

Warnings for 1st time Entrepreneurs - tylerhwillis
http://www.realistadvisory.com/2009/05/7-warnings-for-1st-time-entrepreneurs.html

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nkohari
This article was absolutely terrible. Several points sound more like the
author is playing buzzword bingo, and the rest are unsupported by the
explanation. Take #1, for example. How does the number of business plans that
received funding relate to a 98% chance of losing your capital investment?

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tptacek
I don't know, I agree that the evidence presented is sketchy, but the number
sounds right. You're certainly far more likely to fail than succeed.

I didn't think the article was terrible at all.

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jasonlbaptiste
This is honestly the worst article I've ever had the displeasure of reading on
Hacker News. I'm all for realism, and the odds are always against us. That's
fine, but he's basically eliminating everything he can. He's more pessimistic
than "realist". Honestly, if you want to read about pitfalls and things to
do/not do as first time entrepreneurs there are hundreds of better articles
that have been posted here.

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tptacek
So the reason this is the worst article you've read here is that it's too
pessimistic?

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tptacek
Couldn't agree with #4 (Exorcise BigCo Demons) more, haven't seen it written
about much, feels like a fresh point worth considering.

Whole startup org charts (or use-of-proceeds slides) are based on the same
stale shake-and-bake playbook, which is probably why so many of the resulting
companies have the obligatory 4-person marcom team with the VP/Marketing, the
Dir/Marketing whose job depends on managing booths at conferences, the PR/AR
person who adds the obligatory budget line item for Gartner and Schwarz
Communications, and "Sr. Marketing Manager" whose job it is to project manage
the people that team outsources copywriting to.

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jack7890
I disagree with all the negative responses here--I think this is an excellent
article with useful warnings. Yes, the 98% datapoint is random and
unsubstatiated, but I think the author is using it more figuratively than
literally. Most startups fail. That's all he's saying.

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hnbw
What is he talking about in #5? I simply have no idea what he means. Can
anyone explain?

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tptacek
He's saying that consumers are less likely to pay you for web product features
than he thinks you think they are. He's also saying that he thinks the way to
get money from small business customers is to have a quantifiable value
proposition: he thinks you need to be making them money in a way that you can
clearly spell out in terms a company controller would believe.

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hnbw
Thanks.

If that's what he meant, then I have to agree with a few of the others -- it's
a terribly _written_ article even if the points are good. I appreciate the
explanation!

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unbannable
98% chance of failure?

My understanding is that the 5-year failure rate of new businesses is about
40-50%. Given that an average 2x-year-old has a much lower chance of being
successful enough in his first couple of jobs to (a) stay there for 5 years
and (b) have it still be worth coming to work every day, this isn't a bad
failure rate.

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tptacek
Fewer than half of all businesses started last time this statistic was taken
will survive four years (presumably the number is lower during this business
cycle). But simply being alive (or even nominally profitable) isn't the same
thing as "success". It's just "not failure". What are the numbers on
successful exits? Remember, we tend to read only about the successes; when we
read about "failures", it's more often than not the failures of those
companies lucky enough to have gotten on our radar before.

In any case, the article isn't making a case for "not doing a startup". It's
making a case for being realistic about outcomes. This is a good thing. If
you're going to fail, fail fast so you can move to the next thing.

