullified and finding their traditional digital marketing practices aren’t affordable or effective.

Small Business Getting Crushed

Most small businesses are at this point right now, and have no idea what they’ll do.

That’s because Google, Facebook, Apple and Amazon hold all the cards. From the cloud to consumer access, to analytics, to personalized delivery, their marketing power is immense. If small business is to survive, it must adopt similar technologies. But right now, the software tools and the creative and technical talent aren’t available.

Small businesses are finding they can only gain exposure to the market via paid advertising which eats their budget. Then they can’t hire talent to develop the right content and deliver it via today’s sophisticated distribution channels.
Consumer markets are so fragmented now that reach is in doubt. And when SMBs reach their markets, their lead conversion funnels may not be effective enough to capture sales and create customers.

In short, it’s a horrible mess for small businesses. If SMBs can find talented marketing service providers who use the next generation software tools, then they can leverage predictive analytics, personalization and perfect targeting.

Right now, everyone relies on Facebook and Google for exact targeting yet they have a vested interest in not being too successful. It’s better for the monopolies if you spend more on less targeted traffic. They make their money on wasted spend. Success means less spend on advertising because you get your customer right away.

There’s a lot of gamesmanship in digital marketing and a company with next generation tools (AI tools) can cut through with laser accuracy, give companies a richer stream of customer prospects, and offer a more authentic unique value proposition.

This firm is entering at the right market timing. The other 4 factors are still in question however.

What is a Startup Idea Anyway?

What is the idea in this case? Few people even analyze what a startup idea is conceptually. The idea is the match between your unique value proposition and the demand for it in the marketplace. If you don’t have both, you have nothing.

The startup idea begins with a core value proposition in general and how it’s relevant to customers. Then it progresses to how it will be unique and differentiated against any competitors and how it will stand out as the market leader. Then the idea goes to how it will be delivered to customers and whether it can turn a profit.

Through this whole process, failure can occur. And of course, Bill Gross can tell you all about the failure factors too. Startup people all talk about them being failure experts. But you need to be a success expert, and that comes from clarity.

What do Startup Incubators Offer?

The fact that many startups choose incubators tells you more about the challenge. Incubators offer guidance, mentors, support, market insight, and can lead to talented staff, marketers, and angel investors. They provide clarity.  Perhaps then, it’s wise for a startup entrepreneur to go through this process on their own where you take the initiative to find the weaknesses in the idea and execution first.

As in any business endeavor, success is all about achieving clarity. Whatever way you need to do it, is your business, but the point in reading blogs like this is to speed up the clarity process.

That means finding those factors, assets, technique, tools and people that can make it happen. Don’t think that an investor has the answers. They only see it from the final view from their standpoint as an investor. Consider that their demand for profit could be the thing that undermines its success.

Know Where You Get Off the Success Train

Instead, your AI marketing startup is value as its essence, and can only achieve profitability when it’s scaled up by a big money investor (you capture funding or you sell the business).

Often selling the business is the right choice. It’s typical that startup entrepreneurs are great at envisioning and launching, but can’t function within the other stages where the daily 9 to 5 grind rules.

However, with an AI marketing startup the work will be interesting. Which industries would you like to serve? Finance software startups, PropTech companies, cryptocurrency companies, travel and hotels, or sports?

It’s not just the solution, it’s how you’ll excel in verticals where industry expertise and other strengths will be needed. But AI is powerful and could help you build the expertise that will give you a big edge over other marketing agencies bidding for brand’s business.

Pass this post onto to others who need to see the business vision. For any small business to succeed up against billion dollar goliaths, you’d be good.

Ready to succeed online with your business?  Find out more about AI Marketers digital marketing services.

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