Business Entrepreneur

5 mathematical formulas that predict startup success

startup success

(Business Entrepreneur) Being able to predict startup success with math sounds like garbage, but it’s true – there are commonalities that all success stories have.

In a competitive world, how can your brand survive?

According to the U.S. Small Business Administration, an average of 543,000 new businesses get their start every month in America. What the SBA can’t measure as easily is the number of businesses that fail along the way.

A fear many future or new entrepreneurs have is that they won’t be able to keep the lights on or feed their families, because the truth is that going out on your own is an enormous risk that doesn’t always pay off. So how does one predict success?

Steve McIntosh started his first company, World Choice Travel at age 17, growing it to over 250 employees with over $500M in sales, eventually selling to Travelocity. He later co-founded BeQuick Software, ad most recently, Fanhub where his is now working to combine CRM, ticketing, project tracking and pipeline management all in one cloud-based platform.

McIntosh opines that there are 5 mathematical formulas that predict startup success. In his own words:

1. Passion x Energy = Output

Passion is great, but it takes sustained energy levels to product meaningful output. For example, entrepreneurs have new ideas all the time. But, it is only when sustained energy is applied that an actual business takes shape.

2. Output x Objectivity = Quality of Output

Not everything you produce will be great. The more objective you are, the greater your ability to see the negatives in your output and fix them. This means that passion, without the yang of objectivity, may only produce low quality output.

3. Idea x Execution = Opportunity

The opportunity resulting from the most basic of ideas can be magnified when executed perfectly. Take Pinterest for example. The idea of browsing snippets of web pages is simple. But, it was the perfect execution of that idea that turned it into a billion dollar opportunity.

4. Opportunity x Market = Size of Opportunity

Chose your market carefully. When you solve a problem in a large market, execution risk and the need for the perfect idea is diminished. In other words, 1% of a billion dollar market is easier to achieve than 50% of a $20m market.

5. Size of Opportunity x Money x Creativity = Your Piece of Pie

It takes money/resources to execute on a business idea. However, the need for money is diminished by your ability to get creative. Creativity is a substitute for money.

The takeaway

Popping your collar and calling yourself the next Facebook does not a success make. As McIntosh points out in the formulas outlined above, taking risk is not the only factor in launching, operating, and maintaining a company.

1 Comment

1 Comment

  1. Pingback: Is a startup's funding status a valid metric for success? Hint: no - The American Genius

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