I wish this guy the best in improving his algorithm. If it really worked, it could do a lot of good. But the economy is so complex, I doubt he'll ever make the model more accurate than a coin toss. I predict the model will just make people overconfident in their investment decisions.
The Man Who Knows Whether Any Startup Will Live or Die
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Re: The Man Who Knows Whether Any Startup Will Live or Die
#22from the article: 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 dunno why but I can't stop thinking that tossing a coin could achieve the same goal :)
That only works if startups fail 50% of the time. If they fail more frequently, a coin flip would be wrong.
Re: The Man Who Knows Whether Any Startup Will Live or Die
#23"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
Not necessarily, as the distribution of startup returns is highly skewed and you don't know the correlation of his model prediction vs relative return.
Ie, if his model consistently predicts success of those companies deep in the right tail (ie, your Facebooks and Twitters), but is less correct about just 'mildly' successful startups, the algorithm will greatly outperform a coin flip.
Re: The Man Who Knows Whether Any Startup Will Live or Die
#24Ignoring 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…
There is a factor at play here, I think, and it's the age. Many investors are simply older and are more experienced individuals. I'm not even sure if their VC status matters here any more than their age.
(In a rather comical example, two youngsters want to put together another chat app with cool new smiley icons, then two VCs step in and ask: how are you going to monetize on smileys?)
Investors should definitely be viewed as part of the team - one, and two, age should also be taken into account. I wonder if Growth Science considers this as well.
Re: The Man Who Knows Whether Any Startup Will Live or Die
#25Too bad that the very best startups are always the outliars (aka without historical data).
Do have any data to back that up? It seems a blanket statement to call "the best" start-ups outliers. What defines "the best" startup?
Re: The Man Who Knows Whether Any Startup Will Live or Die
#26title: "The Man Who Knows Whether Any Startup Will Live or Die"
text: ""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..."
Which is not surprising... if the title was really true, this man would likely be richer than Warren Buffett at this point.
Re: The Man Who Knows Whether Any Startup Will Live or Die
#27I wish this guy the best in improving his algorithm. If it really worked, it could do a lot of good. But the economy is so complex, I doubt he'll ever make the model more accurate than a coin toss. I predict the model will just make people overconfident in their investment decisions.
Investing is anti-inductive; if his algorithm actually starts to be used in investment decisions, people will keep gaming it until it will no longer be a useful signal.
Re: The Man Who Knows Whether Any Startup Will Live or Die
#28I wonder if they use Bayesian logic, because they should.
I also suspect that even though the article does not disclose a lot, the major factor at play in their model is the market sizes. I'm pretty sure their online version would heavily rely on the industry/segment you select. In other words it's a business-plan-looking-good approach which in today's rapidly changing world becomes less and less relevant. So I'll remain skeptical about it.
Re: The Man Who Knows Whether Any Startup Will Live or Die
#29from the article: 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 dunno why but I can't stop thinking that tossing a coin could achieve the same goal :)
That only works if startups fail 50% of the time. If they fail more frequently, a coin flip would be wrong.
I stand corrected, you're right. I'm supposed to know better.
Re: The Man Who Knows Whether Any Startup Will Live or Die
#30Earlier quoted context omitted.
> 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!
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