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December 01, 2003

What makes some startups succeed

[Via Ross Mayfield] Darwin magazine on what makes some startup succeed -

Observations of some counter-intuitive trends :

- Companies raising the most capital don't have the strongest chance to succeed
- A fully staffed executive team is not necessarily a requirement for success
- Most successful storage startups fail to meet all the criteria for being a truly "disruptive innovation."
- In 93 percent of the cases, the strategy that a company emerges with (at exit) is completely different from the strategy it set out to implement

Remedy for all this :

- set a higher bar for substantive technical differentiation
- match developmental costs to the exit opportunity profile (which depends on the specific subsector you're in)
- mitigate risk with "staged deal structuring and sequential organizational development"
- recognize and leverage exit windows
- for investors lucky enough to go public, liquidate your investment as soon as possible thereafter, which history shows will enhance your return

Largely drawing these results from the storage startups but this is applicable to any other subsector

December 1, 2003 in Entrepreneurship | Permalink


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