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Yes, you hear a lot of successful founders talking about how they killed themselves to get there. But thanks to survivorship bias, you don't hear from all the o

by pg 15y ago

Yes, you hear a lot of successful founders talking about how they killed themselves to get there. But thanks to survivorship bias, you don't hear from all the ones who risked everything, turned their lives and relationships and health upside down, and then lost. You seem to be conflating the concepts of necessary and sufficient conditions. Working hard may be a necessary condition for success, but I don't think anyone has ever claimed it was a sufficient one.

ryanwaggoner 15y ago
I'm not talking about working hard at all; I think success pretty much always requires hard work of some kind. My friend definitely worked hard to get his business up and running and to the point where it supports him. I'm talking about the idea that you have to work so hard that it threatens or consumes everything else in your life. And no one claims that doing that is sufficient, but a lot of people claim it's necessary. It probably is necessary if the plan is to hit a billion-dollar exit in a few years. I just think that path entails a lot of extra risk that investors overwhelmingly benefit from, and founders end up paying for in the event that things go south. And sadly, I feel that a lot of investors essentially exploit young founders who don't know enough yet to know that they're paying a very high price for a 1/10000 chance at a grand slam (making $20m in 2-5 years), when they'd be better off in almost every way by going for the 1/10 or 1/100 base hit (making $2m in 5-10 years). And to be clear, I'm not lumping YC in with most investors here. However, YC does place a little too much emphasis on raising VC and not enough on building revenues. But that's a bubble for you :)
- pg 15y ago
  Your reasoning exhibits another common fallacy. While the average probability of making $20m in 5 years may be low, that doesn't imply each individual's is. For the right sort of person the probability might be 2/3 or even higher. For most people it's epsilon. The reason the average is low is that it's the average of a lot of epsilons and a handful of higher numbers. This is easier to understand if you consider e.g. the question of being over 7 feet tall. Maybe only 1 in 10000 (or whatever) people is over 7 feet tall. But that doesn't mean your probability of being over 7 feet tall is .01%. Your probability is either 0% or 100%.
  - ryanwaggoner 15y ago
    Isn't this only valid in hindsight? Isn't your probability of anything 0% or 100% once it has happened or not happened? The problem here is that we have no idea in advance which bucket you'll end up in. So yes, I suppose some founders have a very high probability and some have almost no probability. But that's not useful when you don't know which group you're in yet. So the average actually IS useful. You have either 0% or 100% probability of being over 7 feet tall, but what about your unborn child? Genetics aside, if 1 out of 10000 kids are born over 7 ft and you have a gun to your head, how will you calculate your kids odds of being that tall?
    - deleted 15y ago
      [deleted]
    - YuriNiyazov 15y ago
      An individual himself can't predict whether he or she will be successful or not, but someone who's seen many such individuals in their "before" state and in their "after" state can make more accurate predictions. For example, YC's whole investment model is based on the assumption that it's not just hindsight, and that the YC partners can use the data model that they have, that gets better with each batch, to predict which founders fall into the "success bin", and they choose to invest in those.
      - ljlolel 15y ago
        YC's record is a lot closer to 1% than 100% of getting huge homerun hits. By your logic, this implies that in the best possible circumstances (YC), you're not going to get above a few percent chance a priori of a huge success if you work like crazy. Whereas an equally intelligent person working reasonable hours on the side when appropriate has a decent chance of making a profitable lifestyle business in the millions without the possibility burnout and debt.
        YuriNiyazov 15y ago
        I am not talking about "getting huge" at all, because I don't believe there is enough space in the market for 300+ (number of YC investments so far) huge (Google/Apple/Facebook/Microsoft) companies. I am, however, talking about non-trivial exits, ones that definitely put a founder in the "success" bin. Let's say, 10+ million in 4 years. I don't think it's possible to get to that point "on the side".

by pg 15y ago

ryanwaggoner 15y ago

I'm not talking about working hard at all; I think success pretty much always requires hard work of some kind. My friend definitely worked hard to get his business up and running and to the point where it supports him. I'm talking about the idea that you have to work so hard that it threatens or consumes everything else in your life. And no one claims that doing that is sufficient, but a lot of people claim it's necessary. It probably is necessary if the plan is to hit a billion-dollar exit in a few years. I just think that path entails a lot of extra risk that investors overwhelmingly benefit from, and founders end up paying for in the event that things go south. And sadly, I feel that a lot of investors essentially exploit young founders who don't know enough yet to know that they're paying a very high price for a 1/10000 chance at a grand slam (making $20m in 2-5 years), when they'd be better off in almost every way by going for the 1/10 or 1/100 base hit (making $2m in 5-10 years). And to be clear, I'm not lumping YC in with most investors here. However, YC does place a little too much emphasis on raising VC and not enough on building revenues. But that's a bubble for you :)

pg 15y ago
Your reasoning exhibits another common fallacy. While the average probability of making $20m in 5 years may be low, that doesn't imply each individual's is. For the right sort of person the probability might be 2/3 or even higher. For most people it's epsilon. The reason the average is low is that it's the average of a lot of epsilons and a handful of higher numbers. This is easier to understand if you consider e.g. the question of being over 7 feet tall. Maybe only 1 in 10000 (or whatever) people is over 7 feet tall. But that doesn't mean your probability of being over 7 feet tall is .01%. Your probability is either 0% or 100%.
- ryanwaggoner 15y ago
  Isn't this only valid in hindsight? Isn't your probability of anything 0% or 100% once it has happened or not happened? The problem here is that we have no idea in advance which bucket you'll end up in. So yes, I suppose some founders have a very high probability and some have almost no probability. But that's not useful when you don't know which group you're in yet. So the average actually IS useful. You have either 0% or 100% probability of being over 7 feet tall, but what about your unborn child? Genetics aside, if 1 out of 10000 kids are born over 7 ft and you have a gun to your head, how will you calculate your kids odds of being that tall?
  - deleted 15y ago
    [deleted]
  - YuriNiyazov 15y ago
    An individual himself can't predict whether he or she will be successful or not, but someone who's seen many such individuals in their "before" state and in their "after" state can make more accurate predictions. For example, YC's whole investment model is based on the assumption that it's not just hindsight, and that the YC partners can use the data model that they have, that gets better with each batch, to predict which founders fall into the "success bin", and they choose to invest in those.
    - ljlolel 15y ago
      YC's record is a lot closer to 1% than 100% of getting huge homerun hits. By your logic, this implies that in the best possible circumstances (YC), you're not going to get above a few percent chance a priori of a huge success if you work like crazy. Whereas an equally intelligent person working reasonable hours on the side when appropriate has a decent chance of making a profitable lifestyle business in the millions without the possibility burnout and debt.
      - YuriNiyazov 15y ago
        I am not talking about "getting huge" at all, because I don't believe there is enough space in the market for 300+ (number of YC investments so far) huge (Google/Apple/Facebook/Microsoft) companies. I am, however, talking about non-trivial exits, ones that definitely put a founder in the "success" bin. Let's say, 10+ million in 4 years. I don't think it's possible to get to that point "on the side".