6 ms·

Starting a business isn't as crazy and risky as they say

92 points by swombat 17y ago

edw519 17y ago
Glad to see someone challenge "95% of all businesses fail" myth with a little data. I've always hated that "statistic". I'd rather look at it this way... 99.9999% of all sperm fail to reach their destination. Yours won. Keep winning.
- revorad 17y ago
  Brilliant. Must remember that one!
- eugenejen 17y ago
  Wow, even our births are black swans, a lot of high impact but very improbable events.
- mseebach 17y ago
  I think that statement is tainted by survivor bias.
  - bd 17y ago
    See also anthropic principle: "The conditional probability of finding yourself in a universe compatible with your existence is always 1." http://en.wikipedia.org/wiki/Anthropic_principle http://en.wikipedia.org/wiki/Anthropic_principle
  - Periodic 17y ago
    People also tend to have investment bias. Once you've invested in something, you're likely to think it is more valuable than if you haven't. To put it simply, we humans have trouble thinking from a different perspective, and we tend to focus on what we'd lose rather than gain. Thus, people who own their own business would be biased towards thinking that running their own business is the better option. Yeah, I've been reading Predictably Irrational.
- lazyant 17y ago
  Actually the sperm that "fail" is way more than 99.9999%. There are approximately 200 to 500 million spermatozoa per ejaculation: http://en.wikipedia.org/wiki/Semen http://en.wikipedia.org/wiki/Semen and a man produces 50 - 300 million sperm/day. I'll let this guy do the math: http://members.shaw.ca/tfrisen/chances_of_you_existing.htm http://members.shaw.ca/tfrisen/chances_of_you_existing.htm
  - dtf 17y ago
    Another interesting factoid I read somewhere today: on average only 15% are fit enough to even reach the egg. Yet sperm fitness has been measured to increase after exposure to pornography involving men and women, while this effect is apparently not observed after viewing lesbian pornography. The theory is that seeing the competition somehow makes the sperm more competitive. And that's why it's better to hang around with your fellow HN'ers than your nay-saying friends.
    - Tichy 17y ago
      It sounds like watching porn is more beneficial than hanging around with HN people. At least if sperm fitness is your main priority.
- jodrellblank 17y ago
  This is based around an inside out view of life. I was not born. born happened first, and the creature existed for a while, and "I" am the emergent sentience. It wasn't "my" sperm since at that point I wasn't. "I" couldn't have been born anywhere else, at any other time, into any other situation or any other family. It's a nonsense idea.
  - dkersten 17y ago
    I'd be kinda weirded out if your sperm impregnated your mother... so I'm glad to hear that it wasn't yours. Though, if you impregnated your mother causing yourself to be born...
    - bd 17y ago
      Obligatory link: Robert A. Heinlein - All You Zombies http://ieng9.ucsd.edu/~mfedder/zombies.html http://ieng9.ucsd.edu/~mfedder/zombies.html
  - bd 17y ago
    Exactly, it's called "observation selection effect" (coined by Nick Bostrom): http://www.anthropic-principle.com/primer.html http://www.anthropic-principle.com/primer.html
- dkersten 17y ago
  83.26% of statistics are made up and 75.91% of people believe that.
rgrieselhuber 17y ago
Having seen enough smart engineers in this industry who were downsized or overlooked for promotions for committing the unforgivable crime of turning 40, I became convinced that it is WAY more risky to pursue a career made up entirely of working for someone else.
swombat 17y ago
Funny story about relative job security... When I was still in the early stages of my first start-up, in autumn 2006, and working full-time at my consulting job, I was also interviewing with various banks. Through this excellent recruitment agent, I got a series of interviews at Lehman Brothers which ultimately culminated in them basically creating a job for me in their Front Office product management team and offering it to me. This was a very good banking job. Front-office based, plenty of exposure to all parts of the bank, creative, intense, and well paid. I hesitated, because on the one hand I had committed into the business I was starting (to the tune of several thousand pounds, and, more importantly, to a close friend...), and on the other hand this was an excellent career opportunity from the "corporate career" point of view. I remember discussing this with my girlfriend at the time. Being very pragmatic, she resolved the question: "Most people," she said, "hope their whole life that they'll be able to start a business. You have the opportunity to do it now, to realise something that for most people remains just a dream. You may never get that opportunity again... but the Lehman job will still be there in a year or two if you decide that start-ups are not for you." Well, she was wrong about the Lehman job. I'm going to have to accept that I will never get a job there now.
- gbookman 17y ago
  If you took the Lehman job, by now you'd have to accept the fact that you would probably never get the chance to start a business again. That would drive me nuts because I've always wanted to start my own business and I don't really like working for others. For (most) other people, I'm sure they'd rather have a steady source of income.
  - jjs 17y ago
    > If you took the Lehman job, by now you'd have to accept the fact that you would probably never get the chance to start a business again. No, they probably still would have gone bankrupt, even despite swombat's valiant efforts.
- rgrieselhuber 17y ago
  I think the real lesson here is that you had a very smart (and rare) girlfriend.
vgurgov 17y ago
you would be lucky pick for any smart employer even if your own business failed. people with creativity and experience of building something new and Taking Responsibility are always valued on 100k+ jobs
shimon 17y ago
I think there are two main reasons we hear these depressing statistics: 1. It validates most people's default decision to pursue a "normal" career path. 2. It increases the psychological barrier to entry in starting a business, so that people don't often attempt it if they're not highly determined. Reason #1 is a strategy for coping with laziness or fear. Reason #2 may be a good or bad thing. On one hand, the people most likely to succeed are those who have a high risk tolerance and are determined to make it despite the odds. On the other hand, anything we can do to further lower the stigma associated with business failure and encourage more people to start businesses is probably good for society.
kp212 17y ago
Inspiration, thank you.
pbhjpbhj 17y ago
After all, aren't side-projects more likely to fail than projects you put all your energy and time and heart and soul into? IMO Side-projects which don't have to support you financially are more likely to succeed because you get to define succeed for yourself - "I sold a copy, yay success". Whilst a full-time occupation has to feed you and pay for everything else you need to live, and possibly your family too, that means there's an automatic in built requirement to make money. If you fail to make enough money day-to-day to survive then you fail, period.
dschobel 17y ago
More than two-thirds of businesses are started at home; only 21% of all businesses employ someone other than the owner. I'm wondering how many of these are ebay or amazon.com storefront type "businesses". More and more I'm getting the feeling that software startups are a rare enough breed that it simply isn't instructive to look at nation-wide statistics.
- Periodic 17y ago
  I agree. He's looking at a lot of businesses that aren't in the software/IT industries. For example, his statistics include plumbers, landscapers, artists, etc. If there's anything I've learned from the Internet it's that the Internet isn't quite like anything else out there. I'd be interested to see what the statistics are for only tech-related businesses and consulting vs. producing.
oscardelben 17y ago
who said that failing is bad? Failure it's integrant part of success, otherwise who could you learn to walk or drive?
- ctb9 17y ago
  I'll say it. Failing is bad. The fact that the main benefit of failure is that it can help you avoid future failure pretty much proves the point. (I guess there is a secondary benefit in knowing you were at least shooting for the stars, but if you take solace in that fact and quit trying before you succeed, that sucks.) No Edison quotes please.
fnid 17y ago
The link in this article to "95% of businesses fail" points to an article titled, "95% of online businesses fail" and he disputes it with statistics for ALL businesses. Be honest. If you start your article with a lie, why should I believe the rest of it?
kleevr 17y ago
Growing up my family saw some rough times. We were living in a small city when the local economy collapsed, and my Dad was out of a job. So, he took the last bit of money he had, bought a trailer, put a hitch on the car, and started a small landscaping company. Less than six months later, we moved from the smallest house my family had ever lived in, and into the largest house we ever lived in; in a down economy no less. I don't know that my father ought to be considered a "serial entrepreneur" as he was never trying to get rich -- only to provide for us, but he did similar things on several occasions whenever push came to shove. More importantly no matter the job climate, he always either found or created enough work for himself to support the rest of us. The lesson I take from this is: when your job sucks or even outright ceases to exist, if the job market is bone dry and the economy is in decline, it might really be the best time to create your own business. (And,.. you'll never know unless you try.)

92 points by swombat 17y ago

Glad to see someone challenge "95% of all businesses fail" myth with a little data. I've always hated that "statistic". I'd rather look at it this way... 99.9999% of all sperm fail to reach their destination. Yours won. Keep winning.

revorad 17y ago
Brilliant. Must remember that one!
eugenejen 17y ago
Wow, even our births are black swans, a lot of high impact but very improbable events.
mseebach 17y ago
I think that statement is tainted by survivor bias.
- bd 17y ago
  See also anthropic principle: "The conditional probability of finding yourself in a universe compatible with your existence is always 1." http://en.wikipedia.org/wiki/Anthropic_principle http://en.wikipedia.org/wiki/Anthropic_principle
- Periodic 17y ago
  People also tend to have investment bias. Once you've invested in something, you're likely to think it is more valuable than if you haven't. To put it simply, we humans have trouble thinking from a different perspective, and we tend to focus on what we'd lose rather than gain. Thus, people who own their own business would be biased towards thinking that running their own business is the better option. Yeah, I've been reading Predictably Irrational.
lazyant 17y ago
Actually the sperm that "fail" is way more than 99.9999%. There are approximately 200 to 500 million spermatozoa per ejaculation: http://en.wikipedia.org/wiki/Semen http://en.wikipedia.org/wiki/Semen and a man produces 50 - 300 million sperm/day. I'll let this guy do the math: http://members.shaw.ca/tfrisen/chances_of_you_existing.htm http://members.shaw.ca/tfrisen/chances_of_you_existing.htm
- dtf 17y ago
  Another interesting factoid I read somewhere today: on average only 15% are fit enough to even reach the egg. Yet sperm fitness has been measured to increase after exposure to pornography involving men and women, while this effect is apparently not observed after viewing lesbian pornography. The theory is that seeing the competition somehow makes the sperm more competitive. And that's why it's better to hang around with your fellow HN'ers than your nay-saying friends.
  - Tichy 17y ago
    It sounds like watching porn is more beneficial than hanging around with HN people. At least if sperm fitness is your main priority.
jodrellblank 17y ago
This is based around an inside out view of life. I was not born. born happened first, and the creature existed for a while, and "I" am the emergent sentience. It wasn't "my" sperm since at that point I wasn't. "I" couldn't have been born anywhere else, at any other time, into any other situation or any other family. It's a nonsense idea.
- dkersten 17y ago
  I'd be kinda weirded out if your sperm impregnated your mother... so I'm glad to hear that it wasn't yours. Though, if you impregnated your mother causing yourself to be born...
  - bd 17y ago
    Obligatory link: Robert A. Heinlein - All You Zombies http://ieng9.ucsd.edu/~mfedder/zombies.html http://ieng9.ucsd.edu/~mfedder/zombies.html
- bd 17y ago
  Exactly, it's called "observation selection effect" (coined by Nick Bostrom): http://www.anthropic-principle.com/primer.html http://www.anthropic-principle.com/primer.html
dkersten 17y ago
83.26% of statistics are made up and 75.91% of people believe that.

rgrieselhuber 17y ago

Having seen enough smart engineers in this industry who were downsized or overlooked for promotions for committing the unforgivable crime of turning 40, I became convinced that it is WAY more risky to pursue a career made up entirely of working for someone else.

swombat 17y ago

Funny story about relative job security... When I was still in the early stages of my first start-up, in autumn 2006, and working full-time at my consulting job, I was also interviewing with various banks. Through this excellent recruitment agent, I got a series of interviews at Lehman Brothers which ultimately culminated in them basically creating a job for me in their Front Office product management team and offering it to me. This was a very good banking job. Front-office based, plenty of exposure to all parts of the bank, creative, intense, and well paid. I hesitated, because on the one hand I had committed into the business I was starting (to the tune of several thousand pounds, and, more importantly, to a close friend...), and on the other hand this was an excellent career opportunity from the "corporate career" point of view. I remember discussing this with my girlfriend at the time. Being very pragmatic, she resolved the question: "Most people," she said, "hope their whole life that they'll be able to start a business. You have the opportunity to do it now, to realise something that for most people remains just a dream. You may never get that opportunity again... but the Lehman job will still be there in a year or two if you decide that start-ups are not for you." Well, she was wrong about the Lehman job. I'm going to have to accept that I will never get a job there now.

gbookman 17y ago
If you took the Lehman job, by now you'd have to accept the fact that you would probably never get the chance to start a business again. That would drive me nuts because I've always wanted to start my own business and I don't really like working for others. For (most) other people, I'm sure they'd rather have a steady source of income.
- jjs 17y ago
  > If you took the Lehman job, by now you'd have to accept the fact that you would probably never get the chance to start a business again. No, they probably still would have gone bankrupt, even despite swombat's valiant efforts.
rgrieselhuber 17y ago
I think the real lesson here is that you had a very smart (and rare) girlfriend.

vgurgov 17y ago

you would be lucky pick for any smart employer even if your own business failed. people with creativity and experience of building something new and Taking Responsibility are always valued on 100k+ jobs

shimon 17y ago

I think there are two main reasons we hear these depressing statistics: 1. It validates most people's default decision to pursue a "normal" career path. 2. It increases the psychological barrier to entry in starting a business, so that people don't often attempt it if they're not highly determined. Reason #1 is a strategy for coping with laziness or fear. Reason #2 may be a good or bad thing. On one hand, the people most likely to succeed are those who have a high risk tolerance and are determined to make it despite the odds. On the other hand, anything we can do to further lower the stigma associated with business failure and encourage more people to start businesses is probably good for society.

kp212 17y ago

Inspiration, thank you.

pbhjpbhj 17y ago

After all, aren't side-projects more likely to fail than projects you put all your energy and time and heart and soul into? IMO Side-projects which don't have to support you financially are more likely to succeed because you get to define succeed for yourself - "I sold a copy, yay success". Whilst a full-time occupation has to feed you and pay for everything else you need to live, and possibly your family too, that means there's an automatic in built requirement to make money. If you fail to make enough money day-to-day to survive then you fail, period.

dschobel 17y ago

More than two-thirds of businesses are started at home; only 21% of all businesses employ someone other than the owner. I'm wondering how many of these are ebay or amazon.com storefront type "businesses". More and more I'm getting the feeling that software startups are a rare enough breed that it simply isn't instructive to look at nation-wide statistics.

Periodic 17y ago
I agree. He's looking at a lot of businesses that aren't in the software/IT industries. For example, his statistics include plumbers, landscapers, artists, etc. If there's anything I've learned from the Internet it's that the Internet isn't quite like anything else out there. I'd be interested to see what the statistics are for only tech-related businesses and consulting vs. producing.

oscardelben 17y ago

who said that failing is bad? Failure it's integrant part of success, otherwise who could you learn to walk or drive?

ctb9 17y ago
I'll say it. Failing is bad. The fact that the main benefit of failure is that it can help you avoid future failure pretty much proves the point. (I guess there is a secondary benefit in knowing you were at least shooting for the stars, but if you take solace in that fact and quit trying before you succeed, that sucks.) No Edison quotes please.

fnid 17y ago

The link in this article to "95% of businesses fail" points to an article titled, "95% of online businesses fail" and he disputes it with statistics for ALL businesses. Be honest. If you start your article with a lie, why should I believe the rest of it?

kleevr 17y ago

Growing up my family saw some rough times. We were living in a small city when the local economy collapsed, and my Dad was out of a job. So, he took the last bit of money he had, bought a trailer, put a hitch on the car, and started a small landscaping company. Less than six months later, we moved from the smallest house my family had ever lived in, and into the largest house we ever lived in; in a down economy no less. I don't know that my father ought to be considered a "serial entrepreneur" as he was never trying to get rich -- only to provide for us, but he did similar things on several occasions whenever push came to shove. More importantly no matter the job climate, he always either found or created enough work for himself to support the rest of us. The lesson I take from this is: when your job sucks or even outright ceases to exist, if the job market is bone dry and the economy is in decline, it might really be the best time to create your own business. (And,.. you'll never know unless you try.)