The statistics behind start up success

Startups: never have so many understood so little about the statistics of variance present in the outcomes of small samples.

People like to speak of 10x productivity, non-stop work and geniuses – but the reality is much less interesting. A large number of small teams working on many different problems will by definition have a great variance in outcomes just by random extraneous factors (also known as the law of small numbers and insensitivity to sample size).

via Startup School And Survivor Bias | Hacker News.

A lot of the advice is like Malcolm Gladwell’s Outliers – luck is random but you can increase your preparation so that you can respond when luck falls in your direction. In the case of start ups, it means trying many things – or in the terminology of Silicon Valley – “pivot quickly”.

Unfortunately the advice ends with a strong recommendation to engage in sex, age and ADA discrimination against workers:

Here’s my list of startup advice:

Be alive. Be male. Be young. Don’t have health issues. Be born in America or move there. Enter the cycle after a recession. Speak English. Enter a growing/new field where the level of competition is low and so is the sophistication of your competition. Surf cost trends down from expensive to mass consumer markets. Work bottom up – on small things. Be of above average intelligence. Have family support. Have a college degree.

One wonders what their lawyer thinks of them writing things like this in public?  This is on the web site of a business that funds start ups, openly admitting illegal discrimination practices. It’s become so deeply ingrained in Silicon Valley thinking that not one commenter to the article notices.

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2 thoughts on “The statistics behind start up success

    • You are welcome. Your observation here is also an important one that is typically missed:

      For example a child who has to work part time from the age of 15 until he graduates from college does not have the same time to “practice” a given task that he/she is fond of. All while another child that does not have to worry about that type of responsibility and can hone his/her efforts into said task. This can be seen in minority groups and poorer communities around the world. We are not saying that it is impossible to become successful under these conditions but it becomes more difficult, and there is more to overcome.

      That is an excellent insight.

      Like

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