You have probably heard the statistic about business failures – that there are 10X more companies that fail than succeed. You may have heard the statistic that 9 out of 10 new companies fail [ref]. How do we beat the odds and create a successful company?
Let’s start with a key fact that is incredibly important:
- THE IDEA MATTERS!
You may have heard people say, “the idea isn’t important, it is all about execution!” Bullshit. The idea really matters. Idea + Execution matters. And luck matters too in many cases. Two examples:
- Iridium had an idea: Satellite phones that let you make a call from ANYWHERE on Earth. That was their idea. And they executed like crazy. The company spent billions of dollars and put up 72 (72!) satellites. But it did not matter that they executed at the highest level. The idea was bad, flawed, and the execution DID NOT MATTER. All the execution in the world does not matter if no one cares about the idea. Not very many people on Earth needed the ability to communicate from Antarctica, or the middle of the Amazon rain forest. Most people live in cities, and cities have normal cell phone coverage, and this option works great for most people. So people generally did not buy what Iridium has to sell, and the company went down in flames despite all of the money that was invested: “The company failed to earn revenue sufficient to service the debt associated with building out the constellation and Iridium went bankrupt, the largest bankruptcy in US history at the time.” [ref]
- The Ariel Atom company got incredibly lucky when Top Gear featured them in the video here. You may be thinking, “Oh, they had a cool product, Top Gear was certain to feature them!” No – this is survivor bias clouding your judgement yet again. On Top Gear you only see the products they feature, not all of the products that they ignore. So it looks like it is easy to get on Top Gear. Just like it looks easy to get to the front page of Reddit. But it is not easy. Luck matters. The thing about luck is that there is often no way to predict it. You simply need to be out on the playing field and hope that luck happens. It often does. See the Aerial Atom as proof.
In order to start a business that succeeds, you MUST find an idea that RESONATES with an audience. Let’s take a look at what this means…