5 ms·

90% of Tech Startups Fail [Infographic]

33 points by amerf1 14y ago

jacques_chester 14y ago
I'm working up some articles about estimation. One is going to be about estimation by analogy; or what Kahneman called "Reference Class Forecasting". The basic insight is to check the base rates for your given venture or project. Humans are notoriously optimistic when making forecasts or estimates. And now I am experiencing a strange thing. My current startup venture is based on the fact that people ignore the base rates; that humans have optimism bias. And what am I doing? ... I'm ignoring the base rates and being optimistic ...
- speeder 14y ago
  That is the whole point of having a startup in first place. Why startups famously have many young single people? Because young single people can go gung ho at risks and do what must be done, even if the chance to work is very small... If the world need "X", and if you try it there are only 1% of chance of succeeding, what better way to make it happen than to 100 companies try it? Yes, 99 will die, but one will work!
digitalWestie 14y ago
I think you have to define scope though. MySpace isn't the definition of success but I don't know if it's the definition of failure either...
- jdavis703 14y ago
  Didn't MySpace fail once it was an apparatus of News Corp? I think it would be very difficult to count News Corp as a startup.
alanctgardner2 14y ago
I kind of hoped an infographic would be about aggregate stats, not a pretty picture of six businesses. To get right down to brass tacks: - the two really successful ones are both commerce-related. We aren't comparing Facebook and MySpace, it's not really a compelling comparison. If they didn't fail because of market fit, show us people with the same idea who executed better - there are few attributes that are compared directly. They cite some good things one company did, and some unrelated bad things the other one did. Why can't we see how much funding they took side-by-side, for example? - Maybe this is a bit old, but I wouldn't really put Zynga in the 'wins' column. Which brings us to the real point; on a long enough timeline, everyone's chances of survival go to 0. The common metric for success seems to be an acquisition, or going public. We don't get a good idea of who's exited, or even on what timescale we're comparing these companies.
TomGullen 14y ago
90% of startups/small businesses failing is a figure often thrown around but when I researched it I found no rock solid evidence of this number, also found wildly varying definitions of what a startup is, and what counts as failure. The link in the OP article links to another article which links to another article.
clebio 14y ago
The social buttons that follow scrolling with a lag are maddening. Very distracting.
mbesto 14y ago
Define failure first.
camz 14y ago
The first thing I noticed was that Allmand Law who commissioned the infographic is a firm that specializes in bankruptcy and collections... LOL It's an interesting/hilarious (yet ironically fitting) marketing strategy. Failed startups make great clients for bankruptcy law firms. Most end up swimming in debt.
lttlrck 14y ago
An infograpnic that concisely illustrates the title of the post? Out of luck.
bradshaw1965 14y ago
A vast percentage of all companies fail. Take a look at stock market listings from 20,50, 100 years ago. The question is what kind of value was produced from the organization.
rheide 14y ago
This is ridiculous. The infographic shows examples of 'successful' startups that have only been around for 2 years, then setting them side by side with 'failed' startups that took 5 years or more to fail. And as someone else mentioned before, Zynga is far from a success story. It's one of the most memorable failures, if anything. I'm sure the study provides very sensible results, but this infographic is a complete misrepresentation of it.
- georgemcbay 14y ago
  I agree with you that this is ridiculous. However, you really need to define success vs failure before declaring any company as one or the other. Taking Zynga as an example, viewed from the position of "making Mark Pincus an awful lot of money" Zynga was a smashing success, while viewed from the position of "painting Mark Pincus as a credible person to do business with in the future" Zynga was a huge failure.
  - msprague 14y ago
    Also MySpace was a failure?? It sold for $500 Million. Ask Tom Anderson what he thinks about it.
scottmagdalein 14y ago
This isn't an infographic. This is text with colorful backgrounds and icons.

33 points by amerf1 14y ago

I'm working up some articles about estimation. One is going to be about estimation by analogy; or what Kahneman called "Reference Class Forecasting". The basic insight is to check the base rates for your given venture or project. Humans are notoriously optimistic when making forecasts or estimates. And now I am experiencing a strange thing. My current startup venture is based on the fact that people ignore the base rates; that humans have optimism bias. And what am I doing? ... I'm ignoring the base rates and being optimistic ...

speeder 14y ago
That is the whole point of having a startup in first place. Why startups famously have many young single people? Because young single people can go gung ho at risks and do what must be done, even if the chance to work is very small... If the world need "X", and if you try it there are only 1% of chance of succeeding, what better way to make it happen than to 100 companies try it? Yes, 99 will die, but one will work!

digitalWestie 14y ago

I think you have to define scope though. MySpace isn't the definition of success but I don't know if it's the definition of failure either...

jdavis703 14y ago
Didn't MySpace fail once it was an apparatus of News Corp? I think it would be very difficult to count News Corp as a startup.

alanctgardner2 14y ago

I kind of hoped an infographic would be about aggregate stats, not a pretty picture of six businesses. To get right down to brass tacks: - the two really successful ones are both commerce-related. We aren't comparing Facebook and MySpace, it's not really a compelling comparison. If they didn't fail because of market fit, show us people with the same idea who executed better - there are few attributes that are compared directly. They cite some good things one company did, and some unrelated bad things the other one did. Why can't we see how much funding they took side-by-side, for example? - Maybe this is a bit old, but I wouldn't really put Zynga in the 'wins' column. Which brings us to the real point; on a long enough timeline, everyone's chances of survival go to 0. The common metric for success seems to be an acquisition, or going public. We don't get a good idea of who's exited, or even on what timescale we're comparing these companies.

TomGullen 14y ago

90% of startups/small businesses failing is a figure often thrown around but when I researched it I found no rock solid evidence of this number, also found wildly varying definitions of what a startup is, and what counts as failure. The link in the OP article links to another article which links to another article.

clebio 14y ago

The social buttons that follow scrolling with a lag are maddening. Very distracting.

mbesto 14y ago

Define failure first.

camz 14y ago

The first thing I noticed was that Allmand Law who commissioned the infographic is a firm that specializes in bankruptcy and collections... LOL It's an interesting/hilarious (yet ironically fitting) marketing strategy. Failed startups make great clients for bankruptcy law firms. Most end up swimming in debt.

lttlrck 14y ago

An infograpnic that concisely illustrates the title of the post? Out of luck.

bradshaw1965 14y ago

A vast percentage of all companies fail. Take a look at stock market listings from 20,50, 100 years ago. The question is what kind of value was produced from the organization.

rheide 14y ago

This is ridiculous. The infographic shows examples of 'successful' startups that have only been around for 2 years, then setting them side by side with 'failed' startups that took 5 years or more to fail. And as someone else mentioned before, Zynga is far from a success story. It's one of the most memorable failures, if anything. I'm sure the study provides very sensible results, but this infographic is a complete misrepresentation of it.

georgemcbay 14y ago
I agree with you that this is ridiculous. However, you really need to define success vs failure before declaring any company as one or the other. Taking Zynga as an example, viewed from the position of "making Mark Pincus an awful lot of money" Zynga was a smashing success, while viewed from the position of "painting Mark Pincus as a credible person to do business with in the future" Zynga was a huge failure.
- msprague 14y ago
  Also MySpace was a failure?? It sold for $500 Million. Ask Tom Anderson what he thinks about it.

scottmagdalein 14y ago

This isn't an infographic. This is text with colorful backgrounds and icons.