7 ms·

It's true some successful company are the results of serious pivots. But I bet some 80% of them are the result of an initial good idea. IMO you shouldn't build

by Charuru 16y ago

It's true some successful company are the results of serious pivots. But I bet some 80% of them are the result of an initial good idea. IMO you shouldn't build a company from a bad idea, but you can in your spare time try to validate an idea you're uncertain about. But don't quit your job at Google.

eladgil 16y ago
Support from Fred Wilson's blog that most of his successful outcomes (success defined as "exit) were pivots: "Of the 26 companies that I consider realized or effectively realized in my personal track record, 17 of them made complete transformations or partial transformations of their businesses between the time we invested and the time we sold. That means there a 2/3 chance you’ll have to significantly reinvent your business between the time you take a venture capital investment and when you exit your business." Source: http://unionsquareventures.com/2007/11/why-early-stage.php http://unionsquareventures.com/2007/11/why-early-stage.php
- eladgil 16y ago
  More from the same blog post by Fred Wilson on his investments: "Here’s an interesting breakdown of the “transformers” versus the “stick to our plan” investments in my personal track record. Greater than 5x – 11 total investments – 7 transformed, 4 did not 1x to 5x – 10 total investments – 6 transformed, 4 did not Failures – 5 total investments, 1 transformed, 4 did not Unrealized Union Square investments – 6 total, 3 transformed, 3 have not"
- Charuru 16y ago
  Are you sure we're talking about the same "transformation"? Also that 17 lumps major and minor transformations together... For example if someone starts a dating site but later transforms into a general social network, I would call that a complete transformation. However if you start out making a ruby IDE but later realizes that real money is in MMORPGs or whatever, well you might have as well as waited.
  - dinedal 16y ago
    Does it matter? I think the point is that (Great People) + (Profitable Idea) = (Success) Consider: The variant of (Poor People) + (Profitable Idea) = (50/50 Success) and the variant of (Great People) + (Unprofitable Idea) = (Failure). If (Great People) it is far easier to get (Profitable Idea) then to change (Poor People) to (Great People). To use your example, if you're making a Ruby IDE and no one pays you, you will never be profitable. If you make a Greate Ruby IDE and no one pays you, you will never be profitable. Discovering that MMORPG's are more profitable one day, you build one, and people pay you, you might be profitable. You could consider the time you spent on your Ruby IDE a waste, or you could consider that you've learned something about software development as a business. It is far easier to change the idea then the people.
    - Charuru 16y ago
      But that's implying that working at Google won't be as rewarding. There's a lot of pressure to execute and iterate and so on when you're doing a startup. People sometimes forget to sit down and relax. Being in a less risky, less stressful position at Google can give you the important insights you need when you really start your business. I also submit that it'll be easier to quit Google when you've discovered your home run idea than to change your entire business.
      - harryh 16y ago
        "Being in a less risky, less stressful position at Google can give you the important insights you need when you really start your business." You could not be more wrong on this point. Being at google is a recipe for complacency. Quitting your job is incentive to actually figure out how to build something good. Because it's do that or fail.
        Psyonic 16y ago
        If this is so, why are there so many startups started by ex-Googlers?
riffer 16y ago
It's true some successful company are the results of serious pivots. But I bet some 80% of them are the result of an initial good idea. The successful ones that are a result of an initial good idea are a strict subset of the ones that choose a promising market.

by Charuru 16y ago

eladgil 16y ago

Support from Fred Wilson's blog that most of his successful outcomes (success defined as "exit) were pivots: "Of the 26 companies that I consider realized or effectively realized in my personal track record, 17 of them made complete transformations or partial transformations of their businesses between the time we invested and the time we sold. That means there a 2/3 chance you’ll have to significantly reinvent your business between the time you take a venture capital investment and when you exit your business." Source: http://unionsquareventures.com/2007/11/why-early-stage.php http://unionsquareventures.com/2007/11/why-early-stage.php

eladgil 16y ago
More from the same blog post by Fred Wilson on his investments: "Here’s an interesting breakdown of the “transformers” versus the “stick to our plan” investments in my personal track record. Greater than 5x – 11 total investments – 7 transformed, 4 did not 1x to 5x – 10 total investments – 6 transformed, 4 did not Failures – 5 total investments, 1 transformed, 4 did not Unrealized Union Square investments – 6 total, 3 transformed, 3 have not"
Charuru 16y ago
Are you sure we're talking about the same "transformation"? Also that 17 lumps major and minor transformations together... For example if someone starts a dating site but later transforms into a general social network, I would call that a complete transformation. However if you start out making a ruby IDE but later realizes that real money is in MMORPGs or whatever, well you might have as well as waited.
- dinedal 16y ago
  Does it matter? I think the point is that (Great People) + (Profitable Idea) = (Success) Consider: The variant of (Poor People) + (Profitable Idea) = (50/50 Success) and the variant of (Great People) + (Unprofitable Idea) = (Failure). If (Great People) it is far easier to get (Profitable Idea) then to change (Poor People) to (Great People). To use your example, if you're making a Ruby IDE and no one pays you, you will never be profitable. If you make a Greate Ruby IDE and no one pays you, you will never be profitable. Discovering that MMORPG's are more profitable one day, you build one, and people pay you, you might be profitable. You could consider the time you spent on your Ruby IDE a waste, or you could consider that you've learned something about software development as a business. It is far easier to change the idea then the people.
  - Charuru 16y ago
    But that's implying that working at Google won't be as rewarding. There's a lot of pressure to execute and iterate and so on when you're doing a startup. People sometimes forget to sit down and relax. Being in a less risky, less stressful position at Google can give you the important insights you need when you really start your business. I also submit that it'll be easier to quit Google when you've discovered your home run idea than to change your entire business.
    - harryh 16y ago
      "Being in a less risky, less stressful position at Google can give you the important insights you need when you really start your business." You could not be more wrong on this point. Being at google is a recipe for complacency. Quitting your job is incentive to actually figure out how to build something good. Because it's do that or fail.
      - Psyonic 16y ago
        If this is so, why are there so many startups started by ex-Googlers?

riffer 16y ago

It's true some successful company are the results of serious pivots. But I bet some 80% of them are the result of an initial good idea. The successful ones that are a result of an initial good idea are a strict subset of the ones that choose a promising market.