The 99% (of startups) • Hacker News Board

Re: The 99% (of startups)

#161

Post by base » Thu, Dec 03, 2015, 2:50 PM UTC

jmathai wrote: post #145

noname123 wrote: post #29

Would love to see a series of good curves: (1) of all startup's started by people who working in the industry, quit FT jobs to do startup or put in serious moonlighting hours in startup; total earnings - opportunity cost, annualized: (total income from startup - opportunity cost of hours worked on startup) / years spent Maybe this data-set should be split further into bins of founders whose last title prior to startu…

Dug up a post of mine from 2 years ago [1]. I bootstrapped for 14 months without salary and then took a pay cut for 2 years. Here are my numbers. I blogged about this as well [2]. Loss of salary for 1 year, 2 months Does not include loss of 401k match or ESPP -$140,000 Successful Kickstarter @ $25k +$20,000 8 week contracting project @ 20hrs / week +$16,000 Living expenses for 14 months (savings/stocks) -$70,000 Post…

Your living expenses don't belong in those calculations. In both cases that would be money spent. In case of a startup if you have less expenses they would even offset the total.

Re: The 99% (of startups)

#162

Post by cunac » Thu, Dec 03, 2015, 2:50 PM UTC

Estragon wrote: post #127

6stringmerc wrote: post #70

Earlier quoted context omitted.

The way you phrase this reminds me of what I studied happening in the hedge fund world, in that some of the 'top performer' funds only out-performed the market due to insider trading. Galleon (Raj - convicted), SAC (sanctioned), and probably a handful more that got spooked out of the avenue of enrichment. It almost seems - almost - like there may be a similar insular community whereby those who feel like piling in wi…

It's fascinating to me that many startups put their crown jewels on github, a company with an inexplicably high valuation due to investments from some of the most successful VC companies. Don't they worry about exactly the kind of insider trading you're talking about, or worse? Same goes for slack.

it is fascinating that people think most of the code from startups is crown jewels. If you look closely 99% of code is not hard to reproduce it is just time consuming to write but I doubt you will find some breakthrough ideas. Sure you might find some cool/impressive thing here and there but especially at early stages nothing there except number of hours put in. I know people tend to glorify things they write but mostly it is not that stellar achievement what they did.

Re: The 99% (of startups)

#163

Post by Cshelton » Thu, Dec 03, 2015, 3:31 PM UTC

mahyarm wrote: post #125

refurb wrote: post #99

Earlier quoted context omitted.

Berkshire doesn't just buy stock. It buys a controlling interest and influences the way the company is run.

VC investors tend to influence the company too.

While true, the difference between the decisions the board of a company makes and the 'investors' is pretty significant. VC investors are not there to act as a board of directors. Where as many private equity/takeovers deals usually end up replacing many people on the board and executives.

Re: The 99% (of startups)

#164

Post by fweespeech » Thu, Dec 03, 2015, 4:01 PM UTC

coffeemug wrote: post #75

fweespeech wrote: post #74

Earlier quoted context omitted.

> The question isn't whether VCs are brilliant according to some absolute metric. The question is whether they deploy capital better than random chance. The numbers show that top ten VCs consistently do. Does it? If you have enough gamblers in a high stake casino where the house hasn't stacked the deck, some of them will seem to consistently win in comparison to the other players. Similarly, a very small percentage o…

This analysis breaks down if the top ten outperform the market after you've started watching them. If that's the case (which for top ten VCs it is), the math suggests it isn't a "million quarters" situation.

> This analysis breaks down if the top ten outperform the market after you've started watching them. If that's the case (which for top ten VCs it is), the math suggests it isn't a "million quarters" situation.

Actually, it doesn't. The top 10 VCs aren't static and unchanging.

Re: The 99% (of startups)

#165

Post by vonklaus » Thu, Dec 03, 2015, 4:27 PM UTC

smt88 wrote: post #45

jacquesm wrote: post #42

Earlier quoted context omitted.

I think that would make for very depressing reading. It would be comparable to making a documentary about everybody who ever played the lottery. For the most part you'll see people that lost. Year after year after year. And then there would be the lottery winners. A couple of them. The middle is quite narrow, it's good money for a relatively large number of people but it is still a very small fraction of the total nu…

Thank you for being (seemingly) the only person on HN who understands that startups are a lottery. A very, very expensive lottery.

That is the wrong wy to think about it. If you want to take an analogy, and I still dislike it but if pushed, I would call it sportsbetting.

There is a degree of chance (lets stop using luck) about both start ups and sportsbetting. They depend on forces outside of one's control.

However, a lottery mathematically dictates that you will have a poor outcome of winning and all you can do is increase your probability by buting tickets. A startup has more control over how it operates.

A gambler can watch tapes and use past performance to find a perceived mismatch between the spread or gaming lines, and their appraisal.

Many gamblers are unsuccessful. However there is a reason that the same couple guys seem to make it to the end of the world series of poker every year[0].

Peter Theil discusses it in depth in You're not a lottery ticket[1]. Startups are risky as hell and even smart people with good ideas fuck them up. However, smart people with good ideas only rarely win the lottery[2]

[0]amnended qoute from rounders.

https://m.youtube.com/watch?v=g7VMjutSNHk

[2]http://m.nydailynews.com/news/crime/mit-students-scammed-mas...

Re: The 99% (of startups)

#166

Post by known » Thu, Dec 03, 2015, 5:02 PM UTC

"No one can make you feel inferior without your consent." --Roosevelt

Re: The 99% (of startups)

#167

Post by ronlkah » Thu, Dec 03, 2015, 5:39 PM UTC

coffeemug wrote: post #68

downandout wrote: post #64

This gives an interesting glimpse into the prognostication abilities of supposedly brilliant VC's. It also shows the the near-impossibility of cashing in private company shares, at least through VC's. In addition to this story, the Sony hack revealed that Evan Spiegel of Snapchat wanted to cash in about $40 million worth of shares just after he spurned Facebook's $3 billion offer. He was also roundly rejected. Had so…

> This gives an interesting glimpse into the prognostication abilities of supposedly brilliant VC's. The question isn't whether VCs are brilliant according to some absolute metric. The question is whether they deploy capital better than random chance. The numbers show that top ten VCs consistently do.

A November 2015 Cambridge Associates study: "The widely held belief that 90% of venture industry performance is generated by just the top ten firms is a catchy but unsupported claim" http://www.cambridgeassociates.com/our-insights/research/ven...

Re: The 99% (of startups)

#168

Post by Maultasche » Thu, Dec 03, 2015, 6:20 PM UTC

Androider wrote: post #80

coffeemug wrote: post #68

Earlier quoted context omitted.

> This gives an interesting glimpse into the prognostication abilities of supposedly brilliant VC's. The question isn't whether VCs are brilliant according to some absolute metric. The question is whether they deploy capital better than random chance. The numbers show that top ten VCs consistently do.

Take 1000 people, have each predict a coin flip 10 times. The top 10 players will have predicted way better than random chance would have you believe. Why several of them are even 10 for 10, they must have special prediction powers! ;) Grow the player base, increase the number of predictions, you'll end up with some real super-stars who just go on winning. They'll probably write books and lecture about their techniqu…

Some people can be incredibly lucky despite a lack of skill. Statistically, it's unlikely, but given a large enough sample size, someone will have extraordinary success purely by chance.

The Romans considered luck to be an important trait. When regarding military leaders, they considered luck to be even more important than skill. It meant that the gods favored the lucky person.

Julius Caesar was a skillful general, but he was even more admired for his incredible luck. There were many times where he was almost beaten, yet he got some lucky break that allowed him to be victorious.

Re: The 99% (of startups)

#169

Post by Estragon » Thu, Dec 03, 2015, 9:18 PM UTC

cunac wrote: post #162

Estragon wrote: post #127

Earlier quoted context omitted.

It's fascinating to me that many startups put their crown jewels on github, a company with an inexplicably high valuation due to investments from some of the most successful VC companies. Don't they worry about exactly the kind of insider trading you're talking about, or worse? Same goes for slack.

it is fascinating that people think most of the code from startups is crown jewels. If you look closely 99% of code is not hard to reproduce it is just time consuming to write but I doubt you will find some breakthrough ideas. Sure you might find some cool/impressive thing here and there but especially at early stages nothing there except number of hours put in. I know people tend to glorify things they write but mos…

If I was a VC assessing a firm, I would love to get a look at their git repository, and not just for due diligence. I would know where their demos are inadequate, which would be very useful for bargaining.

Re: The 99% (of startups)

#170

Post by noname123 » Thu, Dec 03, 2015, 9:22 PM UTC

jasonkester wrote: post #131

noname123 wrote: post #29

Would love to see a series of good curves: (1) of all startup's started by people who working in the industry, quit FT jobs to do startup or put in serious moonlighting hours in startup; total earnings - opportunity cost, annualized: (total income from startup - opportunity cost of hours worked on startup) / years spent Maybe this data-set should be split further into bins of founders whose last title prior to startu…

You'll want to divide again by hours worked per year, since that's where the true payoff comes from running your own business. Imagine a SaaS product that brings in just shy of a single Bay Area dev salary. Is that a success for a single founder who has put six years into building it? Of course not, right? But what if said single founder now needs to put in roughly 100 hours per year to keep that business ticking alo…

Thank you jasonkester, it is indeed very complicated because to be nitpicky, you have to consider the growth or decay of the said established SaaS business over the years, the probability of the next SaaS business taking off; which I'd go out on a limb and say is highly variable but assume the median case to be: steady of loss of income from established business (e.g., BingoCard Creator) and very high risk/reward of next business in pipeline taking off.