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Startup success is mostly random. I'm reminded of a quote from SMBC [1] that I've always liked: "Doubt kills more dreams than failure...but Random Chance is li

Startup success is mostly random. I'm reminded of a quote from SMBC [1] that I've always liked: "Doubt kills more dreams than failure...but Random Chance is like, Grim Reaper for dreams." Success in startups (and life in general) is not the linear function that most of us want it to be. It isn't related in direct proportion to the amount of effort, intelligence, work, time, love, energy, etc that's invested. It's more of a logarithmic function. There is a minimum amount of effort and those other things that must be put in to have any chance of success. But after that the returns diminish rapidly. It's comforting to think that if we just try harder or smarter we can triumph in the end. But the fickle winds of fate have the ultimate say, and any sense of control is probably an illusion. Saying that a company failed due to lack of product-market fit is like saying that a sports team lost due to not scoring enough points. It's always a true statement, but it doesn't illuminate the cause of the failure in a way that would be instructive to others. Most startups that were successful enough to be included on this list probably did 80% of things "right". Some times "it just didn't work out" is all that you'll be able to say. Despite all that, I think there is a lot of value in these autopsies. Being able to learn something, anything, from the experience of others is very valuable. Knowing more about what causes failure won't guarantee success, but it sure as hell beats knowing nothing. [1] http://www.smbc-comics.com/?id=3506 http://www.smbc-comics.com/?id=3506

teacup50 11y ago
It may be true that "startup" success is mostly random in the YC/modern Valley-VC culture of throwing a fistful of darts at the board and hoping that at least a few stick. Business success, however, is not mostly random.
- free2rhyme214 11y ago
  This.
- kelukelugames 11y ago
  Can you please explain the difference between business success and start up success?
  - crucini 11y ago
    Possibly it's that business success means building a profitable business, while startup success means positive exit.
  - strommen 11y ago
    "Startup" implies venture capital, which means the founders' early understanding of the business is going to be amplified by an infusion of cash, with the expectation of rapid growth. Business success can occur slowly, perhaps growing 5-10% every year (or maybe not even growing at all, and just remaining profitable). I think of it like golf: bootstrapped businesses are like trying to use a putter to get the ball from the tee all the way to the hole. It's probably going to take you a long time, but if you pay attention you have a good chance of eventually succeeding. VC is like a big driver club, so you can get the ball to the hole faster but if you make a bad shot then you're screwed.
  - swombat 11y ago
    I covered my thoughts on the difference between startup founders and entrepreneurs in this article, if you're curious... http://swombat.com/2013/6/4/startup-founders-vs-entrepreneurs http://swombat.com/2013/6/4/startup-founders-vs-entrepreneur...
- danieltillett 11y ago
  This is why when you only have one life that you should put all your efforts into what the VCs disparagingly call a "life-style" business rather than be one of their random darts. It doesn't matter to them if you end up as one of the darts on the floor, but it will matter greatly to you.
jv22222 11y ago
One thought on this... If startup success is mostly random then how can someone like Elon Musk create startup-after-startup shooting for a goal against-all-odds, but always come out on top? Does he define the "mostly" in the argument?
- callmeed 11y ago
  The thing is, once you've had a success, you now have enough money to buy your way over certain hurdles or attack industries that can't be tackled with $5 VPS and a MacBook Air. Plus VCs are 10x more likely to give you their money. Could Elon have started Tesla if he didn't previously make $165M from PayPal? I say "unlikely". Could he have started X.com/PayPal if he didn't make $22M from Zip2? I don't know. Was Zip2's success partly due to luck? I don't know but I'm sure it played a part.
  - baudehlo 11y ago
    He didn't start Tesla.
    - cloudwalking 11y ago
      Sure he did. He just wasn't CEO when he (and the four other founders) started it.
      - panic 11y ago
        Elon Musk wasn't involved with the founding of Tesla. From http://marketbusinessnews.com/tesla-motors/12064 http://marketbusinessnews.com/tesla-motors/12064: In July, 2003, Tesla Motors was founded by Martin Eberhard and Marc Tarpenning (who both initially financed the company). A year later Elon Musk invested in the company and became Chairman. Musk made Tesla’s long-term vision to produce affordable electric vehicles available for the public.
        braun_st 11y ago
        IIRC there was quite a fight between Martin and Elon for control of the company, it wasn't pretty Which brings me to a point regarding this article: I don't want to be a dick but most startup postmortems don't tell the truth. Besides that most founders fail to realize exactly where they failed the fact is that the startup environment itself isn't transparent at all. On that last point: a year ago I was talking to a friend who just closed his startup and he gave the typical "not enough traction/not enough funding" explanation they should be selling as hallmark cards already. Last month I bump into him after a meetup and the story was quite different: his startup was unfortunately used as filler along many others by a group of investors who needed to put a show because they were using government funds to finance these companies. All the participant startups got some seed money but at the end of the day all the full amount of funding was given to one single company with no employees a half-baked product that failed to launch and founded by none other than the younger brother of one of the investors who then moved his entire operation to singapore, and then nothing. There are tons of stories like that, and founders can't say anything because when something like this happens and in the heat of the moment its most likely they would look like sore losers and the last thing they need at that point is to scare away other potential investors by looking like a rogue founder. My point is that we rarely if ever get the whole story.
justonepost 11y ago
For consumer, yes luck is important, for enterprise not as much. Generally in enterprise if you work hard, are deeply talented, and know your particular vertical / market really well you'll at the very least get an acquisition / acquihire.
deleted 11y ago
[deleted]
auganov 11y ago
Not that I necessarily disagree - but conversely it's just as comforting to think effort past a certain threshold is not worth it.

teacup50 11y ago

It may be true that "startup" success is mostly random in the YC/modern Valley-VC culture of throwing a fistful of darts at the board and hoping that at least a few stick. Business success, however, is not mostly random.

free2rhyme214 11y ago
This.
kelukelugames 11y ago
Can you please explain the difference between business success and start up success?
- crucini 11y ago
  Possibly it's that business success means building a profitable business, while startup success means positive exit.
- strommen 11y ago
  "Startup" implies venture capital, which means the founders' early understanding of the business is going to be amplified by an infusion of cash, with the expectation of rapid growth. Business success can occur slowly, perhaps growing 5-10% every year (or maybe not even growing at all, and just remaining profitable). I think of it like golf: bootstrapped businesses are like trying to use a putter to get the ball from the tee all the way to the hole. It's probably going to take you a long time, but if you pay attention you have a good chance of eventually succeeding. VC is like a big driver club, so you can get the ball to the hole faster but if you make a bad shot then you're screwed.
- swombat 11y ago
  I covered my thoughts on the difference between startup founders and entrepreneurs in this article, if you're curious... http://swombat.com/2013/6/4/startup-founders-vs-entrepreneurs http://swombat.com/2013/6/4/startup-founders-vs-entrepreneur...
danieltillett 11y ago
This is why when you only have one life that you should put all your efforts into what the VCs disparagingly call a "life-style" business rather than be one of their random darts. It doesn't matter to them if you end up as one of the darts on the floor, but it will matter greatly to you.

jv22222 11y ago

One thought on this... If startup success is mostly random then how can someone like Elon Musk create startup-after-startup shooting for a goal against-all-odds, but always come out on top? Does he define the "mostly" in the argument?

callmeed 11y ago
The thing is, once you've had a success, you now have enough money to buy your way over certain hurdles or attack industries that can't be tackled with $5 VPS and a MacBook Air. Plus VCs are 10x more likely to give you their money. Could Elon have started Tesla if he didn't previously make $165M from PayPal? I say "unlikely". Could he have started X.com/PayPal if he didn't make $22M from Zip2? I don't know. Was Zip2's success partly due to luck? I don't know but I'm sure it played a part.
- baudehlo 11y ago
  He didn't start Tesla.
  - cloudwalking 11y ago
    Sure he did. He just wasn't CEO when he (and the four other founders) started it.
    - panic 11y ago
      Elon Musk wasn't involved with the founding of Tesla. From http://marketbusinessnews.com/tesla-motors/12064 http://marketbusinessnews.com/tesla-motors/12064: In July, 2003, Tesla Motors was founded by Martin Eberhard and Marc Tarpenning (who both initially financed the company). A year later Elon Musk invested in the company and became Chairman. Musk made Tesla’s long-term vision to produce affordable electric vehicles available for the public.
      - braun_st 11y ago
        IIRC there was quite a fight between Martin and Elon for control of the company, it wasn't pretty Which brings me to a point regarding this article: I don't want to be a dick but most startup postmortems don't tell the truth. Besides that most founders fail to realize exactly where they failed the fact is that the startup environment itself isn't transparent at all. On that last point: a year ago I was talking to a friend who just closed his startup and he gave the typical "not enough traction/not enough funding" explanation they should be selling as hallmark cards already. Last month I bump into him after a meetup and the story was quite different: his startup was unfortunately used as filler along many others by a group of investors who needed to put a show because they were using government funds to finance these companies. All the participant startups got some seed money but at the end of the day all the full amount of funding was given to one single company with no employees a half-baked product that failed to launch and founded by none other than the younger brother of one of the investors who then moved his entire operation to singapore, and then nothing. There are tons of stories like that, and founders can't say anything because when something like this happens and in the heat of the moment its most likely they would look like sore losers and the last thing they need at that point is to scare away other potential investors by looking like a rogue founder. My point is that we rarely if ever get the whole story.

justonepost 11y ago

For consumer, yes luck is important, for enterprise not as much. Generally in enterprise if you work hard, are deeply talented, and know your particular vertical / market really well you'll at the very least get an acquisition / acquihire.

deleted 11y ago

[deleted]

auganov 11y ago

Not that I necessarily disagree - but conversely it's just as comforting to think effort past a certain threshold is not worth it.