

Startup company failure rates are grossly misleading - jordanmessina
http://www.gabrielweinberg.com/blog/2010/05/startup-company-failure-rates-are-grossly-misleading.html

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mixmax
I also think the 90% figure is misleading - but I think it's too optimistic.
The number of people that quit their job and use their savings and/or family-
friends-fools money to start working on a startup and never get to a point
where anyone knows they even exist is huge. These people are never counted in
any of the official statistics, and don't talk much about their venture
because it's never nice to talk about your failures.

If you include this very large shadow group I'd argue that less than 10% even
make it to ramen profitability. You never hear about the failures - only the
successes. This skews the picture.

~~~
jacquesm
There is a second shadow group, those that are quietly successful, and rake in
the money while other (often smaller) parties are banging the drums as loud as
they can.

Some have really good reasons for doing this, such as protecting a niche
they've identified.

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webwright
I read the other day (HBR?) that 85% of venture-backed startups are dead
within 3 years. Say what you will about VC firms, but the companies they fund
tend to be a notch above the mean. And they are certainly the types who get
(and maybe even ask for) advice. Creating a business (the kind that supports
2+ founders) is HARD.

Thinking your chances are better because you're (by your OWN assessment)
smarter, more open to advice, and more hard working than the mean is a
dangerous attitude. If you walk into a room and say, "raise your hand if you
think you're an above-average driver", pretty much every hand goes up. 50% of
them are wrong.

Normally I love Gabriel's posts, but I think this one smacks of Mr. Rogers
("you're special because of who you are").

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algorias
50% would be wrong if you said above-median driver.

~~~
amalcon
Median is better than mean as a metric for "average goodness of driver". To
take a median, you only need a strict ordering; to take a mean, you need to
quantify. Any reasonable method of quantifying how good a driver someone is
will be heavily influenced by environmental factors. The worst driver on an
infinite, featureless plane would be involved in fewer accidents than the best
driver in, say, New York.

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dkuchar
all the data on this is fuzzy, and may always be fuzzy. what type of startup
it is is important, as well as the quality of the founders, none of which is
easily quantifiable. I think the reality is that you make your own odds. a
brilliant/determined/flexible founder can and will make something work.

I've always felt that what kills a startup are commitment/flexibility issues
based on factors outside of the business itself - your spouse doesn't support
you, you're only willing to live on peanuts for so long, children on the way,
etc.

but I don't look at startup success as determined by Idea X, sink or swim. If
you stay in the game long enough, and find a way to feed yourself in the
meantime, you'll find a way.

also, as in life, you alone determine what is and isn't success. for many
people, a lifestyle business that just allows you to work on your own terms
(not too far past ramen profitability) is enough.

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alex_c
I see this discussed now and then, and I never really see the point. I don't
care what a startup's chance to succeed is, I only care what MY startup's
chance to succeed is. And since these estimates vary so widely even when
they're completely general, they're not even that useful as a baseline.

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phreeza
Intuitively I would tend to agree, but being a physicist I would like to see
some more quantitative data on this.

Both the links from the article address different sets of companies than what
he is actually talking about, the one on tomuse.com is about the companies on
that famous graphic, which of course had already gained a certain amount of
traction, otherwise they wouldn't be on there. The other one covers a vast
superset of that, and also covers a much larger timescale than what I imagine
when I hear the 90% figure.

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vaksel
how do you define success?

I'd say even "breaking even + $30K/yr" does not apply to 90% of websites/web
businesses.

~~~
nazgulnarsil
no opportunity cost WRT a normal career path :)

~~~
vaksel
by that criteria you can create a wordpress blog, slap some adsense on it, and
make $10 a month with it.

~~~
jacquesm
And even that is harder than it seems.

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MisterWebz
Not really. Updating regularly with good content and some SEO and you could
easily get $10/month with adsense.

~~~
jacquesm
> Updating regularly

> with good content

> and some SEO

> could

That's what I said.

Updating regularly for $10 / month is a pretty hefty commitment, that's going
to work out to what ? $0.30 / hour ?

Good content requires writing skills and editing skills.

SEO requires SEO skills, you'll have to do that yourself because at $10 /
month you are not going to pass it off to someone else to do it for you.
That's a good bit of reading.

And finally, that's a 'could', not a 'will' or 'shall', it remains to be seen
if it will work for that particular case of content, update frequency and SEO
skills.

For less than $300 / month you're better off washing cars.

~~~
MisterWebz
You're making it sound like you need to be a professional writer to earn
$10/month. I _can_ earn that amount with maybe 20 minutes of work every 2 or 3
days, which, by the way, anyone can unless they're computer illiterate.

Whether you're better off washing cars is another argument.

~~~
codexon
30 / 2 * 20 / 60 / 10 that comes out to $2 per hour.

~~~
MisterWebz
So what's your point?

~~~
codexon
Well my point is that $2/hour is kind of low.

Whenever I see people giving these estimates about how their blog is earning
$5 a day without doing anything, they always seem to be low-balling the amount
of time they spent on it.

I've had multiple ad sense websites and they all net below $1/hour. I'm sure I
can improve that, but not enough to be a worthwhile part-time job.

I would be happy to have someone prove me wrong by helping me build a low
effort $10+/hour blog, but until then, I remain skeptical.

~~~
MisterWebz
So writing something for 20 minutes every 3 days (which some might even enjoy)
counts as a part-time job? It's like saying browsing on HN is a part-time job.
Or were you talking about the $5 a day? In that case, yes, you might have to
put a little more effort into it.

However, building a blog that earns $5 a day without doing anything(or let's
just say, doing a lot less than you're supposed to) is possible, but it's just
not ethical.

~~~
codexon
Let's not get hung up on definitions here. It doesn't really matter if
$10/month is a job or just a hobby to you. The important question, is whether
or not it is attainable with low effort as you seem to suggest.

I've built a few websites with pagerank 2-4 where I spent more than 20 minutes
every 3 days and enjoyed it. All of them have netted less than $10/month over
a span of 5 years.

This experience has led me believe it is not possible to even get to $10/month
without treating it as a job...unless you happen to enjoy blogging about acai
berry and prescription drugs.

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eande
"You're doing a software/Internet startup with low marginal costs."

I know this is where a lot of the media focus is on software and internet. But
I think there is still a good number of service or product related start-ups,
although I don't have actual numbers.

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ngsayjoe
Same kind of misleading advice old folks tell the young to study hard, get
good grades, work for a good company, and blah blah blah ...

