Which of the 4 components in a startup business is more important?

• The Team
• The Product or Service
• The Business Model
• The Market

Take your time…you do not have to answer right away. Pretty tough eh??

I know, as a serial entrepreneur and budding venture capitalist I have learned a few things about startups. If you would have asked me this question back in 2005 when I got my first real taste of a start up, I would answer, “the product or service is most important.” Ask me the same question in 2006, I probably would have answered, “man it’s all about the market.” Fast forward even further to late 2008 and I would answer the exact same question with, “I think I got, it’s all about the right business model.” Contrarily I have seen that a large number venture capitalist they say, “its all about the team, they make it happen.”

So what are you suppose to believe? I have given you four totally different answers to the exact same question. Confused?!? Don’t be.

I submit to you that ALL four components of a start up are very important.

Look at it like this:

• Awesome product + booming market + great team + a terrible business model = no profitability over the long term
• Awesome product + great team + excellent business model + no market = no sales & zero profit
• Awesome product + booming market + excellent business model + bad team = miss opportunities or failure
• Booming market + great team + excellent business model + bad product = almost no sales & low to zero profit

So the best situation to be in should look like this:

• Awesome product or service + booming market + pretty good team + right business mode = sustainable profits/success

There you have it. When it comes to starting a business or investing in a startup the way you can separate the winners from the loser is to see how all four components work together.

1. I too wanted to say team first, but then, I just did Atlanta StartUp weekend with a random team that turned out to be great.

   Business model, but more importantly internal structure are just as important. One thing I always like to try is to set specific timelines for the group. Actual business model and product are only important if you can actually get a product to market.

   Posted by Stephen | November 17, 2009, 1:25 am

2. Stephen - Thanks for the comment. I do think the Team is very important, they see everything through to the end. In the end you really need all four and any great company can fail without them, but when I look at it and said what if I could have only one component. It would be market.

   I think you can sell crappy food that takes hours to make with people standing in line all day and a lazy team to prepare it to a hungry group of people. So that is my take.

   Posted by TheMoneyMaven | November 19, 2009, 3:01 am