
YouNoodle Is A Terrible Idea - epi0Bauqu
http://www.altgate.com/blog/2008/08/younoodle-is-a.html
======
swombat
I am naturally skeptical of unknown people asking for details that belong in
the business plan. If you're a potential investor, I don't mind sending you
the plan, and without an NDA, but for random sites to ask for such details
just seems wrong. Moreover, I think that any business owner who gives in to
such requests is either desperate or stupid.

I applied to thefunded.com at some point, and they asked for those kinds of
details too. I'm not quite sure what they offer in return for all this
confidential information, and actually, the fact that they ask for it and that
their members have all given it kind of rules them out as a community worth
belonging to, imho - full of "entrepreneurs" who are either desperate or
stupid.

Would love for someone to contradict me and let me know what I've missed out
on by not sending our business plan to be reviewed by unknown parties at
thefunded.com.

~~~
sdpurtill
Hey guys, Sam from YouNoodle here. The research and development project behind
this was the biggest of its kind ever conducted. If you want to learn more
about predictive analytics you can read some of the well-informed recent
articles about Startup Predictor.

Harvard Business Publishing:
[http://discussionleader.hbsp.com/anthony/2008/08/younoodle_i...](http://discussionleader.hbsp.com/anthony/2008/08/younoodle_innovation_through_a.html)

The Telegraph:
[http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/...](http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/08/07/cnent107.xml)

American National Public Radio: <http://tinyurl.com/625gva>

Venture Beat: [http://venturebeat.com/2008/08/07/younoodles-startup-
predict...](http://venturebeat.com/2008/08/07/younoodles-startup-predictor-
wants-to-tell-you-how-much-a-company-is-worth/)

We are listening to your privacy concerns and will be making changes to how we
convey our measures to protect you. Realize you're giving us sensitive
information and we take our role in handling that very seriously. Appreciate
any further comments or feedback you guys provide as we are iterating fast on
this.

~~~
aneesh
From the Harvard Business Publishing Article:

> "Before the 1950s, lending depended on the wisdom and judgment of loan
> officers. Then, a company called Fair Isaac developed a way to use four
> simple variables to develop a credit score that reliably predicted the risk
> of lending to an individual."

That is a very misleading analogy. YouNoodle is not the present-day analog of
Fair Issac. This goes back to the idea that while it's very difficult to
predict random events individually, you can predict them well _in aggreggate_.
Fair Issac isn't really betting on customer X defaulting on a loan -- they're
really betting on _a thousand customers like X_. Same with insurance premiums.
A model won't be a great predictor of one person, but if you have hundreds of
thousands of customers, you can have a much more accurate estimate. This is
the law of large numbers. For a simpler example, you wouldn't want to bet on
the outcome of a single coin toss, but it's a pretty safe bet that if you toss
a (fair) coin a million times, the heads percentage will be _very_ close to
50%.

Fair Issac played the game by lending to lots of customers. _YouNoodle is
trying to play this game for each individual case._ They're bold enough to
mathematically estimate the value of one individual startup, and say that they
have some confidence in it. It's the analog of making a loan to 1 person,
insuring 1 person, or betting on a single coin flip. Probability tells you
this is very risky. VC don't make thousands of bets like insurers or banks do.
For the bank, my individual outcome doesn't really matter to the big picture.
VCs on the other hand invest in a very small number of startups - each startup
matters.

~~~
dkokelley
I haven't used their site, and I don't have a startup to use with it (so if
this is exactly what they do then I apologize), but a tool that states "20% of
startups in your industry with similar circumstances succeeded. Here are some
ways you can increase your percentage." and then shows different ways that a
startup could increase its chances based on the statistical data would be
interesting to me as a startup founder, and I think it would be helpful to VCs
and others as a pre-screening tool for their investments.

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aneesh
Even as a self-proclaimed math nerd, I'll be the first to admit that certain
things just don't lend themselves well to predictive models. You can probably
predict success _in aggregate_ , but the individual cases are really tough to
predict in situations where a lot of luck is involved (dating, starting a
company, etc). Stop trying to find a mathematical formula for the success of a
startup. It's hard to find a good one.

I think they're overestimating the valuations. Most startups' valuations will
go to ZERO within 2-3 years, and yet YouNoodle tells you anyone is worth
millions. I played around with their numbers: a startup that hasn't done
anything yet, and that the founder is working on 2 hours/wk gets a valuation
of over half a million dollars.

~~~
kirill
Aneesh, it's hard to provide an objective experience if you use fake data.
Nevertheles, based on the data we analyzed, a 500k valuation was the most
likely outcome for the profiles of entrepreneurs you entered, working on a
startup for approx 2 hrs/week. Remember that this is a 3-year prediction and
the hours is relevant to that initial timeframe pre-funding. Many of those
teams will have increased their hours/week during those three years; and 500k
is an indication that they are most likely to achieve an angel round within 3
years, but not much more.

~~~
aneesh
> "a 500k valuation was the _most likely_ outcome for the profiles of
> entrepreneurs you entered" (emphasis added)

Exactly my point. Given 100 startups with that profile, you can say with some
confidence that the _average_ outcome will be 500k. But you're ignoring the
distribution! It's very risky to make the bet that _one individual startup_
will be worth 500k.

I'm not saying you should make better predictions. I'm saying that it's a very
risky game to make mathematical predictions on individual valuations at all.

Most machine-learned models aren't _better_ than humans, they're just much,
much faster than humans. It's a bold bet you're making if you're trying to be
better than humans at predicting valuations. Models don't allow for
intangibles like "killer sales ability" that may not be reflected in your
degree or past job, but that a VC can pick up on 5 minutes after meeting you.

See my reply to Sam's post here: <http://news.ycombinator.com/item?id=272015>

Edit: Someone put in the relevant numbers for WebVan or Pets.com. I think
those two failed within ~3 years.

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aofstad
I think that if it were this easy to predict the success of a startup, VCs
would have figured this out a long time ago. Applying for funding would
involve filling out a simple form of variables to be plugged into a magical
equation.

I don't think that this site accounts for the high probability of FAIL
inherent in any startup. Probably just assumes that the company will continue
along the growth path of previous SUCCESSFUL startups that were included in
their historic data.

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ericb
YouNoodle failed to use BCC when announcing the site to their beta signup list
(I was curious...). There were about 120 other people on the email some of
whom immediately started Replying to All. Ugh.

Thankfully, I used my gmail account.

~~~
staunch
Not exactly confidence inspiring.

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grag
I get the feeling that the startup predictor is just a marketing gimmick to
garner some press and that more useful services will be coming... It's
certainly not a bad way to get people to talk about their company and register
on their site. If / when they do come out with a more useful service they'd
likely to get some good press simply because they've already been on the
blogosphere radar.

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13ren
Has anyone managed to get a fail out of YouNoodle (whether for a present, past
or hypothetical startup)?

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tlrobinson
100% gimmick. I wouldn't take investment from anyone who used my company's
YouNoodle rating as a guide, and I doubt there are any legitimate investors
who would ever do so. So what's the point? Entertainment?

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adrianwaj
I would love YouNoodle's startup predictor to work great.

Why not? It'd allow the cream to rise to the surface.

Despite the publicity surrounding startup investment, it can be really hard to
secure a first meeting and at least this is another way to attract investors
who would otherwise not know about, or look passed someone.

