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You can still derive some information from this kind of analysis. We can conclude that "this idea sounds stupid" or "this is a first-time founder" are not goo

You can still derive some information from this kind of analysis. We can conclude that "this idea sounds stupid" or "this is a first-time founder" are not good reasons to dismiss an investment opportunity. In other words, the mentioned traits don't appear to be strongly negatively correlated with startup success.

Retric 11y ago
Suppose, 50% of all successful companies had first time founders (which sounds great!), but 51% of all companies where started by first time founders. Well, now being a first time founder is a small negative indicator. As to stupid idea, I think the black and white nature of the question is an issue for analysis. A scale where people suggest how likely it is to make money could be a more useful indicator. I suspect people may call long shots 'terrible' even if they think it might work, but that does not discount really dumb ideas. Google was a long shot, selling a highly toxic playdough substitute is just not going to work and may get people killed.
minimaxir 11y ago
> We can conclude that "this idea sounds stupid" or "this is a first-time founder" are not good reasons to dismiss an investment opportunity. No we can't conclude that. These companies are immense outliers in a marketplace where over 90% of startups fail due to being stupid ideas.
pbreit 11y ago
I call "baloney" on the "stupid idea" tenet. Somehow folklore has us believing that AirBnB, for example, sounded crazy at the time but does anyone really believe that? Staying in homes has been around as long as homes and vacation rentals was a mature market.
- lberlin 11y ago
  It didn't sound crazy at the time. It sounded crazy at the time to investors - old, rich white guys (I'm generalizing, of course). These guys didn't need to or want to stay in an AirBnB, or at least didn't before it had already become commonplace. Younger folks though, traveling on a budget, interested in meeting other people while away from home - it's a no brainer. We all stay on friends couches, in guest rooms, share cars.
  - ghaff 11y ago
    Put another way, couchsurfing and ride sharing have been around forever. What wasn't obvious is whether there was enough money in intermediating these as commercial transactions to make a business that would be interesting to VCs. (And, arguably, the current valuations of these businesses is higher than the market will ultimately support.)
  - pbreit 11y ago
    Is that even true? I'm familiar with the recent story about everyone supposedly passing on AirBnB. But the real reason is that it was an odd way to try to raise that amount of money. When raising a few 100,000s pre-product you go to a much smaller circle, not cold-ish intros to "pros".

Retric 11y ago

Suppose, 50% of all successful companies had first time founders (which sounds great!), but 51% of all companies where started by first time founders. Well, now being a first time founder is a small negative indicator. As to stupid idea, I think the black and white nature of the question is an issue for analysis. A scale where people suggest how likely it is to make money could be a more useful indicator. I suspect people may call long shots 'terrible' even if they think it might work, but that does not discount really dumb ideas. Google was a long shot, selling a highly toxic playdough substitute is just not going to work and may get people killed.

minimaxir 11y ago

> We can conclude that "this idea sounds stupid" or "this is a first-time founder" are not good reasons to dismiss an investment opportunity. No we can't conclude that. These companies are immense outliers in a marketplace where over 90% of startups fail due to being stupid ideas.

pbreit 11y ago

I call "baloney" on the "stupid idea" tenet. Somehow folklore has us believing that AirBnB, for example, sounded crazy at the time but does anyone really believe that? Staying in homes has been around as long as homes and vacation rentals was a mature market.

lberlin 11y ago
It didn't sound crazy at the time. It sounded crazy at the time to investors - old, rich white guys (I'm generalizing, of course). These guys didn't need to or want to stay in an AirBnB, or at least didn't before it had already become commonplace. Younger folks though, traveling on a budget, interested in meeting other people while away from home - it's a no brainer. We all stay on friends couches, in guest rooms, share cars.
- ghaff 11y ago
  Put another way, couchsurfing and ride sharing have been around forever. What wasn't obvious is whether there was enough money in intermediating these as commercial transactions to make a business that would be interesting to VCs. (And, arguably, the current valuations of these businesses is higher than the market will ultimately support.)
- pbreit 11y ago
  Is that even true? I'm familiar with the recent story about everyone supposedly passing on AirBnB. But the real reason is that it was an odd way to try to raise that amount of money. When raising a few 100,000s pre-product you go to a much smaller circle, not cold-ish intros to "pros".