Timing

“Timing” – a cartoon that illustrates how market timing is often overlooked as one of the most important determinants of a startup’s success.

Wilbur Labs, a venture incubator, did a post-mortem of over 368 startups and found that the two primary cited reasons by founders for failure were running out of cash and insufficient market demand for a product.

However, behind both of these reasons is that launching a product when the market is ready is often more crucial than the idea itself.

Bill Gross, founder of Idealab, mentioned from his study of startups that “the number one thing was timing.

Timing accounted for 42% of the difference between success and failure.” The human desire for controllable factors and trying to build a narrative around events, might be at work for why founder post-mortems rarely bring up the timing issue.

We can see this timing phenomenon occurring at the moment with those AI companies that were funded before the OpenAI launch in November 2022. Brendan Burke, senior emerging technology analyst at Pitchbook, notes that “most pre-GenAI companies have struggled to find their next chapter as the underlying technology races by them and investors look for new ideas.

Of the 546 AI & ML companies that raised a mega-deal of at least $100 million from 2020 to Q2 2022, only 287 have closed a deal since the VC downturn beginning in Q3 2022, including acquisitions.”