

A Machine To Pick Startup Winners - raheemm
http://www.technologyreview.com/news/428427/a-machine-to-pick-startup-winners/

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stcredzero
The problem with analytics I've experienced, is that they often aren't
actually good at picking out the something they're targeting. They're actually
good at picking out something _like_ what they're targeting. When I use
Pandora, I just get hollow dopplegangers of bands I like, not bands I actually
like.

That said, and no doubt this will be controversial, I think there's great
potential for Moneyball style statistical analysis of programmers. (Though
there are significant organizational and cultural issues involved.)

The reason why stats work in baseball, is that there's ample empirical data:
baseball players are up to bat, or have a chance to catch a ball again and
again. Like baseball players, there are certain actions that programmers do
again and again -- namely commits going to production. If one could get
accurate stats on a large enough population, with automated metrics for
function points and bugs, it should be possible to produce meaningful stats on
programmers working with a given technology.

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hooande
This sounds interesting, but I think the difference in the two situations is a
repeatable experimental environment. In baseball every at bat is the same...a
batter, a pitcher and 8 defenders. This lends itself well to statistical
analysis. In programming, every commit is different and under wildly varying
circumstances.

I think the same logic might apply to the OP. Looking at a startup investment
through the lens of a credit score makes some sense, but it seems more likely
to avoid predictable losses than it is to identify the next facebook or
google.

As an aside, there's something I've always wondered about companies who
predict the success of other companies...what score did they get from their
own algorithm?

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stcredzero
_This sounds interesting, but I think the difference in the two situations is
a repeatable experimental environment. In baseball every at bat is the
same...a batter, a pitcher and 8 defenders. This lends itself well to
statistical analysis. In programming, every commit is different and under
wildly varying circumstances._

You could argue this both ways. The situation at bat varies quite a bit. You
can have different pitchers, different lighting, different wind speed and
direction, different umpire, different situation on-base, etc... However, this
all comes out in the wash because there are so many iterations.

Programmers commit a lot. If you can get reliable data including bug rates for
a given programming environment, I think you'd have good data.

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ovi256
And that's a pretty clear "submarine" [1] article, without a doubt pitched by
PR to the journalist. Don't get me wrong, it was a good and informative
article, it's just that I'm training myself to recognize these.

[1] <http://www.paulgraham.com/submarine.html>

~~~
akldfgj
Ah, yeah, it's Technology Review. That's what they do. It's not a rabble-
rousing publication.

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asanwal
Interesting challenge, but it seems they look for a lead investor as the first
signal of quality for the investment. As a result, it's questionable how much
additional value their algorithm is uncovering/adding to their decision as a
follow-on investor.

Said another way, if Sequoia or Kleiner or Union Square are investing and
Correlation then gets to see the deal, I wonder how many deals their algorithm
would pass on.

If this was truly algorithmic startup investing to be the lead investor, it'd
be much more interesting. But this method of using social proof as the first
filter seems like business as usual.

That said, I imagine this is a great approach from a marketing perspective
when raising the fund and reaching out to investors (LPs) as it clearly
differentiates the fund from a thesis/approach perspective.

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jakeonthemove
Hmm, since this is based on analyzing existing data, the system will most
likely be useless for companies that want to do something new or something
niche-specific. Not a good thing for an investment company, unless they always
want to play it safe.

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Yaa101
Computer says no...

