Most investors state that a startup’s team is the most important determinant of its success.
Simultaneously, when a few companies in a category run into trouble and/or fail and the category therefore falls out of favor, we are quick to dismiss new companies which emerge in that category.
This happened for mobile gaming companies several years back when Zynga, the at the time leader of the pack, started facing difficulties.
More recently, it’s happening in e-commerce as all but a horizontal approach is falling out of favor.
The first two statements of this post are contradictory. Specifically, if a startup’s team is indeed the most important determinant of its success, it isn’t correct to explain failure by pointing to the category.
And the reality is exactly that. Most startups that don’t succeed are faced with this outcome because of the team’s approach to and decisions within a category, not the category itself.
Outsiders don’t see the inside of a company. As a result, they assign responsibility for the outcome to the category. When, in most cases, insiders know that responsibility lies with the team.
This creates opportunities for great teams in out of favor categories.