Black Swan Farming • Hacker News Board

Re: Black Swan Farming

#241

Post by JoelMarsh » Mon, Sep 10, 2012, 10:27 AM UTC

Great essay. Enlightening, actually. A few somewhat provocative questions:

If you could theoretically "randomize" start up ideas, founders, business models, and every other primary ingredient in current "start-up theory", like a giant multivariate test... would we not see similar results to now?

Or similarly, if you closed your eyes and invested "blindly" how would you expect your results to differ (ROI-wise)?

It seems like investing results more closely resemble a lottery than a predictive model, based on your description.

Sort of a scary thought: what if current investment criteria (and therefore start-up goals) are largely irrelevant?

For example, IQ is distributed in the same way as winners and losers in start-ups. What if that is a key factor,(purely hypothetically, of course)?

In theory, shouldn't "good criteria" for investing generate progressively better results within smaller and smaller samples?

Re: Black Swan Farming

#242

Post by DeepDuh » Mon, Sep 10, 2012, 10:35 AM UTC

adrianhoward wrote: post #231

bambax wrote: post #223

Earlier quoted context omitted.

Although I predicted the iPod would fail (...!!), I strongly disagree with you about Dropbox. I dreamed about something like Dropbox before Dropbox existed; I always have had many different machines that needed to be "synchronized" by hand. I carried around hard drives, and Iomega disks and whatnot, and used "Beyond compare" to sync all of those and it was a nightmare. The recommendation model of Dropox had nothing t…

DropBox is awesome - and I use it myself :-) Before I used it DropBox was just another file sharing/syncing software. One of a whole stack of 'em that all seemed to suck in one way or another. I'm sure that they all promised that they would be bringing cloud file storage to the masses as part of the initial pitch.... and I tried them all because, like you, I wanted this service before any of 'em existed. Why did Drop…

Was it obvious? I always thought DropBox won because of its built-in viral marketing through sharing and the streamlined installation + web frontend. But was that before or after investors began pouring money into it?

Re: Black Swan Farming

#243

Post by bambax » Mon, Sep 10, 2012, 10:36 AM UTC

adrianhoward wrote: post #231

bambax wrote: post #223

Earlier quoted context omitted.

Although I predicted the iPod would fail (...!!), I strongly disagree with you about Dropbox. I dreamed about something like Dropbox before Dropbox existed; I always have had many different machines that needed to be "synchronized" by hand. I carried around hard drives, and Iomega disks and whatnot, and used "Beyond compare" to sync all of those and it was a nightmare. The recommendation model of Dropox had nothing t…

DropBox is awesome - and I use it myself :-) Before I used it DropBox was just another file sharing/syncing software. One of a whole stack of 'em that all seemed to suck in one way or another. I'm sure that they all promised that they would be bringing cloud file storage to the masses as part of the initial pitch.... and I tried them all because, like you, I wanted this service before any of 'em existed. Why did Drop…

We obviously agree on everything... except the "Dropbox promise". I don't think Dropbox had any competitor when it was founded and I'm not sure it has any now.

Dropbox is not another file sharing software; the application form to YC doesn't even mention file sharing:

http://dl.dropbox.com/u/27532820/app.html

Dropbox isn't even about cloud storage.

Dropbox synchronizes your files between your different computers -- silently, automatically, without you doing anything except turn those machines on.

Nobody did this before Dropbox and still nobody is doing it now (except maybe AeroFS, which is much more difficult to setup and use -- but certainly not iCloud or any other "solution" that is restricted to one OS or company, and certainly no backup solution either).

That's why it was a fantastic idea... which has since been coupled with a brilliant execution, yes. But the idea itself was amazing.

Re: Black Swan Farming

#244

Post by noiv » Mon, Sep 10, 2012, 10:39 AM UTC

Paul has described the problem very well and he also made a habit of insisting a startup needs to solve a real problem.

Now, I wonder whether the understanding of both aspects is enough to put him in a position to recognize founders on the other side of the table capable to provide a solution to random black swan farming?

Eventually more interesting is the question what would be his best guess from which field of science he expects useful outcome enhancing the criteria to make more educated decisions on founders?

Am I alone with the impression the essay sounds stucked?

Re: Black Swan Farming

#245

Post by marcofloriano » Mon, Sep 10, 2012, 10:49 AM UTC

Investors like to think they can predict the Market. It happens in Forex, Stock Market, Business ... and Startups. Nobody can predict the human nature. If i was the guys behind YC, trying to figure out new investments, i would try to measure precisely one thing: the passion of the founders for their startups. Because everything else is just luck.

Re: Black Swan Farming

#246

Post by patio11 » Mon, Sep 10, 2012, 10:54 AM UTC

lsc wrote: post #203

patio11 wrote: post #149

Earlier quoted context omitted.

It's public knowledge which I picked up in being an early customer and fan of the company. I think much of the story is summarized here: http://37signals.com/founderstories/slicehost

man, 0-20,000 users in less than 3 years? damn. I've been at it for what, seven now? eight? and I've achieved 1/10th that. Even if we only count from the time when I kinda figured out the hardware end of things, 2007 or so, that's still five years.

Congratulations on your success. The overwhelming majority of people will never run a hosting company. Of those that do, many of them will be unable to sustain it to 2k customers and run it profitably for half a decade.

With regards to the new knowledge that 20k customers is possible, that just gives you something to shoot for next, right? There's something you can do that starts at 2k users today and gets you to 20k users. You know that is possible, because other people have done it. So work on that. (Knowing from previous conversations that you're rate limited on customer acquisition by processes other than marketing I'd suggest, as the Slicehost guys did, "automating the "%#)(% out of everything" and then focusing on customer acquisition as your primary job, if that is a huge priority for you.)

More broadly: philosophically, if we consider ourselves failures for not doing things other people have done, then we'll all be failures essentially all of the time. That strikes me as an unhappy bit of philosophy to adopt then.

Re: Black Swan Farming

#247

Post by cperciva » Mon, Sep 10, 2012, 11:00 AM UTC

thaumaturgy wrote: post #226

cperciva wrote: post #221

Earlier quoted context omitted.

I can't tell here if you're just off-hand mentioning something you like about HN, or if you're also suggesting that it's something other people should like too. The point I was trying to make was that I would be disappointed if what pg clearly saw as a problem was "fixed", because for me it's a feature.

For you it is, for others it is not. You would be disappointed, others would be contented. (I'm not picking on you btw, I have a tremendous amount of respect for you. But I don't think your desire for debate on what you write is suitable justification for other people putting up with the same, especially when it's discouraging them from writing.)

I claim no privileged position for my preferences. I was just stating what they were. :-)

Re: Black Swan Farming

#248

Post by ryanbrunner » Mon, Sep 10, 2012, 11:07 AM UTC

bambax wrote: post #243

adrianhoward wrote: post #231

Earlier quoted context omitted.

DropBox is awesome - and I use it myself :-) Before I used it DropBox was just another file sharing/syncing software. One of a whole stack of 'em that all seemed to suck in one way or another. I'm sure that they all promised that they would be bringing cloud file storage to the masses as part of the initial pitch.... and I tried them all because, like you, I wanted this service before any of 'em existed. Why did Drop…

We obviously agree on everything... except the "Dropbox promise". I don't think Dropbox had any competitor when it was founded and I'm not sure it has any now. Dropbox is not another file sharing software; the application form to YC doesn't even mention file sharing: http://dl.dropbox.com/u/27532820/app.html Dropbox isn't even about cloud storage. Dropbox synchronizes your files between your different computers -- si…

I'm sure there were companies that were doing the same thing as Dropbox at the time that Dropbox was released. To name one example - Microsoft's SkyDrive (apparently called Windows Live Folders at the time), released either around the same time or prior to DropBox, depending on your definition. It's been a while since I've used it, but I remember the functionality being roughly equivalent between the two products (in that they fulfill the base use case of silent synching between two computers)

That isn't to say Dropbox didn't blow them out of the water in regards to execution, but it wasn't an idea that was completely without precedent. Ideas rarely are, even if they seem like that in retrospect due to one company out executing everyone to an insane degree.

Re: Black Swan Farming

#249

Post by simonh » Mon, Sep 10, 2012, 11:08 AM UTC

adrianhoward wrote: post #202

bambax wrote: post #195

Earlier quoted context omitted.

Is it really that counter-intuitive, though? A sample of two "rock stars" doesn't seem to be enough to draw conclusions from it. For instance, whereas Airbnb can admittedly be seen as a questionable idea (but not outright bad), Dropbox (the idea, before implementation) sounds like a very good idea. Maybe not a $7b idea, but still very good. Of course, among the YC funded startups, there may be a lot of ideas that sou…

Dropbox (the idea, before implementation) sounds like a very good idea. Maybe not a $7b idea, but still very good I don't think so. My first encounter with DropBox was very similar to my first encounter with Google... but it was "Oh look - another way to share files" rather than "Oh look - another search engine". Or indeed many, many people's reaction to the release of the first iPod ("Oh look - another mp3 player").…

The reason dropbox wasn't an obvious winner was that it had so few features.

"I can't sync more than one folder? It syncs everything to every device? (not anymore). It doesn't use WebDAV? Oh well, at least it's simple. I'll just use it until something better comes along."

And they win.

Of course they have plenty of features, an API and much more flexibility that before if you want it, but none of that complicate the core function - a directory that syncs.

Re: Black Swan Farming

#250

Post by ryanbrunner » Mon, Sep 10, 2012, 11:19 AM UTC

pmarca wrote: post #88

mixmax wrote: post #18

There's a pretty interesting lesson for potential YC candidates, particularly the ones that get turned down, here. When you interview a startup and think "they seem likely to succeed," it's hard not to fund them. And yet, financially at least, there is only one kind of success: they're either going to be one of the really big winners or not, and if not it doesn't matter whether you fund them, because even if they suc…

> If your startup ends up making you a million dollars a year you will probably be very happy and rightfully call yourself a success. I see this a lot from various corners of the startup ecosystem, particularly 37 Signals and their followers. The problem is that it's not really true, by which I mean there are not very many examples of it begin true, and there is an excellent reason to believe that it may never be tru…

Isn't this article implying that it's awfully hard to find success in the VC model as well? With the traditional funding model, you're either an AirBnB, DropBox, or someone who ultimately isn't going to make much of a lot of money at all. If you're lucky, you'll come out of it with something that maybe makes up for the blood and sweat equity you put into the company for little or no pay.

Ultimately, I'd agree that successfully getting a 37 signals, Balsamiq, or Fog Creek off the ground is difficult, but compared to the VC model of "DropBox or bust", it seems like a much more attainable goal.

I think the main lesson is that there's really no free lunch in the startup world - we've all heard it a hundred times before, but there's no silver bullet that guarantees success, or even a decent chance at success in this business. It's not quite the lottery, but a 1 in 50 shot probably isn't unrealistic odds.