Tips

Most technologists have little interest in the mechanics of starting and building a business. That’s why I recommend that they find a co-founder who loves business challenges, including marketing and finance. I usually envision a 50-50 ownership split for their efforts, but every engineer believes the technology side deserves the majority share.

In fact, an entrepreneur friend of mine, who made millions on her marketing expertise, asserted recently that most inventors fail in business because they refuse to believe that any business expertise or experience is worth more than 5 percent in partner equity. If you consider yourself a technologist, you probably believe and may be propagating one of the following myths:

1. The first priority for funding should be to develop the technology.

Outside investors are most interested in scaling a proven business model, not research and development. Thus it’s a waste of time for most entrepreneurs to be looking for investors until they have a product and some customer revenue. Most founders bootstrap product development.

2. Fabulous solutions require great technology.

Business success requires customers to see a solution as exciting, and they rarely care about the technology behind it. I exhort entrepreneurs to keep it simple, start with a minimum viable product (MVP), and test it out with early customers. The best technologies are barely invisible and low cost.

3. New technology is so exciting it sells itself.

The reality is that consumers and businesses alike are afraid of new technologies, due to the learning curve, potential quality problems and side effects. This fear can easily override their fear of the problem the technology aims to solve. Business people know how to downplay the technology and market the value of the solution.

4. Marketing is a necessary evil to mask poor technology.

In today’s world of information overload, everyone relies on marketing and social media to find solutions to match their needs. Even the best technical solutions often fail due to lack of good marketing. The right marketing efforts can cost as much as the technology.

5. You can’t build a business case until the technology is finalized.

In fact, building a business case, starting with market opportunity and customer segmentation, is the only way to know what you can afford to spend on the technology. Technology that can’t be sold for a profit or appeals only to early adopters is not a viable business.

6. Patents are not worth the effort, since big companies will win.

Intellectual property is a business issue, not a technical issue. Patents can raise startup valuation by investors by as much as a million dollars, and will attract acquisitions rather than copycats. Patents can apply to innovative user interfaces, processes or a new technology algorithm.

7. Business efforts should start only after the product is right.

Business experts often now recommend that entrepreneurs start their marketing first to confirm that they have real customer interest and an appealing product concept. Elegant implementations may be too expensive or too complex for non-technical customers.

8. Perfecting the technology early removes most business risk.

It’s true that inventions can’t be scheduled, but it’s equally true that customers can’t be invented. The ultimate risk is trying to sell a solution that customers don’t need or want.

All this doesn’t mean that a great technologist can never be a great entrepreneur, but it does suggest that business skills are as key to startup success as technical skills. Very few people have both, but there are some notable exceptions, including Mark Zuckerberg of Facebook and Elon Musk, founder of Tesla Motors, SpaceX and others. The odds are still against you being the next one.

The alternative is to find a co-founder who can provide the business acumen, as Bill Gates did with Steve Ballmer for Microsoft, and Google did by bringing in Eric Schmidt. I’m personally a technologist, and I’m always disappointed when good technology languishes on the sidelines for 20 years in denial of business realities. Don’t let a few myths stop you from changing the world.

Most entrepreneurs have heard the commonly cited statistic that 90 percent of all technology startups (and let’s face it, the majority of modern startups are technology based) fail. Some fail because their products didn’t end up being what they thought it would. Some fail because they ran out of money. Others fail simply because their revenues couldn’t grow fast enough.

But these causes of death don’t exactly illustrate what went wrong for the startup during the course of its life, much in the same way that listing a heart attack as a cause of death doesn’t directly indicate an unhealthy lifestyle that may have led to it. Like with human life, some startup deaths come out of nowhere and can’t be helped, and some are both predictable and preventable.

We all know that there’s no shortcut to success, and there’s no magic formula that can create the “perfect” startup, immune from the 90 percent death rate constantly looming over the heads of entrepreneurs. However, there’s one factor that rises above all others in importance: the timing of the business.

In a recent TED Talk, serial entrepreneur Bill Gross introduces a quandary that has been plaguing him for years. Both within and outside his organization, he’s witnessed dozens, if not hundreds, of different businesses grow from just a hint of an idea to full-fledged enterprises standing and developing on their own. He’s seen a number of different successes during his tenure, and he’s seen a lot of failures, and as you would imagine, some ideas he thought were perfect turned out to be flops and some he thought would be flops turned out to be quite successful.

Dirven by curiosity, Gross examined dozens of different companies, evaluating them on a point scale in each of five different categories he felt were at least partially responsible for determining a startup’s success. They included the strength of the idea behind the company, the plan on how the idea would be executed, the amount of capital the business was injected with, the people who were running the show, and whether the idea launched at a time when audiences were both ready for it and interested in it.

If you saw the headline of this piece, you won’t be surprised to learn that timing turned out to be the factor responsible for the greatest number of successes among Gross’s selection sample. And while the idea and the funding might make more sense — after all, how can you find success with a bad idea or without any money to help you grow? — the timing aspect represents the greatest make-or-break point in a startup’s development.

Imagine a business where everything else is perfect: You have a great idea, a theoretically brilliant business model, a talented team and enough funding to get the ball rolling. But if your idea comes too early and consumers aren’t ready for it, they won’t readily adopt your system. If your idea comes too late and there are already a number of different competitors in front of your target audience, you won’t be able to squeeze in.

Imagine the other end of the spectrum. Everything else is lacking: You have an OK, but not great idea, a business model with a few holes, a few dedicated people who don’t know exactly what they’re doing and barely enough funding to keep the lights on. But your release is timed perfectly. People have a strong need for your idea and they’re ready for it, but you’ve come along before anybody else has.

You could expect to see strong initial sales, which can help you flesh out your business model and provide you enough cash to negate your funding issue. At that point, you’d be able to hire a better team, and eventually, your idea will evolve and get better with the support of your users.

Timing can’t be ignored, and it can’t be substituted just by paying more attention to the other elements of your business. Certainly, having a good idea, business model, team and available capital can all increase your chances of success, but without that critical timing factor, you’ll inevitably end up failing — or at least struggling.

The biggest downside to this is that there’s no scientific process for determining the timing of your idea. You can use market research to figure out the personas of your target demographics, and competitive research to see what your competition is like, but for the most part, timing comes down to a gut feeling and a little bit of luck.

Still, hit the timing right, and everything else in your business will fall into place in due time.