Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

The Man Who Knows Whether Any Startup Will Live or Die

wired.com

Post reply on HN
Print view View original

11–20 of 60 posts

Re: The Man Who Knows Whether Any Startup Will Live or Die

#11

Post by adwf »

colanderman wrote: post #6

> According to the U.S. Bureau of Labor Statistics, about half of all businesses fail within five years. > He [...] thinks that even a model that’s only right about 50 percent of the time could help investors and entrepreneurs avoid particularly bad ideas ...does he have a bridge to sell me too? What am I missing? (One can simply predict "always succeeds" and will be right half the time.)

Because the current rule of thumb is that ~9/10 startups fail. If you can reduce that to a 50/50 bet, you've made quite an improvement.

Re: The Man Who Knows Whether Any Startup Will Live or Die

#13

Post by michaelochurch »

Ignoring the already-discussed issue of overfitting, I'm going to discuss something that surprises many, but shouldn't.

Using this process, he discovered some surprising things—most notably that a company’s team is only about 12 percent predictive of a company’s success.

I'm surprised that it's even that high. In the real world (e.g. outside of the VC-funded world) the team is important, because they're going to grow the company from scratch, and that requires getting more things right than wrong over 5+ years. On the other hand, if you're Snapchat, you have several investor-level people working to protect the company from its founder-quality problems and its own worst impulses, and the company will IPO or be bought before its cultural rot reaches a critical point.

The Valley's founder-quality problem creates a lot of awful corporate cultures, and it has dragged the status of engineers way down, and it's generally been bad for the world... but it doesn't kill businesses because the investors are able to keep enough of them on track to produce successes. The influence of VC "rocket fuel" and guidance is why a company can have terrible founders and still succeed.

Re: The Man Who Knows Whether Any Startup Will Live or Die

#14

Post by IgorPartola »

colanderman wrote: post #6

> According to the U.S. Bureau of Labor Statistics, about half of all businesses fail within five years. > He [...] thinks that even a model that’s only right about 50 percent of the time could help investors and entrepreneurs avoid particularly bad ideas ...does he have a bridge to sell me too? What am I missing? (One can simply predict "always succeeds" and will be right half the time.)

To be fair, "wrong" is not describing everything. If it has a lot of false negatives (says "fail" when startup succeeds), but very few false positives, that would really be worth something.

Re: The Man Who Knows Whether Any Startup Will Live or Die

#15

Post by mojuba »

adwf wrote: post #11
colanderman wrote: post #6

> According to the U.S. Bureau of Labor Statistics, about half of all businesses fail within five years. > He [...] thinks that even a model that’s only right about 50 percent of the time could help investors and entrepreneurs avoid particularly bad ideas ...does he have a bridge to sell me too? What am I missing? (One can simply predict "always succeeds" and will be right half the time.)

Because the current rule of thumb is that ~9/10 startups fail. If you can reduce that to a 50/50 bet, you've made quite an improvement.

Not really. What the article says is, the model would predict 50% of time whether a company will fail or not, which doesn't make sense, because 50% for a binary prediction (i.e. fail or not) is exactly nothing.

So maybe it's just bad or confusing wording in the article, the guy actually meant to say something else.

Re: The Man Who Knows Whether Any Startup Will Live or Die

#16

Post by tarkofski »

"He admits the models will never be perfect, but thinks that even a model that’s only right about 50 percent of the time could help investors and entrepreneurs avoid particularly bad ideas that, to the untrained eye, look like excellent opportunities."

He basically admits his model is no better than a monkey

Re: The Man Who Knows Whether Any Startup Will Live or Die

#18

Post by adwf »

mojuba wrote: post #15
adwf wrote: post #11

Earlier quoted context omitted.

Because the current rule of thumb is that ~9/10 startups fail. If you can reduce that to a 50/50 bet, you've made quite an improvement.

Not really. What the article says is, the model would predict 50% of time whether a company will fail or not, which doesn't make sense, because 50% for a binary prediction (i.e. fail or not) is exactly nothing. So maybe it's just bad or confusing wording in the article, the guy actually meant to say something else.

Yeah I'm going with confusing wording, I think he meant what I said above. Not to mention he could be referring to eliminating false positives, which is slightly different to finding true positives versus true negatives.

Re: The Man Who Knows Whether Any Startup Will Live or Die

#19

Post by falcolas »

tarkofski wrote: post #16

"He admits the models will never be perfect, but thinks that even a model that’s only right about 50 percent of the time could help investors and entrepreneurs avoid particularly bad ideas that, to the untrained eye, look like excellent opportunities." He basically admits his model is no better than a monkey

> He basically admits his model is no better than a monkey

Well, technically, a monkey with a coin to flip. "Heads this startup will succeed, tails it will fail"

Re: The Man Who Knows Whether Any Startup Will Live or Die

#20

Post by gerhardi »

falcolas wrote: post #19
tarkofski wrote: post #16

"He admits the models will never be perfect, but thinks that even a model that’s only right about 50 percent of the time could help investors and entrepreneurs avoid particularly bad ideas that, to the untrained eye, look like excellent opportunities." He basically admits his model is no better than a monkey

> He basically admits his model is no better than a monkey Well, technically, a monkey with a coin to flip. "Heads this startup will succeed, tails it will fail"

Now coin flip wouldn't be anything near 50% accurate, unless there is a world where more than a small fraction of startups survive!
Post reply on HN