Friday, June 29, 2007

Market, Product, Team and/or Luck?

Marc Andreessen wrote a great post on what's most important for a startup - and while I agree with most of what he says, in the end I don't agree with his conclusion. Yes, market is a powerful, compelling force that pulls products out but you also need the right team to figure out the market and how to get access to it. A strong team will tell the investors if they are in the wrong market and figure out how to shift strategy (we've refocused FirstRain over the last 18 months for just this reason). A great team will be honest with themselves about what it is going to take to get to a terrific product. But I do agree that great products are hard to create.

Some venture firms store statistics on the parameters that contribute to their company's success. When Mayfield funded my last company, Simplex, one of the partners told me they ask the investing partner to rank the factors that contributed to him investing - and the result over 25+ years of results was that the choice of the CEO has an order of magnitude higher impact on the probability of success than any other factor. Of course at the time, as a brand new CEO, this was scary as hell.

So I also humbly suggest that alongside of team, market and products there is a fourth very powerful parameter that plays in startups - and that is Luck.

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