When is the Right Time to Start a Business?

They are, of course, both correct. If your plan is to get rich quick with a copycat idea by attracting millions in venture capital, it’s never a good time, especially now that VCs are wearying of the unrealized promise of many online businesses to attract real customer dollars. Caterina, presumably, made a reasonably small fortune developing and selling Flickr to Yahoo. But she started with a need, not a clever idea, and she nurtured it for years until it was clear to all that Flickr met that need. Even then, it was a strategic acquisition for Yahoo, rather than a cash cow, just as Skype was a strategic acquisition for eBay. And while both Flickr and Skype were original, met a need in a unique way, and achieved enormous popularity virally before they were acquired, it is far from certain that either had a sure-fire business model i.e. was destined to be sustainably profitable as an operating business. Much of what made both products so popular, after all, was that they were (and are) free.

I’ve spoken before about how and when to start a new business, and the graphic at right resummarizes my perspective on what you need to have, what you need to know, and how to go about it. But I thought I would offer a succinct answer to the question that a lot of people ask, which is When is the Right Time to Start a Business?

My answer is when you can answer ‘yes’ to all of the following questions:

1. I’ve identified a real need no one else is meeting effectively, and I know why no one else is meeting it effectively.
2. I’ve identified a team of people who (a) collectively have the skills and knowledge needed, without a lot of overlap, to bring this product or service to fruition, (b) believe passionately in the project to bring this need to market, (c) really like each other, and (d) know what they’re getting into and have reasonable expectations of the journey they’re about to undertake.
3. The whole team are competent and continuous innovators, improvisers, and learners.

That’s it. No mention of venture capital (the new name for ‘lenders of last resort’). No mention of marketing plans or detailed business plans with ten-year financial projections. No mention of luck. No mention even of deep networks (though they certainly help).

The most successful (on their own terms) businesses I know, some of which have been going for generations, all have these three qualities going for them, and I know of nothing else they all have in common (except perhaps that most of their principals have either failed or come close to failing in a past enterprise). Walk into companies like this, talk to a few people at random, and you can tell, almost immediately, if they have these qualities. You can smell it.

Walk into most companies and they reek of self-doubt, or of tedium, of internal friction and loathing, of risk-aversion and dread, of inflexibility, or false arrogance, or imaginative poverty.

I’m not saying that you can’t succeed, for awhile at least, with some cute copycat web or software idea that will attract brief fame, long enough to catch the eye of a big company who sees strategic advantage in buying it rather than copying it, and paying you enough to retire comfortably. But, as David says, if this is your approach you might as well pick up a Powerball ticket while you’re at it.

The three qualities above are exceptional, and not at all easy to come by. I know people who have been striving for them for a lifetime, quietly but unhappily working at some boring job at which they are overqualified and under-appreciated, but unable to find either the need or the teamthat will let them do what they really want to do.

For those that can, it’s always a good time to start a business.