Domopalooza: Timing Key to Startup Success—and Luck
Salt Lake City—For every success story to come out of Silicon Valley, there are countless startup companies that dwindle into obscurity. But for Matt Cohler, success comes down to a simple—if elusive—formula.
“I think it was a combination of the entrepreneur, the product they’re building, and the way they’re taking the product to market, and last but not least, timing: what’s going on in the world,” said Cohler, general partner at Benchmark, at Domopalooza 2018 Wednesday. “I think if you come in at a time when there’s a shift in platform, that opens up a lot of opportunities.”
Cohler knows Silicon Valley success; he’s been involved early on with a laundry list of household names: LinkedIn, Facebook, Uber, Instagram and Snapchat, for which he was the first investor. The secret to being involved with all of those thriving companies is somewhat less complicated than the secret to entrepreneurial success.
“That was basically really, really good timing and really, really, really good luck. Not all [luck] but 99.999999 percent,” he said. “Luck is 99 percent of most things, and if you don’t realize that, you’re fooling yourself. Timing is everything, too.”
Cohler first came to Silicon Valley in 2002, before working on the Internet was considered a reliable or lucrative path to success. He found his way into the then-tiny staff of LinkedIn, which succeeded where other professional social networking sites had failed because of a few key differences. The timing was significant, Cohler said, but founder Reid Hoffman also made some key decisions that helped make the difference. Among those differences was the omission of profile pictures—a feature that had caused earlier competitors to disintegrate into dating sites.
“Once it was established and once norms were established, of course we can add profile pictures, but it was important not to have those Day One,” said Cohler.
It took some times for LinkedIn to gain traction—Hoffman heavily utilized his get the first users in a way that Cohler characterized as, “this process of very unscalably clawing your way to a point where it tips into being useful.” Because it took so long to grow, Cohler said, many people think Facebook was established earlier, despite being a year younger.
By the time Facebook launched in 2004, LinkedIn had enough growth that Cohler found himself getting superfluous, he said, but Facebook was, “tiny and on fire.” Again, he said, Facebook succeeded far beyond other social media networks because of that combination of entrepreneur, product, product use and timing.
That same combination was true at Uber, which understood that solving small problems was necessary before tackling larger ones. Instagram came about at a time when consumers were transitioning platforms.
“Instagram came across in a moment in time when this fundamental shift was happening from web to mobile. You have to kind of re-imagine what the product is about at that time, and Instagram had done that,” Cohler said.
Snapchat was one of the most acute demonstrations in knowing which demographics to watch to understand what new thing is going to make it big.
“In consumer software, it’s always the kids who are the leading indicators of these things—tweens and teens and sometimes college kids,” he said. “They’re more in touch with the bleeding edge of technology than other people. It was this very simple but very powerful idea.”
Many successful startups are ultimately acquired by larger entities—Google acquiring YouTube, for example, or Facebook buying up Instagram and WhatsApp, Cohler said, examples that show with textbook clarity the need and opportunity for large companies to stay relevant.
“Ultimately, it’s a dynamic, competitive world, so you’ve got to grow and change or you’ll die. The greatest big companies have figured out how to do that well, figured out how to disrupt themselves in a way that’s complementary to what they’re already doing rather in a way that will destroy themselves,” he said, cautioning that startups can also get lost in the shuffle of established processes and executives with different ideas of how it should be run. “The best way to handle that is kind of giving them an unfair advantage. Let them be a startup within your company and give them access to the resources you have in your company.”