

The (Highly Controversial) YouNoodle Startup Predictor Is Coming - sdpurtill
http://www.techcrunch.com/2008/08/05/the-highly-controversial-younoodle-startup-predictor-is-coming/

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michaelbuckbee
I'm skeptical of this on a very plain basis: If you had technology that could
do this for companies, why would you focus on the startup market and not
instead on the potentially much more lucrative public markets?

If the technology is as good as is stated in the TC article couldn't they
pretty rapidly build up a listing of undervalued companies on Wall Street and
buy into them?

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rms
I think it is a PR gimmick rather than an expected useful product -- their
main product is a social network for investors and entrepreneurs.

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kirill
Actually, we're pretty serious about this. Connecting a large number of people
in the startup industry -is- a big opportunity in itself (and we've already
gotten a high level of traction on that front). However, we've found enough
evidence to suggest that data can be used to significantly improve decision-
making within it also, which is even more valuable.

~~~
rms
I wish you guys the best of luck. There is certainly an absolutely enormous
amount of money in solving this problem.

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hhm
Techcrunch should have also tested whether predictions for startups that
failed were correct too; otherwise this is way too incomplete (YouNoodle might
be designed to make you happy by making you believe your company is always
worth a lot).

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bigbang
>YouNoodle might be designed to make you happy by making you believe your
company is always worth a lot

just like astrology

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omouse
Which is a viable business model..."There's a sucker born every minute" or
something like that.

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mtw
I would prefer a tool for entrepreneurs that would show them directly what
factors they can focus on to get a higher valuation and/or higher chances of
success.

The page would be interactive and users would drag bars or change data such as
cost of infrastructure per user, cost of marketing per user, data about
competition etc, and then the probability of success would change in real-
time.

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zzzmarcus
Startup Idea: Take the same concept and apply it to indie bands. It's such a
point of pride among hipsters to predict the next big band that I bet it'd be
a niche hit.

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babul
I'm sure people like songkick are already working on it. However, as always,
building it and getting it to take off are different challenges.

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agentbleu
I forget the name but there is such a company out of Spain and CA who have an
algorithm that analyze the song and compare it to others that were hits to
give you a number.

found it
[http://edition.cnn.com/2008/WORLD/europe/03/07/spiritof.musi...](http://edition.cnn.com/2008/WORLD/europe/03/07/spiritof.music/index.html)

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Prrometheus
This makes me want to make a YouNoodleNoodle that predicts whether or not
YouNoodle will succeed.

Done! Here's the code:

<html><body><h1>NO!</h1></body></html>

But seriously, there are so many subjective factors (including luck) in
judging the viability of a business that I doubt their ability to do so. If
they produce a better-than-random track record, they can change my mind. Until
then, I am highly skeptical.

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breck
I wouldn't be so sure. While I doubt YouNoodle will be able to make valuable
predictions, people are gullible and this tool will produce great linkbait.

The predictions from YouNoodle might be closer than simply picking a random
number from 0-$1B, but I think a regression with a few regressors(founders
previous startup success, current income, market size, etc) would be just as
useful.

But most people don't understand statistics, and if you overestimate the
valuations of new startups, that particular startup will likely link to
YouNoodle. They could turn into a successful player in the
TechCrunch/Valleywag space.

~~~
adrianwaj
I wonder if the prediction will be more than just a single number but in fact
a distribution of probabilities with predictions. That will make it less
trashy.

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helveticaman
Quit hating; this is awesome. Statistical analysis can tell upstarts what's
important and what isn't in a way a blog post can't. It might reveal
statistical surprises a la Freakonomics. I'm just saying, I'm happy someone is
bothering to do the math on what works and what doesn't. This is something I
want. If my startup were taking off, I'd pay to access this information.

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adrianwaj
I like the idea, but there will always be anomalies that crop up. So just as
Google is always fine-tuning their algorithm, so must YouNoodle. Only God
knows what will really happen and it sounds like there is an over-emphasis on
the Social Proof of those associated with a startup. Opportunities exist that
can present themselves to anyone.

It says: "YouNoodle aims to make the prediction right before the first round
of funding for a company."

What happens if a company can't or doesn't raise capital? If there were a tool
on the site like the just launched <http://webequity.com.com.au>
<http://bit.ly/3lZTZa>, these startups could still launch whereby the team is
paid with equity in the startup instead of cash.

Also, with the valuations in place, tools could be provided to raise money by
way of small payments from investors who would also use the site.
Alternatively, tools may exist to simply locate such investors with the
financial exchange to take place off-site. Such investors may co-invest
alongside a high-profile investor who leads the round and who takes an active
role in monitoring and working with the company. In this way, a company can
uphold its valuation by enabling many diversely sourced investors to access a
round who are prepared to pay a premium to access such an investment that they
would otherwise not be able to find or participate in, and are likewise also
willing to forgoe any board seat claim.

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nickb
This one's probably more accurate and much simpler:
<http://web.ics.purdue.edu/~ssanty/cgi-bin/eightball.cgi>

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apexauk
"How much will my startup be worth in 3 years?"

"Definately."

Hmm.. should really repeat and average..

"Will my startup be worth megabucks in 3 years?"

"Yes."

Sweet - I like this one.

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ph0rque
It would be interesting what the prediction would be for 37Signals.

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sharpshoot
I really believe in this to change how investors validate their gut
assumptions. All YN is trying to do is take the social, psychological and
environment factors to generate an accurate estimate.

Historically successful entrepreneurial teams have exhibited drive, ambition,
a great network and ruthless determination. What makes you say its going to
change.

Hats off to these guys

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vaksel
eh I wouldn't count on that, this is actually just a tool to reinforce their
current preferences.

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mattmaroon
How is it impressive that a company in 2008 predicted data that is accurate as
of 2008? I'm sure they legitimately used 2005 data in doing so, but they
probably tweaked their algorithms until the 2005 data was accurate given what
we now know. Anyone could do that.

This is posed as being equivalent to making accurate predictions of the near
future, but it's not.

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ivankirigin
There are very standard ways of validating a predictor. Using test & training
sets, and tuning the output to be optimized even on unseen data.

If they did this, they should be open about the numbers. Hell, I'd be open
about the data too, and make a challenge to make a better predictor. If the
algorithms still run on their machines, they can only gain by being open.

~~~
tfinniga
Sure, standard machine learning stuff.

But in order to be a reliable predictor, I think it would be necessary to
predict the economy as well. The same startup that would be successful during
the bubble would not be so successful after it popped. In other words, I don't
think they have enough inputs to be reliable predictors.

On the other hand, perhaps they don't need to be reliable absolute predictors.
The VC's question is basically which should be funded. This might be able to
give a rough ordering, which is plenty valuable.

~~~
ivankirigin
The life of a company from start to big exit or large acquisition is pretty
long. I'm not sure the economy matters so much -- just delays things
sometimes.

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ashleyw
I really don't see the point of it. Its like horoscopes, and its basing all
startups as a neutral idea with the same success rate - Facebook is the same
as Techcrunch which is the same as Twitter, even though they are completely
different in the size of the target audience.

It looks as if its mainly basing the predicted investments off the founders
and what they have worked on in the past, but is that good enough? We all know
startups can fail no matter who is behind them - Cuil, its founders had first
hand experience with the leader of search, Google, but has still pretty much
failed so far.

Plus, apart from a bit of fun, who would use it? I doubt investors would use
it over their years of experience in the industry, and it seems like they are
in fact the target audience!

I look forward to giving it a go.

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fallentimes
I don't really get why this is "highly controversial" unless it's just more TC
link bait.

Sounds like a good idea to me; if they're able to do what what Moneyball did
for baseball and what PER did (to a lesser extent) did for basketball all the
power to them. What's the downside of having more accurate tools and
indicators> Since the tool will be public and founders will know what to focus
on.

However, I highly doubt too many VC's will take them seriously until they
start producing verifiable results instead of form fitting historical data.
Very few took sabermetrics and some of the other sports' quant stuff seriously
to start either.

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adrianwaj
If you read Arrington's first post about YouNoodle <http://bit.ly/326Nx6>, he
was very scathing to the point of being unfair. Along with Crunchbase, my
guess is that he wants TC to be the Goto point for startups, not YouNoodle,
and YouNoodle is positioned to establish many relationships with many
entrepreneurs to which he may be jealous.

"It’s hype and nonsense, and it won’t work." ~MA

~~~
fallentimes
Ah ok thanks for the background information. Arrington sounds like a lot of
old school baseball scouts and GMs.

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troystribling
There is a movie production company called Epagogix
<http://www.epagogix.com/index.html> that has an algorithm which predicts the
success of a movie from the script. Epagogix was profiled in the book Super
Crunchers <http://www.randomhouse.com/bantamdell/supercrunchers/>

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jyothi
I think all this predictor thing is a hype they are using to gain traction.

I used YouNoodle and I felt all this prediction thing is spoof - The real crux
- This IS going to be a startup directory (crunchbase + social aspect.)

Imagine a niche area for linkedin to concentrate on - high powered
entrepreneurs all connected and talking about their ventures even stealth
startups.

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babul
I am still wondering why others like TechCrunch et al have not at least
_tried_ something like a quantitative prediction tool before.

Perhaps it was too much conflict of interest to their core reporting/news
business model, or too much work?

Still it is interesting to observe the shifts from reactive to proactive
process in that space.

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joeter
"YouNoodle is also basing predictions on historical data, and in a rapidly
changing world that is consistently disrupted by new technologies, those
predictions are very hard to make. Humans who are on top of recent
developments can make subjective decisions that are far more likely to be
accurate than an algorithm."

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markbao
No startup predictor can take in consideration how well team members execute
their ideas.

Sure, it could take in account information about past startup founders, but
what if you asked it about Larry and Sergey in 1998? No past information. How
are you going to predict how well they executed Google?

~~~
kirill
Even though Google is an anomaly (black swan:), as you can see in the
Techcrunch article, YouNoodle would've still predicted an $80M+ valuation for
Google, in part because of the high quality team and advisors they managed to
assemble from the start, including Ram Shriram and Andy Bechtolsheim.

~~~
markbao
True, true.

Quite a smart system, though. Kudos to the YouNoodle team.

(The name's awful, though. If the founders are here, don't be offended, it's
nothing personal, but consider another name?)

~~~
noodle
great name, imo

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13ren
I love this kind of idea, but it never works.

TechCrunch tested predictions of success - but what of failure? (maybe it says
they all succeed...?)

Anyone care to enter a past learning-experience startup, to test this out?

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yangyang42
I'd be interested see how YC companies are valued by this predictor.

YouNoodle may or may not be an accurate predictor, but I bet they're good at
predicting which teams/startups are likely to get funding from investors/VCs.

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jsmcgd
Surely they don't have enough data on the startups that didn't make it, that
didn't have a high profile. Will the algorithm not tend to be very optimistic?

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demandred
it doesn't calculate for supply & demand.

Powerset is worth whatever MSFT was willing to pay for it, not what the
predictor says its worth.

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bigbang
MSFT was willing to pay Powerset for whatever it thinks its worth. So
acquisition price is fair enough I think.

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helveticaman
Officially, MSFT will pay as little as it can (ethically/legally/effectively)
get away with.

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jrockway
How is YouNoodle going to make money from this?

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aneesh
If it's as good as they say, making money is trvial: just make the predictor
proprietary. The real question is: "Can they make the predictor good?"

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jrockway
This makes sense, now that I've thought about it some more. It is logical that
they would use the predictor to decide where to invest. But, they probably
don't actually have any money to invest. By hyping themselves on TechCrunch or
whatever, they can get some seed funding :)

That's my theory anyway.

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shawndrost
rand(60,150)*1000000

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nazgulnarsil
the only predictions worth a damn are the ones with money involved.

