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What if successful startups are just lucky?

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Re: What if successful startups are just lucky?

#141

Post by brudgers »

jxcole wrote: post #137
brudgers wrote: post #133

Earlier quoted context omitted.

If it were just luck then the companies rejected by YC should statistically perform as well as those selected for interviews which should perform as well as those offered spots in a given batch.

Sorry, not an expert and I have never been an entrepreneur so forgive me if I am misunderstanding, but doesn't YC give them money? In order for this statement to be true either (1) having startup seed money has no bearing on success or (2) YC gives the same money to people it rejects as to people it accepts.

The amount of capital provided by YC is trivial...a rounding error relative to the value of a successful company. But more relevant is that YC almost certainly has some meaningful data on the companies it rejects.

So PG's claim could very well be supported by proprietary information.

Re: What if successful startups are just lucky?

#143

Post by vacri »

pesenti wrote: post #88
pg wrote: post #71

All successful startups are lucky, but they're never just lucky. If they were, we could save ourselves a lot of work reading applications and doing interviews. We could just pick randomly instead. If we did that for one batch, you'd really be able to tell the difference, believe me.

In order for us to "believe you", you would need to test your hypothesis at least once - for example, by selecting a small number the startups you invest in at random and see how they fare compared to the other startups. Keep in mind that most stock pickers would respond exactly like you even though their choices are rarely (if ever) better than chance.

If I was to walk for the first time into your kitchen and tell you that your hotplate was turned on, would you not believe me until I'd also experienced your hotplate turned off? You would discount my previous experiences with hotplates, because maybe, just maybe, your hotplate is hot enough to boil water when it's unpowered?

The idea that the null hypothesis is the only source of information needs to die.

Re: What if successful startups are just lucky?

#145

Post by scott_karana »

Amadou wrote: post #93
FD3SA wrote: post #63

One important point to realize for the author is that games are not services, they are works of art. As such, you can't say this is an incredible game with the same objectivity as this is an incredible service . Ryzom was a great game, but MMOs are built on one thing: atmosphere. Blizzard made WoW precisely because WarCraft was its longest running and most popular brand to date. Blizzard already had a massive fan bas…

Don't regret making works of art. It is all that succeeds us when we leave this realm. Until someone turns off the hosting servers.

Why would anyone do that unless they were dead? :-)

Re: What if successful startups are just lucky?

#146

Post by [deleted] »

pg wrote: post #71

All successful startups are lucky, but they're never just lucky. If they were, we could save ourselves a lot of work reading applications and doing interviews. We could just pick randomly instead. If we did that for one batch, you'd really be able to tell the difference, believe me.

[deleted]

Re: What if successful startups are just lucky?

#147

Post by powera »

nwhitehead wrote: post #87
pg wrote: post #71

All successful startups are lucky, but they're never just lucky. If they were, we could save ourselves a lot of work reading applications and doing interviews. We could just pick randomly instead. If we did that for one batch, you'd really be able to tell the difference, believe me.

I would absolutely love to see a double-blind randomized experiment with controls for YC applications. In one batch, randomly and secretly assign CONTROL or EXPERIMENT to each application (in whatever proportion you are comfortable with). Of the CONTROL batch, do regular reviews. For the EXPERIMENT batch, randomly accept the same percentage of groups as the control. Then have people outside of the reviewers try to la…

So pg's years of experience getting better than random results is irrelevant and you'll only believe him if he does a long experiment (that would cost him lots of money if it's not just luck) to prove something he already believes?

Re: What if successful startups are just lucky?

#148

Post by jacques_chester »

minikites wrote: post #48
kristiandupont wrote: post #18

This has been on my mind lately as well, for some reason. That, and the point of this story http://sivers.org/horses which is basically that even after the fact, it's really hard to know anything[1]. I don't know if it's just from growing older but I feel a lot more humble when looking at peoples ideas and actions than earlier. I literally feel that I have no clue whether they will succeed or not whereas I used to qu…

Thank you for posting a link to that story. It reminds me a bit of Boethius: "It's my belief that history is a wheel. 'Inconstancy is my very essence,' says the wheel. Rise up on my spokes if you like but don't complain when you're cast back down into the depths. Good time pass away, but then so do the bad. Mutability is our tragedy, but it's also our hope. The worst of time, like the best, are always passing away."

Otherwise expressed as

   This too shall pass.

Re: What if successful startups are just lucky?

#149

Post by minikomi »

pg wrote: post #71

All successful startups are lucky, but they're never just lucky. If they were, we could save ourselves a lot of work reading applications and doing interviews. We could just pick randomly instead. If we did that for one batch, you'd really be able to tell the difference, believe me.

This makes me wonder if there's some kind of fantasy football for startups played behind the scenes by some people.

Re: What if successful startups are just lucky?

#150

Post by scarmig »

powera wrote: post #147
nwhitehead wrote: post #87

Earlier quoted context omitted.

I would absolutely love to see a double-blind randomized experiment with controls for YC applications. In one batch, randomly and secretly assign CONTROL or EXPERIMENT to each application (in whatever proportion you are comfortable with). Of the CONTROL batch, do regular reviews. For the EXPERIMENT batch, randomly accept the same percentage of groups as the control. Then have people outside of the reviewers try to la…

So pg's years of experience getting better than random results is irrelevant and you'll only believe him if he does a long experiment (that would cost him lots of money if it's not just luck) to prove something he already believes?

It's unclear whether he's getting better than random results. You're assuming the consequent.

It's well-known that the most successful startup in a group of startups is likely to earn more in profit than all the rest combined. We're here on HN talking about PG because YC has been the most successful of all incubators. However, there's always going to be one incubator that significantly outperforms all the others as a result of the distribution of startup success.

I don't know enough about how well PG's investments have done to make informed judgments, but only a very select few people are likely to have that info. I suspect those people have also done their due diligence to figure out if YC is a value-add compared to other incubators (it should be possible to do this without a convoluted double blind experiment), but anyone who's not them really can't say for sure that that's the case.

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