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I read the other day (HBR?) that 85% of venture-backed startups are dead within 3 years. Say what you will about VC firms, but the companies they fund tend to

I read the other day (HBR?) that 85% of venture-backed startups are dead within 3 years. Say what you will about VC firms, but the companies they fund tend to be a notch above the mean. And they are certainly the types who get (and maybe even ask for) advice. Creating a business (the kind that supports 2+ founders) is HARD. Thinking your chances are better because you're (by your OWN assessment) smarter, more open to advice, and more hard working than the mean is a dangerous attitude. If you walk into a room and say, "raise your hand if you think you're an above-average driver", pretty much every hand goes up. 50% of them are wrong. Normally I love Gabriel's posts, but I think this one smacks of Mr. Rogers ("you're special because of who you are").

epi0Bauqu 16y ago
So you think someone entering a startup blind (no advice, no methodology on customer development/hiring/etc.) has an equal failure rate to someone who's spent years taking in good advice? The other subgroups were capital intensive vs not and low marginal cost vs high. I think all three would decrease your chances of failure.
- dkuchar 16y ago
  and if you're VC funded your model is capital intensive, otherwise what's the point.
- nostrademons 16y ago
  What counts as good advice? I would imagine that bloggers on the Internet (even if they've sold companies successfully before, and even though they're better than the information vacuum before the Internet) don't really compare to having face-to-face investments from a network of angels who've done this before.
algorias 16y ago
50% would be wrong if you said above-median driver.
- nostrademons 16y ago
  Yeah, if you take average=mean, then well over 50% of drivers are above average.
- jcl 16y ago
  Still, it could be even higher than 50% wrong, since sometimes the most capable people underrate their ability: http://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect http://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect
- amalcon 16y ago
  Median is better than mean as a metric for "average goodness of driver". To take a median, you only need a strict ordering; to take a mean, you need to quantify. Any reasonable method of quantifying how good a driver someone is will be heavily influenced by environmental factors. The worst driver on an infinite, featureless plane would be involved in fewer accidents than the best driver in, say, New York.
dkuchar 16y ago
VCs expect a 10x return and put an incredible amount of pressure on a startup. getting VC money is not the right path for every startup in every market, which is why the numbers are so dire.

epi0Bauqu 16y ago

So you think someone entering a startup blind (no advice, no methodology on customer development/hiring/etc.) has an equal failure rate to someone who's spent years taking in good advice? The other subgroups were capital intensive vs not and low marginal cost vs high. I think all three would decrease your chances of failure.

dkuchar 16y ago
and if you're VC funded your model is capital intensive, otherwise what's the point.
nostrademons 16y ago
What counts as good advice? I would imagine that bloggers on the Internet (even if they've sold companies successfully before, and even though they're better than the information vacuum before the Internet) don't really compare to having face-to-face investments from a network of angels who've done this before.

algorias 16y ago

50% would be wrong if you said above-median driver.

nostrademons 16y ago
Yeah, if you take average=mean, then well over 50% of drivers are above average.
jcl 16y ago
Still, it could be even higher than 50% wrong, since sometimes the most capable people underrate their ability: http://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect http://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect
amalcon 16y ago
Median is better than mean as a metric for "average goodness of driver". To take a median, you only need a strict ordering; to take a mean, you need to quantify. Any reasonable method of quantifying how good a driver someone is will be heavily influenced by environmental factors. The worst driver on an infinite, featureless plane would be involved in fewer accidents than the best driver in, say, New York.

dkuchar 16y ago

VCs expect a 10x return and put an incredible amount of pressure on a startup. getting VC money is not the right path for every startup in every market, which is why the numbers are so dire.