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While I have no data in support of this, and thereby could be totally fooling myself, it does not look hard to spot irrationality in human behavior, which happe

by alok-g 13y ago

While I have no data in support of this, and thereby could be totally fooling myself, it does not look hard to spot irrationality in human behavior, which happens to be a lot more common than what most people think. I am assuming that such irrational thinking on part of the founders and key executives would correlate at least somewhat with a startup's success or failure.

edanm 13y ago
You are likely wrong. Here's why. Taking the "outside view", the success rate of startups is small. VC's, whose entire living depends on picking the right startups, are still living with low odds. It's true that VC's have different priorities, in that they are optimizing for large successes and therefore are part of the reason that the success rate is so low. On the other hand, if you join a startup and get options, it almost certainly raised VC money, and is therefore also being pushed in the "get big" direction. And if it's not, your payday won't be particularly big either. In other words, taking an outside view in this case, you probably can't do better than VC's, and their success rate is what the article talks about.
- alok-g 13y ago
  I am not confident that I understood you in full, so am rephrasing what I am understanding: 1. Given the experience VCs have, having seen much larger number of startups than a common founder, some validation of the startup's concept and also the founders' rationality quotient already comes from a money raising event. 2. Success statistics are very different if you include vs. not the startups that are unable to raise money. A startup that is unable to raise funding is probably not even getting included in the statistics, even if the founder may loose all his savings into it to consider it a failure. 3. I follow your point about optimization for getting big. Thanks
  - michaelt 13y ago
    The article compares startups that received seed funding - which is mostly given out by experienced investors like Paul Graham. If your decision to join or not join a company hinges on the assumption that you're better at picking winners than Paul Graham, well, that's a big assumption.

by alok-g 13y ago

edanm 13y ago

You are likely wrong. Here's why. Taking the "outside view", the success rate of startups is small. VC's, whose entire living depends on picking the right startups, are still living with low odds. It's true that VC's have different priorities, in that they are optimizing for large successes and therefore are part of the reason that the success rate is so low. On the other hand, if you join a startup and get options, it almost certainly raised VC money, and is therefore also being pushed in the "get big" direction. And if it's not, your payday won't be particularly big either. In other words, taking an outside view in this case, you probably can't do better than VC's, and their success rate is what the article talks about.

alok-g 13y ago
I am not confident that I understood you in full, so am rephrasing what I am understanding: 1. Given the experience VCs have, having seen much larger number of startups than a common founder, some validation of the startup's concept and also the founders' rationality quotient already comes from a money raising event. 2. Success statistics are very different if you include vs. not the startups that are unable to raise money. A startup that is unable to raise funding is probably not even getting included in the statistics, even if the founder may loose all his savings into it to consider it a failure. 3. I follow your point about optimization for getting big. Thanks
- michaelt 13y ago
  The article compares startups that received seed funding - which is mostly given out by experienced investors like Paul Graham. If your decision to join or not join a company hinges on the assumption that you're better at picking winners than Paul Graham, well, that's a big assumption.