3 ms·

I still think that the best predictors for success are variables that characterize the founders (smarts, perseverance, adaptability, etc), rather than their ini

I still think that the best predictors for success are variables that characterize the founders (smarts, perseverance, adaptability, etc), rather than their initial ideas or pitches. People like to dissect ideas and pitches because that's a lot easier to do than assess the competence of the founders. (Via for example, recommendation letters, but that's a whole new topic). Try doing this: Read "Founders at Work" or some other collection of startup stories, and try to identify any pattern in the initial ideas that were reasonable predictors of success. I am sure you will scratch your head for a long time before realizing that it's all about the founders: how they adapted to the circumstances, how they dealt with the tough times, etc. (Ask the very author of the post above!). My family is full of successful entrepreneurs in totally different market segments (ice cream shops, uninterruptible power supplies, ornamental rocks, etc), and frankly if I didn't know them I'd think they'd all flop: their markets were saturated at the time, they were non-experts, and there was no clear "competitive advantage". I love the following quote from my cousin (the most recent and already very successful entrepreneur in the family), when talking about how he dealt with all sorts of difficulties with his company: Sometimes I'm afraid of what I might want in the future. Because it seems like if I really want something, there doesn't seem to exist anything I can't have. (Loosely translated from Portuguese).

j_baker 16y ago
This sounds to me like the Fundamental attribution error[1]: Attributing too much to the person and not enough to their situation. Smart, motivated people will eventually succeed. However, that doesn't mean that every given startup they found will succeed. A lot of people will go through a few startups before they get it right. [1] http://en.wikipedia.org/wiki/Fundamental_attribution_error http://en.wikipedia.org/wiki/Fundamental_attribution_error
- arturadib 16y ago
  Wait, did you also factor in everything I said after "smarts"? And did you interpret prediction variables as crystal balls with 100% accuracy? All I'm saying is that, based on historical accounts, initial ideas/pitches do not seem to be good predictors of success. The only patterns I have noticed have to do with the founders (not just smarts!). But maybe you have noticed something else? Or perhaps no pattern at all??
Charuru 16y ago
I'm not sure your standards for success are the same as the writer though. You need a home run idea to hit a home run.
- arturadib 16y ago
  Here's an article by the writer you should read: "Your idea sucks, now go do it anyway" http://blog.asmartbear.com/your-idea-sucks-now-go-do-it-anyway.html http://blog.asmartbear.com/your-idea-sucks-now-go-do-it-anyw...
ippisl 16y ago
Some research on business strategy, by rita mcgrath("discovery driven growth") found that many successful entrepreneurs have changed their initial idea while building their business. This is specially true for very dynamic/chaotic business areas. Her recommendation for dynamic/chaotic business areas:work with an adaptive strategy, using small experiments(in similar spirit to eric ries's "lean startup").
mkuhn 16y ago
What you are describing is called Upper Echelon Theory or the Upper Echelon Perspective which is backed up by quite a solid base of research. It basically states that a company is a reflection of its officers (or founders) and that they therefore are largely responsible for a company's successes or failures. Upper echelon theory is one of the things used to justify the bonuses and salaries that Top Management Teams receive in today's world. Also a lot of the research into entrepreneurship in the last years has focused on the upper echelon perspective a lot and tried to establish a link between factors in the founder team and a company's success. For my Master Thesis I myself looked into the fact if diversity in a founder team increases the likelihood of startup success. The result there have been that) diversity largely has no significant influence on the success of an internet startup, only diversity in Nationality had a significant, negative impact. If you are interested in the topic I can dig up and post a few of the papers that I used as the base for my Thesis. Unfortunately I am not yet allowed to post my own Thesis.
- gojomo 16y ago
  What kinds of diversity did you look into? Did you find any factors in founding teams correlated with success?
  - mkuhn 16y ago
    I only looked at diversity and no other factors. I did a survey which I also published here on HN and in total got back 67 usable results. Quite a small sample but enough. I checked for a total of 7 different kinds of diversity that can be split into two broad categories: 1. Ascribed Characteristics - Things that are "visible" and others ascribe to you. Here I checked for Gender, Age, Nationality, and Race. Hypothesis here was that diversity in Ascribed Characteristics has a negative effect because it fosters non-task related conflict. 2. Achieved Characteristics - Things that people have worked for. Here I checked for type of education, level of education, industry experience, functional experience. Hypothesis here was that diversity in achieved characteristics enlarges the overall knowledge available to the company and fosters task related conflict which leads to better decisions. Therefore diversity in achieved characteristics should have a positive effect. As mentioned before while the results trended towards what I expected the results weren't significant enough to reject the Null-Hypothesis in all cases but Nationality diversity which had a small negative effect. To summarize what I found: The effects of diversity in founder teams of internet startups are so small that they are outweighed by many other factors that are easier to achieve than to fine tune the composition of your founder team.

j_baker 16y ago

This sounds to me like the Fundamental attribution error[1]: Attributing too much to the person and not enough to their situation. Smart, motivated people will eventually succeed. However, that doesn't mean that every given startup they found will succeed. A lot of people will go through a few startups before they get it right. [1] http://en.wikipedia.org/wiki/Fundamental_attribution_error http://en.wikipedia.org/wiki/Fundamental_attribution_error

arturadib 16y ago
Wait, did you also factor in everything I said after "smarts"? And did you interpret prediction variables as crystal balls with 100% accuracy? All I'm saying is that, based on historical accounts, initial ideas/pitches do not seem to be good predictors of success. The only patterns I have noticed have to do with the founders (not just smarts!). But maybe you have noticed something else? Or perhaps no pattern at all??

Charuru 16y ago

I'm not sure your standards for success are the same as the writer though. You need a home run idea to hit a home run.

arturadib 16y ago
Here's an article by the writer you should read: "Your idea sucks, now go do it anyway" http://blog.asmartbear.com/your-idea-sucks-now-go-do-it-anyway.html http://blog.asmartbear.com/your-idea-sucks-now-go-do-it-anyw...

ippisl 16y ago

Some research on business strategy, by rita mcgrath("discovery driven growth") found that many successful entrepreneurs have changed their initial idea while building their business. This is specially true for very dynamic/chaotic business areas. Her recommendation for dynamic/chaotic business areas:work with an adaptive strategy, using small experiments(in similar spirit to eric ries's "lean startup").

mkuhn 16y ago

What you are describing is called Upper Echelon Theory or the Upper Echelon Perspective which is backed up by quite a solid base of research. It basically states that a company is a reflection of its officers (or founders) and that they therefore are largely responsible for a company's successes or failures. Upper echelon theory is one of the things used to justify the bonuses and salaries that Top Management Teams receive in today's world. Also a lot of the research into entrepreneurship in the last years has focused on the upper echelon perspective a lot and tried to establish a link between factors in the founder team and a company's success. For my Master Thesis I myself looked into the fact if diversity in a founder team increases the likelihood of startup success. The result there have been that) diversity largely has no significant influence on the success of an internet startup, only diversity in Nationality had a significant, negative impact. If you are interested in the topic I can dig up and post a few of the papers that I used as the base for my Thesis. Unfortunately I am not yet allowed to post my own Thesis.

gojomo 16y ago
What kinds of diversity did you look into? Did you find any factors in founding teams correlated with success?
- mkuhn 16y ago
  I only looked at diversity and no other factors. I did a survey which I also published here on HN and in total got back 67 usable results. Quite a small sample but enough. I checked for a total of 7 different kinds of diversity that can be split into two broad categories: 1. Ascribed Characteristics - Things that are "visible" and others ascribe to you. Here I checked for Gender, Age, Nationality, and Race. Hypothesis here was that diversity in Ascribed Characteristics has a negative effect because it fosters non-task related conflict. 2. Achieved Characteristics - Things that people have worked for. Here I checked for type of education, level of education, industry experience, functional experience. Hypothesis here was that diversity in achieved characteristics enlarges the overall knowledge available to the company and fosters task related conflict which leads to better decisions. Therefore diversity in achieved characteristics should have a positive effect. As mentioned before while the results trended towards what I expected the results weren't significant enough to reject the Null-Hypothesis in all cases but Nationality diversity which had a small negative effect. To summarize what I found: The effects of diversity in founder teams of internet startups are so small that they are outweighed by many other factors that are easier to achieve than to fine tune the composition of your founder team.