

Why Startups Fail (infographic based on Startup Genome data) - danberger
http://visual.ly/why-startups-fail

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mattront
"Inconsistent startups write 3.4 times more lines of code in the Discovery
stage and 2.25 times more lines of code in the Efficiency stage."

This is interesting. Either inconsistent startups (startups that are more
likely to fail) over-do development - or - they tackle problems that are more
complex and thus require more code. The implication of the later point is that
startups working on difficult problems are more likely to make mistakes (like
premature scaling) and fail.

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sthlm
I always find there to be a very poor correlation between complexity, quality
or efficiency and lines of code written. Therefore, I find the conclusion that
they over-do development or approach more complex problems highly
questionable. It might just be that they are not the most thoughtful
programmers. This would go along much better with inconsistency. Instead of
developing software, you set your mind on scaling fast, write a bunch of code
and fall into the inconsistent startup category.

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todsul
I'm sceptical about the usefulness of the dataset. One of the first things we
learn as startup founders (or interns for Dr House) is that if you ask a
person to analyse or predict their own behaviour, chances are the answer is
way off. Even upon careful reflection and introspection, too many biases are
at play.

I first learned this doing customer development for our current startup. We
surveyed potential customers until almost being arrested at a private
conference. We thought "this time is different" because we planned to validate
the concept until we went numb. But we relied too much on others' self-
assessments.

I'm not suggesting self-assessment is pointless (clearly it underpins our
personal development), but rather in fleeting engagements with people who lack
vested interest (e.g. surveys), it can do more harm than good.

Additionally, I found the Startup Genome survey so long-winded that my answers
ended up being rubbish. It would have taken all day to get passed my own
biasses and really think through that many questions. I understand there's
more to the project than the survey, but that's the part I'm particularly
sceptical about.

~~~
truthseeker
* But we relied too much on others' self-assessments.* Can you explain? Do you mean customer development brings in everyone's biases into the picture and not the truth?

What do you think is a better way to do customer development?

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todsul
Not _all_ customer development, but the flavour we practiced, which mostly
involved just asking people how/what/why they did what they did.

Imagine a scale that represents the strength of positive signals you get from
data collected during customer development. At one extreme, you have weak
signals from potential customers who just _say_ they'll use your product. At
the other extreme, you have strong signals from potential customers who _part
with cold hard cash_ and sign multi-year contracts (despite not having a
product yet).

When we first tested our concept, we focussed on the following:

    
    
      * Just doing customer development (it was a big step and an exciting new world)
      * Building a big sample set ("if we're going to do it, let's do it right")
    

But, in retrospect,

    
    
      * We were oblivious to (the lack of) positive signal strength
      * We too quickly dismissed negative signals as "people outside our market"
    

So the intention was there, and man we worked hard at it, but the data was
useless and our analysis was heavily biased. Sounds harsh to say it was
_useless_ , but it really was. We learned very little from talking to hundreds
of people. Of course we learned how to better do customer development next
time, which was/is invaluable.

I think when you ask people about their behaviour and whether they'd use your
product, they're likely to err on the side of politeness. That's a serious
problem for concept validation. But ask them for cash, and politeness takes a
back seat.

Also, just asking if someone will _use your product_ introduces bias already.
It's a leading question.

You could instead ask the following:

    
    
      * "What are your top 5 interests?"
      * If they mention your industry or niche, continue with...
      * "What are your top 5 problems relating to X-interest?"
      * If they mention a problem your concept solves, then record a weak positive signal
      * Describe your concept/solution/product... 
      * If they're willing to provide an email address, increase signal strength
      * If they're willing to sign-up for a trial, increase...
      * Pay deposit, increase... etc
    

Long story short, I think signal strength and honest analysis is the key to
validating a concept. It takes some real hustle to get financial commitments
for non-existent products, but hey, that's what differentiates founders.

~~~
truthseeker
Thank you for the awesome and detailed response. Those are pitfalls I can
definitely try to avoid for my venture.

Lot of what I am learning from entrepreneurship are things I read over and
over again but you don't own the advice until you experience it.

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projectileboy
Great content; fair-to-poor presentation. The designers should re-read Tufte.

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binarysolo
Love the Startup Genome Project report... great idea well executed by some
ambitious folks.

re: infographic... I guess I'm kinda old-school, but I'm in the camp of data
lovers who sees the utility of infographics as one that enriches viewers by
easily bringing to light some otherwise difficult-to-intuit metrics and comps.

This is a really pretty picture, but don't treat it as a TL;DR version of the
actual thing, which I find much more informative: <http://startupgenome.cc/>

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chintan
ouch.. that infographic hurts! pls don't call it an infographic. Thank You.

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bragen
I'm left unsure how they define "premature scale." If they simply mean
"started paying more for customers than they're worth, and doing so on a
massive scale," then, well, duh.

It would be more interesting to know what successful startups do at Stage 3. I
doubt it's just wait longer.

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maxmarmer
We just wrote up a more detailed post here
<http://news.ycombinator.com/item?id=2952799>

We elaborate on what to do in the efficiency stage both in the report and in
the benchmarking tool <https://beta.startupgenome.cc/>

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bragen
Wow, impressively thorough. Kudos.

