What is the right formula for a successful start-up? Mike Arrington offers what he calls “the magic forumla”. First, though, he tries to convince the audience that we are not in “bubble 2.0” . He cites two main reasons – Sarbanes Oxley has put considerable barriers for public companies and investors won’t accept unprofitable floatations. In addition, we are seeing companies fail. In the first internet bubble no companies failed; they were just rolled into other venture funded vehicles.
Now to the tips:
1. Have a good idea!
Either invent a market, destroy a market or remove friction
2. Have a business plan – though, not essential (see Digg)
3. Have a revenue model
4. Build it cheap, test the waters (Digg spent $2,000 building the site)
5. Avoid a high burn rate

However, YouTube didn’t do any of these things! But…they removed friction by providing a much needed service (IPTV not user generated video) and they were first to market. That was enough to compensate.

So what are the shared attributes of winners? passion, doing something extraordinary and he obvious. More importantly, what are the shared attributed of losers?

• Poor founder team/ choices
• Lifestyle/ego entrepreneurs
• raised too much money
• spending too much money
• over business planned
• forget about scaling

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