Why Now? The Key Question for Startups

There are many important questions that entrepreneurs ask themselves when starting a business or that VCs ask when making an investment decision.   Common questions include: How strong is the team?  What is the competition?  How good is the product?  What is the financial plan?  But, there is an important question that is too often missing:

Why Now?     

In other words: What are the fundamental drivers that are creating a huge market opportunity?   What is causing the tide to rise and float all boats in a market?   What ingredients exist to allow a market that didn’t work 5-10 years ago to flourish today?

I believe every VC pitch deck should have a Why Now? slide.  If there aren't fundamental market forces that are creating a massive new market opportunity, you could certainly still build a great business but not likely one with explosive growth.   

Why Now? Examples

Mobile Device Management – Corporate employees are also consumers.  And millions of employees are bringing their own devices to work (BYOD) - iPads, iPhones, Androids, etc.  For a while, enterprise IT organizations fought this trend.   But, CIOs now realize they have no choice and they require new systems to monitor, manage and secure these devices.  This is happening at nearly every enterprise in the country today.  As a result, the Mobile Device Management market, with leaders like MobileIron, is exploding.

Social MarketingWith the rise of Facebook, Twitter, Linkedin and Google+, the CEO of
literally every major Brand is grilling their CMO about their social marketing strategy.  As a result, the flow of dollars into the Social Marketing space has been relentless and companies like Buddy Media, Vitrue, Wildfire and Spredfast are growing quickly.

Cloud Storage Now that they have multiple screens (PCs, iPhones and iPads), consumers finally have a reason to want their files, documents and pictures stored in the Cloud.   Prior to the emergence of these high resolution mobile devices, the ingredients simply weren't in place for Cloud Storage to flourish and, as a result, pioneering companies like Sharpcast struggled to gain momentum.   But, once the ingredients were in place, Dropbox and Box.net have been unstoppable.

Gamification Zynga and others have proven the power of game mechanics to influence online behavior.  Today, businesses, media companies and employers all recognize this opportunity and are incorporating game mechanics and Behavior Management into their own properties.   As a result, companies like Badgevile, Bigdoor and Bunchball are growing fast.

Entrepreneurs should attempt to build the leading company in a market.   And, of course, VCs seek to invest in leading companies.   But, the first and most important challenge is to make sure we are in the right markets...at the right time.  The answer to Why Now? is the key to determining which markets will experience explosive growth and drive the rapid creation of large companies.

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