
First time entrepreneurs have 18% chance of success; 2nd time entrepreneurs: 30% - pierrefar
http://hbswk.hbs.edu/item/6045.html
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seekely
Misleading title. From the very first sentence:

"All else equal, a venture-capital-backed entrepreneur who starts a company
that goes public has a 30 percent chance of succeeding in his or her next
venture. First-time entrepreneurs, on the other hand, have only an 18 percent
chance of succeeding, and entrepreneurs who previously failed have a 20
percent chance of succeeding"

~~~
dcurtis
"a venture-capital-backed entrepreneur who starts a company that goes public"

There's, like, four total people in the world who match that description in
web-based companies over the past few years.

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frisco
They use a strange metric for success, in that the company has to go public.
I'd say a good acquisition is clearly also a "success". Assuming that far
fewer companies go public than are acquired (and make the founders wealthy),
their numbers are quite a bit low.

At any rate, those numbers are already HUGELY higher than I had thought.

~~~
fallentimes
I think issuing dividends on a consistent basis (applies to public & private
companies) & total profitability is a better measure of success than going
public or getting acquired. The latter two rely too much on someone else.

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AndrewWarner
Entrepreneurs who sit on their asses and never take a shot have a 0% chance of
success. Ignore the stats. Take your shot.

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swombat
Lies, damn lies, and Harvard Business School statistics.

~~~
goodgoblin
Its science!

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daveambrose
I submitted this a day ago:

<http://news.ycombinator.com/item?id=384801>

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sanjayparekh
There was a paper by the National Bureau of Economic Research from back in
2006 that had a similar study and findings. I dug through it and brought out
the relevant parts (relevant to me at least) here:

[http://www.sanjayparekh.com/skill-versus-luck-in-
entrepreneu...](http://www.sanjayparekh.com/skill-versus-luck-in-
entrepreneurship-and-venture-capital/)

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kirse
Web startups, 60% of the time they work every time!

~~~
jamess
I was going to go with 99% of the time they never generate enough revenue to
cover their costs, but each to their own I suppose.

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copenja
Which means if you dedicate yourself to starting two businesses you have a 57%
chance of succeeding at least once.

~~~
NyxWulf
Ok, I have no idea how you came up with 57%. Even if you add 18%+30% (which is
not mathematically valid) you'd only get 48%. How in the world did you get
57%?!

The real probability based on the article (according to my calculations) is
34.4%, which is actually much better than I would have guessed.

Here is how I came up with that.

The article states a first time entrepreneur succeeds at an 18% rate. And
someone succeeds at a 20% rate given they failed the first time.

P(First Time Success) = .18

P(First Time Failure) = .82

P(Success | First Time Failure) = .20

P(Second Time Success) = P(Success | First Time Failure) x P(First Time
Failure) + P(First Time Success)

0.344 = .18 + (.82 * .20)

In words: 18 percent of entrepreneurs will succeed on their first try. 82
percent will fail. Of that 82 percent that failed, if they try again, they
will succeed 20 percent of the time. To get a number from the original
population of first time attempts you have to multiply the 82 percent who
failed by the 20 percent who succeeded on the second try which results in
16.4%. That 16.4% is the percentage of the original population who tried on
the first try but did not succeed until the second try. The end result being
34.4% of the original population will be successful on their first _or_ second
try.

Hopefully that makes sense.

* edit to format the formulas a little better

