Success factors for startups: what makes for a successful startup in 2022?

Startups are entering and running a vastly different world in 2022. The global pandemic’s economic impact is going to take years to fully understand, as is the future of work in a changed world.

So what does startup success look like in 2022? A report from Upwork shows freelance earnings went up $100 million in the US, while the Great Resignation continues to shake up the workforce world. Free Trade Europa has released a 2022 report trying to better understand the rise of remote work and the gig economy for freelancers and small business owners in Europe.

With all this economic uncertainty and massive economic disruption, how do we understand startup success factors in 2022? Have they changed, prior to 2020?

Idealab founder Bill Gross determined what he found to be the five most important success factors for startups:

1. Timing
2. Team
3. Ideas
4. Business Model
5. Funding

Gross’s determined factors form a holistic picture of what it takes to secure startup success with your product or service. They remain relevant in 2022, but does the path to growth take you on a different journey?

We’re going to put these five success factors for startups under the 2022 lens and see what’s changed. We’ll structure them in order from least important to most (according to Gross himself).

Touted as a legendary investor, Bill Gross also founded the longest running technology incubator, helping companies achieve success since 1996. Gross has helped start more than 125 companies, from which he derived his startup success metrics. It’s safe to say he’s an authority on the startup economy. It might even be an understatement.

Least important, according to Bill Gross, but still crucial. To understand its placement as least important is to consider it in relation to all the other factors. Without a good team, powerful idea, well-written business plan, etc., funding is useless.

Funding simply refers to the financial backing you can obtain to start your business. This financial backing can come from a number of different sources:

• Venture capital
• Savings
• Friends and family
• Crowdfunding
• Small business loans

Securing funding should be a combination of all these methods, but focus on the ones that suit you best. If you have family money, this might be most ideal. If you’ve been employed for a long time and have amassed money from investments, time to dig into the savings first. If your idea is attractive to venture capitalists, start reaching out.

2022 is a time of economic turmoil, but it’s also seen a great deal of technological innovation. Approaching funding in today’s world means researching the industries where the most money is being poured in, and tailoring your idea and business plan towards that. So while funding usually comes last when planning your startup success, you could work backwards here and provide a need for a problem in the hottest startup sectors today.

A report over at Semi Engineering states points to the billions being poured into battery technology, artificial intelligence, and faster memory access. Futurism is key here. We want reliable energy sources, smarter machines, and more powerful computers.

On the flip side, Phocus Wire reports that travel startups are seeing reluctance from investors, as the world returns to open borders and affordable travel. The kinds of startups suffering from funding shortages include rental platforms, mobility startups like scooters, and car rental startups. All of these platforms are frequented by tourists visiting new cities, which has dwindled significantly since the pandemic.

While reluctant funding or thriving startup sectors shouldn’t sway you one way or the other on your business venture, it is worth considering. Sailors wait for the right wind conditions before setting sail, but they attempt the journey eventually.

Gross argues that a business model isn’t necessarily something you need for startup success. While this may sound strange, he’s referring to companies like Google who never had a monetization strategy and first resisted including advertising. Also Amazon, who began as an online bookstore and grew to the world’s largest online marketplace.

An article at the Harvard Business review provides the simple definition of a business model as ‘how you plan to make money’. Another popular perspective in today’s world of business is to think of your business model as a story. In this way, it is a story you tell to investors to convince them to become characters who help your story reach its happy end.

You can construct your business model in any format you see fit. Even the content of the model is up to you, and will depend on your product or service. However, these are the essential components of any business model, per Strategyzer:

• Desirability: what do I desire to do with my startup, and what desires of the customers do I plan to meet?
• Viability: what are the revenue streams and cost structures that stand to make my business viable?
• Feasibility: what are my resources, what do I plan to do, and who do I plan to partner with that will convince others of my business?

Shakey economic circumstances usually call for stable planning, which means concrete and convincing business plans. We are also no longer in the early days of the internet, when innovation was king and business models could grow as the internet became more user friendly. Today, investors want to know where they’re putting their money and how they’re going to see a return on it. They want competitive alternatives to existing platforms and engaging corporate stories.

Gross places ‘idea’ right in the middle of his startup success metrics. While many of us might be inclined to think all you need is a good business idea, it’s important to remember how bringing an idea to fruition is dependent on so many other factors.

Visualize your idea in the middle of the other success factors, vitally linked to funding, a good business model, an ideal team, and the right timing. Your idea is the heart of your business, but a heart can’t beat without a healthy circulatory system.

Formulating a business idea goes beyond that initial lightbulb moment. And if you don’t have an idea but you aspire to startup success, there are plenty of things you can do to accelerate your arrival to a good one. Try asking yourself these six questions to both develop and interrogate your business idea.

Ideas are difficult to place in context, because the essential philosophy behind a good idea remains the same:

Identifying a problem and theorizing a solution to it.

This is obviously easier said than done, but it should encourage you to look at current trends with a critical eye and a researcher’s mind. Take advantage of today’s data-driven age to analyze what people are talking about and what refuses to go away. Use the following channels and resources to chase potential startup ideas:

• Trending topics/news stories on social media
• Top performing startups throughout the year
• Emerging technologies
• Conversations with friends and family
• Conferences and ideas festivals

Above all, when searching for an idea, remember to keep an open mind, even to the craziest fantasies, and have fun with the process. To an open mind the best ideas come welcome.

When he first formulated his success factors for startups, Gross placed ‘ideas’ at number one, and ‘team’ below it. Over the years, founding many startups—both failures and successes—he changed his mind. He realized that an idea is only as good as the team that backs it. In this way, a bad idea can be reshaped into something better by a good team, and a bad team can squander the best idea.

Your team is the people you work best with. Similar to choosing flatmates, you shouldn’t necessarily prioritize friends when finding the ideal one. Just because you get along together socially, doesn’t mean you will work well together or you should live together. In fact, very often the opposite is true. A good teammate is someone with a similar ambition to you, an equal or better work ethic, and with whom you can have productive disagreements. It also helps to choose teammates with strengths that complement your own, for instance having a teammate who is better with accounting.

Much like finding an idea, the principles of finding and maintaining a good team are resistant to market evolutions, but the means by which you obtain a good team have grown.

If you don’t already have a team in mind or you wish to expand beyond your current team, begin by building a professional network in all the ways that our globally connected world offers today.

This means taking advantage of things both online and offline:

• Online communities based on your interests and expertise (e.g. LinkedIn, Reddit)
• Offline gatherings of like-minded entrepreneurs (e.g. conferences, free-to-attend workshops)
• Online tools to broaden your circle (e.g. buying followers, promoting posts on social media)
• Offline informal meetings with potential teammates (e.g. lunches, attending conferences together)

Notice how the phrase ‘right place, right time’ is always relevant? This is why Bill Gross puts it as the single most important success factor for startups. While each factor is one part of a whole, timing can trump each one of them in the right circumstances. Being too late to the party can be equally damaging to pushing something on a customer base that isn’t ready yet.

It might feel like timing is out of your control. And while it is to a certain degree, this isn’t entirely the case. Often, successful international startups are not the innovators we perceive them to be. They are more often crafty entrepreneurs who waited for existing technology to develop, so they could simply improve on an existing business model. If you want to introduce dinner guests to a new recipe, let someone else serve it to them first as an appetizer, before you bring out the main course.

Each decade comes with its own crucial timing issues, and as technology accelerates, time frames within which ideas remain relevant continue to shrink. This is what we are looking at when we consider business ventures in 2022: a vastly changing market scrambling to put itself back together after a couple of shattering global events.

This might sound scary for the budding entrepreneur, but it is in these times of crisis that big ideas make the most impact. The world is waiting for your idea right now, they may just be a little cautious to embrace it at first.

Consider, if your idea is costly and its failure could mean your financial ruin, holding onto it for a while. Or, if you can afford to, try a few different ideas in smaller, cheaper ways: gauge audience interest on a topic with a blog or take a few polls on social media to see how people respond to your idea.

Startup success, like the success of any venture, will always have an element of mystery to it. Especially in today’s uncertain world. But this doesn’t mean ideas every day aren’t being turned into financially rewarding business models and successful companies. Hopefully, our 2022 analysis of Bill Gross’s five success factors for startups has given you some direction in navigating your way to your goal.