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One might look at this and think "huh 30% success is not too bad" missing the fact that this is from a VC perspective. From a founder perspective, this is abys

by a1371 2y ago

One might look at this and think "huh 30% success is not too bad" missing the fact that this is from a VC perspective. From a founder perspective, this is abysmal because the chance of you getting funded by the likes of a16z or YC is already really slim, about 1% according to YC. So let me ask you something: would you embark on a journey if you knew your chance of success is 0.3%? So many good startups go to oblivion, pandering to the VCs. Where they could have been more resilient on their own.

beau_g 2y ago
There's more success metrics to take away from a startup than just sticking around and creating a 3x or greater monetary return from an initial arbitrary valuation. If you were funded, you were getting paid something, if you were attempting something VCs funded, you were most likely trying something on the cutting edge in which case you are sure to have learned something novel in the space you will most likely to continue to work in. Consider going to work for any other company, let's say a publicly traded one for simplicity - if you work there for 5 years, and the stock price stays flat adjusting for inflation, is whatever you did objectively non successful? Of course not, in this case you would judge your success based on what you shipped + your own career growth. I don't see why you should look at it any differently from a founder or early startup employee perspective in retrospect (though believing this before starting is probably not healthy as if you believe in the VC recipe you should really be abiding to success as a forcing function). For 100% bootstrapping to avoid "pandering to VCs", your success metric is narrower (you have to achieve monetary success in a rigid, often short, timeframe) and your risk threshold is lower thus the successes on the learning side/pushing tech forward are less likely.
condiment 2y ago
It’s disingenuous to claim that the success rate is .3%. The success rate for the first stage (pre-vc) of venture might be one percent, and the success rate for the next stage (post) is 10 to 25%, depending on how a founder perceives success. These rates are independent. You can’t aggregate them because the level of effort to secure VC funding is very different from the level of effort required to take a funded start up to unicorn heights. If I understand your argument to be that startups are relegating themselves to the trash bin because they’re attempting to get attention from venture capitalists at the expense of some fundamental “goodness”, some data supporting that point would be helpful. But that’s not what’s in the article.
dzonga 2y ago
this is where the dichotomy between VC-funded startups and bootstrapped ones is so apparent. e.g [1]- https://x.com/robwalling/status/1825973229296533609 https://x.com/robwalling/status/1825973229296533609 for TinySeed 43% of founders exited for a million or more. small money to VC's but to individuals it's the difference between working for 5 or so years, or a lifetime. as a founder, you can only invest in one startup at once or maybe 2 if pushing it. but a VC gets to invest in hundreds of startups at once.
bsder 2y ago
> 25% produce a return between 1x-3x In addition, notice that this business is considered a failure for the VC while for the founders and employees it may be a perfectly fine business. So, roughly 1/3 are failures and 1/3 are unicorns. But then there is a full 1/3 of startups where VCs and founders are completely misaligned. Taking VC money takes your "success" numbers from 2 in 3 to 1 in 3 as a founder. That's a huge drop. The number one credo of a startup is "You have to be alive to be lucky." Sure, the VC wants you dead within 5 years, but lots of businesses burble along with "merely profitable" for many, many years until they hit their lucky event.

by a1371 2y ago

beau_g 2y ago

There's more success metrics to take away from a startup than just sticking around and creating a 3x or greater monetary return from an initial arbitrary valuation. If you were funded, you were getting paid something, if you were attempting something VCs funded, you were most likely trying something on the cutting edge in which case you are sure to have learned something novel in the space you will most likely to continue to work in. Consider going to work for any other company, let's say a publicly traded one for simplicity - if you work there for 5 years, and the stock price stays flat adjusting for inflation, is whatever you did objectively non successful? Of course not, in this case you would judge your success based on what you shipped + your own career growth. I don't see why you should look at it any differently from a founder or early startup employee perspective in retrospect (though believing this before starting is probably not healthy as if you believe in the VC recipe you should really be abiding to success as a forcing function). For 100% bootstrapping to avoid "pandering to VCs", your success metric is narrower (you have to achieve monetary success in a rigid, often short, timeframe) and your risk threshold is lower thus the successes on the learning side/pushing tech forward are less likely.

condiment 2y ago

It’s disingenuous to claim that the success rate is .3%. The success rate for the first stage (pre-vc) of venture might be one percent, and the success rate for the next stage (post) is 10 to 25%, depending on how a founder perceives success. These rates are independent. You can’t aggregate them because the level of effort to secure VC funding is very different from the level of effort required to take a funded start up to unicorn heights. If I understand your argument to be that startups are relegating themselves to the trash bin because they’re attempting to get attention from venture capitalists at the expense of some fundamental “goodness”, some data supporting that point would be helpful. But that’s not what’s in the article.

dzonga 2y ago

this is where the dichotomy between VC-funded startups and bootstrapped ones is so apparent. e.g [1]- https://x.com/robwalling/status/1825973229296533609 https://x.com/robwalling/status/1825973229296533609 for TinySeed 43% of founders exited for a million or more. small money to VC's but to individuals it's the difference between working for 5 or so years, or a lifetime. as a founder, you can only invest in one startup at once or maybe 2 if pushing it. but a VC gets to invest in hundreds of startups at once.

bsder 2y ago

> 25% produce a return between 1x-3x In addition, notice that this business is considered a failure for the VC while for the founders and employees it may be a perfectly fine business. So, roughly 1/3 are failures and 1/3 are unicorns. But then there is a full 1/3 of startups where VCs and founders are completely misaligned. Taking VC money takes your "success" numbers from 2 in 3 to 1 in 3 as a founder. That's a huge drop. The number one credo of a startup is "You have to be alive to be lucky." Sure, the VC wants you dead within 5 years, but lots of businesses burble along with "merely profitable" for many, many years until they hit their lucky event.