Why Now: Timing and Product Success

If you’re finding this post now, I actually wrote a book about all this… It’s called Why Now: How Good Timing Makes Great Products. You’ll get a fuller perspective there.

Deciding what product to build depends on many things. The problem you’re trying to solve, your capabilities, what you’re passionate about, people involved, how much time you have, your budget, and even temporary considerations like what’s currently hot and how easy it is to raise money.

You have similar questions if you’re evaluating startups as potential investments. Or if you’re a startup founder or an early team member. Or even if you’re part of a team in a larger organization developing new products in-house.

Many things influence your likelihood of success, but there is one factor we recognize, while often not really diving into how it works. That’s the importance of timing, or the “why now” question.

This question has become common in the startup world, but is relevant in many situations.

Forms of the Question

Depending on your focus, the Why Now question itself can take different forms.

• “Why is this the right time to build this business?” In other words, what bigger forces support this type of business being a success?
• “Does the market environment give this business an advantage?” Or: What is the mix of potential customers and potential businesses serving those customers? How does that environment give this business an advantage or disadvantage?
• “Should I wait?” As an investor or early employee, should I wait to see how things develop before going in? Do I risk being too early if I invest or join now? Are early companies at an advantage or a disadvantage?

These questions look simple. But as with many simple questions, there’s a lot going on.

It takes a while to uncover answers to these questions. Over the last couple years I’ve written a menu of options and a set of recommendations to put them into action. I supplemented that with a range of examples I now dip into for comparison to different situations.

Here’s a basic visualization to the way I think about timing and products:

Over the years I’ve seen a lot of change in the way people build startups.

Years ago it was rare to see startup founders systematically go out to learn from their potential customers before building a product. And then, once those same founders learned a bit, it was also rare to see them build something minimal to test and learn if they were on the right track, before committing to build even more. Thanks to books like Four Steps to the Epiphany, The Lean Startup, and Business Model Innovation, methodologies like customer development and concepts like the minimum viable product, lots of off-the-shelf tools and entrepreneurial education, many people changed the way they learn from customers and build products.

It’s time we do the same for the questions of market timing.

This is for you if:

• You’re a startup founder, working to understand how your company may be at an advantage because of market timing. How could you use timing to your advantage? How should you highlight that advantage when raising funding? How about when presenting how big and fast your business could grow when hiring talent?
• You’re part of a product team within a larger organization. What timing considerations should guide your new product development? How could you use an evaluation of timing to help acquire a budget and generate internal support for your work?
• You’re a potential early hire and want to join people working on strong opportunities. If you join industries and companies with a good chance to grow, your own opportunities will grow too. Apart from the team, role, and compensation, what else should you look for?
• You invest and want to focus your system for evaluating opportunities. You’re looking for a new framework and examples to pattern match against.

Since the title might confuse, I wanted to also mention what this post is not about.

This is not about why you personally should found or join a company. People are different and everyone has their own situation. The “why now” I reference is not about finding your passion or life meaning.

But if you want to understand the way timing impacts company and product success, you’re the person I wrote this for. Determine if the time is right for your business to exist.

The reason I’m in a good place to write this is that I’ve started businesses that were both too early (not much fun) and then at exactly the right time (much more fun). I’ve built and operated four startup accelerators and incubators around the world and have seen many startups struggle with (or often ignore) questions of timing. I’ve taught entrepreneurship classes at a major university with a large entrepreneurship center (the University of Southern California). I’ve brought the timing question into the mix as a hands-on workshop for startups and grad students. I’ve also presented publicly about this topic many times while putting my thoughts together.

How Others Think About the Why Now Question

An environment or emerging trend may create a situation that a team can use to its advantage. The same team, working on the same business or product, may have had a harder time earlier when that environment was different and when those trends hadn’t yet emerged. And some companies, already in operation but struggling, benefit from timing in that they were coincidentally ready to take advantage of a new opportunity.

As investor and Netscape founder Marc Andreesen said: “Track startups over multiple decades, what you find is that most ideas do end up working. It’s much more a question of ‘when’ not ‘if’…”

Just look at a very partial list of Dotcom era startups that failed, paired with the related successes that came later. Andreesen’s comment seems to hold. The ideas themselves weren’t bad if others eventually went on to succeed at building them.

Or is Andreesen’s comment specific to new tech companies? Do others focus on timing in history?

Let’s ground ourselves by going back a couple centuries to Napoleon Bonaparte — someone who upended entire governments in Europe. You’d think Napoleon would believe that he could do whatever he wanted, whenever he wanted, through force. And yet, when it came to the importance of timing he said:

“I never was truly my own master; but was always controlled by circumstances.”

And we also have the popular approach to this. The most famous scene in the movie The Graduate is this one:

Mr. McGuire: ”I want to say one word to you. Just one word.”

Benjamin: ”Yes, sir.”

Mr. McGuire: ”Are you listening?”

Benjamin: ”Yes, I am.”

Mr. McGuire: ”Plastics.”

Benjamin: ”Exactly how do you mean?”

Mr. McGuire: ”There’s a great future in plastics. Think about it. Will you think about it?”

We laugh at that scene, but the thing is… McGuire was right. And he was talking about timing.

The plastics industry went on to grow at a tremendous rate after his comment. If you were a young college graduate at the time, as Benjamin was, you could have built a company or a career in the plastics industry.

Note that McGuire didn’t say “go work for DuPont,” or “you should join Dow Chemical.” He said “plastics” and then let Benjamin sort out his path forward (which ended up not involving plastics at all).

So I’m modifying Andreesen, Napoleon, and McGuire’s comments to the simple:

Understanding timing in your market is essential. When teams don’t ask ‘why now’ they miss opportunities to be more successful and risk setting themselves up for failure.

So how do you identify your Why Now?

Why Now Drivers

The first way I look at the Why Now question is to identify the main drivers of market timing that impact a given business.

Your Why Now is a perspective on how one or more of these drivers impacts your odds of success.

There are many drivers of Why Now advantages. And yes, they can overlap.

This is a summary list of drivers I focus on:

1. Technological. These drivers come from tech that improves the ability to build specific products. What was too slow, too expensive, or impossible becomes fast, cheap, or possible. Some types of incremental tech progress is predictable on a rough timeline while other radical types are not. There are “laws” like Moore’s Law and more that describe how fast we may see these changes. Think of the computing power changes in the past few decades.
2. Social/Behavioral. Some behaviors seem to be as enduring as humanity itself (say, the love of music). Some practices go from being scandalous to normal or uncommon to common. Some behaviors originate in one part of the world and then spread elsewhere. And some industries are built on addictions that had to be developed, for example, caffeine, tobacco, and other drugs, but also news media and entertainment. Think of the way cigarette smoking declined in the US after decades of growth. After the decline, the habit may be replaced by something else, like vaping. Some behaviors, once accepted as the norm, receive new scrutiny.
3. Regulatory/Legal. This affects whether businesses are allowed to produce specific products. When regulations or laws are created or lifted, strengthened or weakened, answers to the why now question also change. Some companies follow regulations, some avoid them, and some fight them. Regulatory and legal drivers can function like on-off switches or dimmer switches. The cannabis industry, which operated in a gray market for the last century, has been coming into the mainstream as a result of changed regulations. New financial instruments like cryptocurrencies can go from unknown, to encouraged, to outlawed. Popular businesses can also influence regulations and laws, for example as Airbnb did for hotel licenses. Much telecom innovation came from avoiding regulatory restrictions.
4. Installed Base. This is a term I use to describe the way some businesses depend on the existing popularity of something else. For example, while the components that supported rideshare (GPS, handheld communications tech, online payments, rating systems) were already established it took years until smartphone penetration and the app stores combined them all. Building Lyft and Uber before then would have been technically possible, but much more difficult. The earlier installed base of Garmin and TomTom GPS devices in cars did not enable ridesharing, because the devices were only used in cars and not by passengers waiting for pickup, couldn’t handle payments or ratings, among other limitations.
5. Networks. This is different from the above in that the connections are key, rather than the deployed equipment. The network may also rely on different supporting infrastructure than the equipment. For example, the existence of online social networks that enabled new forms of content distribution, selling, and subscription models. The connections were the key, rather than the equipment people used. Traditional networks of people enabled trust at a distance and new forms of commerce.
6. Economic. Why Nows of this type rely on changes in economic factors. For example, a group of people may have become wealthier (or poorer) and as a result a company’s market may change. A new business model may become possible or an existing business model may become possible in a new place. Economic change may be predictable enough to build businesses with that change in mind. Interest rates (low or high) change behavior.
7. Distribution. New forms of distribution enable some types of business. For example, the printing press in Europe led to cheaper books, more of them, and spreading of the ideas that led to the Protestant Reformation where earlier religious movements failed or were more limited in growth. Online communities form a new kind of distribution opportunity to tap into. Distribution may come from a combination of other drivers, but functions as its own driver.
8. Capital Access. Capital access varies at different times and locations. Who is the likely source of capital — government, venture investors, traditional lenders, customers, or communities? What impact do low or high interest rates have on willingness to invest in spite of risk?
9. Organizational. New organizational structures, including corporations (so individuals may be shielded from the risk the organization takes) and decentralized autonomous organizations (DAOs) for trustless accountability. Businesses may be able to produce more cheaply or without fixed costs by outsourcing production or operating at scale.
10. Available Talent. The production of new experts in specialist fields such as AI, medicine, entrepreneurship, and more. How fast is that talent produced and what access is there, whether in a geographic area, or online? Can you access the talent?
11. Demographic. A population shift that changes prospects for the business or product. Population shifts are usually slow, studied, and predictable. The exception to that is smaller sudden shifts from immigration, war, refugees, and pandemics. What population segments experience at different times and how that affects them long-term.
12. Crisis. A sudden change that opens up an opportunity where none existed before. Examples include the sudden increase in remote work, deliveries, ecommerce, telemedicine, and more during COVID.

This list of Why Now Drivers will help you think about when to attack a changing, or unchanging, world, existing customer demands, and problems to be solved.

Investors and Why Now

There is a difference between stories presented in a pitch deck and real experience. But when it comes to why now questions, pitch decks are one common place you see them answered.

For example, VC firm Sequoia has a recommended slide order for startup founders pitching to them (shown below). Likewise, DocSend (a company that enables founders to track who reads their pitch decks) has published a similar observed slide order. In both cases, a Why Now slide features in the first half of the pitch deck.

But thinking about timing is not just for your PowerPoint slides. It’s also part of your own strategy.

In the paper “How Do VCs Make Decisions?,” the authors surveyed over 800 VCs at over 600 firms to ask about their top considerations for making investments.

More than 60% of responding VCs considered market timing an important factor that contributed to successful investments (differences in rate depending on company stage) and approximately 10% considered timing to be the most important factor. For failed investments, timing was also listed as an important factor by more than 40% of VCs, with roughly 10% of VCs naming timing as the most important reason for the failure.

In his book Zero to One, Peter Thiel, Facebook’s first investor, listed seven questions for startups, including a timing question: “Is now the right time to start this particular business?” Thiel compared social networking and cleantech and how those industries did or didn’t benefit from timing.

Investors use timing in their own investment decisions. Roelof Botha, an investor at Sequoia, wrote about timing in his private YouTube investment memo from 2005, which was later made public.

Botha’s memo outlined the progression of user generated content with shared text and images and that the next generation of content should turn out to be video based on the spread of personal video cameras and broadband internet.

Botha wrote: “Digital video recording tech is for the first time cheap enough to mass produce and integrate into existing consumer products, such as digital photo cameras and cell phones, giving anyone the ability to create video content anytime, anywhere. As a result, user-generated video content will explode.”

In his memo Botha also outlined the problem that existed in 2005: video content was difficult to share. Files were too large to email, too large to host, there was no standardization of file formats, and videos existed as isolated files without interaction between viewers or interrelation between videos.

So YouTube’s solution made sense. Users uploaded videos and YouTube served the content to viewers. YouTube converted different video formats to Flash Video (Flash penetration was 97.6% of web users at the time). The videos were highly compressed and could stream instantly. Users didn’t need to download the whole video first. Creating a community meant that people could comment on the videos and therefore would watch more.

And back in 2005 Broadband Internet into the home was also at critical mass. Traditional media also wanted to increase their online presence in order to follow their audience, which led to more interest in video. The timing was right for something like YouTube.

Timing and You

My informal survey of investors and what I’ve seen myself reveals that most startups don’t actually think deeply about the question of timing and most pitches don’t address the timing question.

As I’ve asked investors what they actually see when startups pitch, I’ve heard that only around 20% of startups are direct on what their timing advantage is. In a formal pitch, most don’t have a “Why Now” slide. That means the remaining 80% of startups are leaving it up to investors to apply their own perspective.

Founders and product leaders shouldn’t miss the opportunity to educate themselves on the ways timing could be an advantage. If you miss that opportunity, the danger is that others may misunderstand the situation and run in a different direction than you expect. Guiding others in that thinking helps show that you’re a good bet.

By now I hope you’re convinced of the importance of timing and business. Not every situation calls for you to assess your timing advantages. But where you need to convince others that you’re on the right path, you can gain a lot by thinking through the way the world is changing and how you can benefit from it.

I’ll go into more detail in the next post.

Feel free to say hello here or at @porlando on Twitter. I hold “Why Now” workshops periodically. Contact me to learn about the next one.