Is it true 90% of startups fail, 10% succeed? What do the 10% do differently?

[poena]

I keep hearing this statistic, can some better define it for me? Like does success mean exit where founders get x dollars? Success seems arbitrary. And is that at 1 year mark?

I get that validating PMF greatly increases the odds of success, too much market saturation decreases odds, crappy hard to use Ai might be contributing to lower odds of success, not knowing how to market, not having a team that can execute…

But what do those companies have and do that the 90% failures don’t?

 

[johndaniels]

@poena B2C projects fail 10X to 100x more times than B2B projects

Non-Tech co-founders fail lot more than tech co-founders.

Co-founders who don't talk to customers before building anything fail lot more than Cofounders who talk to customers everyday.

1) Do B2B
2) Do SAAS
3) Spend all your time talking to customers,
4) Building their needs into a product.
5) iterate quickly.
6) Make, 'being-lucky' a habit, by increasing the surface area of luck.
7) Geographical talent density decreases CAC.
8) Think of the world, as a mountain of concentric circled valleys. Being at the top most valley, it is easier to broadcast, where CAC is a pull. Being at the bottom, CAC is a push. Push is costlier than the pull. Hence B2C is harder for most people as most of them are at the bottom of the hill starting out.

 

[caljreich]

@johndaniels B2C is go big or go home, and you typically need some network effect to be successful. B2B is more linear, the more you work on customer acquisitions(sales), the more customers you get. Borrowing from Nassim Taleb, B2B lives in mediocrastan while B2C lives in extremistan. More luck is required for B2C, but the payout it typically much bigger.

In my opinion, B2B SaaS is a giant bubble right now, valuations are not very high(7-8 figures) but still outrageous. Their customers are themselves, something like 50% of customers of YC companies are other YC companies, then there are companies that are yoloing money on BS products because interest rates/financial conditions have been at their best ever.

Most B2B are just wrappers around AWS service, and now more recently a wrapper around OpenAI API, but the cost is >10x. What are you arbitraging here? A couple months/weeks of dev work? Successful B2B companies will eventually need to have some solid IP to justify their cost and existence.

 

[rtljs26]

@johndaniels Could you please explain your last point?

 

[henry_]

@rtljs26 Luck is when opportunity meets preparation.

Alternatively, if you get lucky 1 in every 1000 things, then if you will get lucky more by doing more things.

 

[sandybear]

@henry_ Luck plays a bigger role in most startups than people want to admit. But like @henry_ says luck is where opportunity meets preparation. If you’re not prepared you’re almost certainly not going to get “lucky.” Sometimes it really is just doing more things (while being prepared) until you get an opportunity.

 

[johndaniels]

@rtljs26 1) Geographically, be where your early adopters are.
2) 'Early Adopters', need not fit one to one with customers' persona.
3) San Francisco or Cambridge, MA. Density of early Adopters is high thereby decreasing the CAC. New York included.
4) Early stage is a clear value judgement on people. What you build is almost immaterial.
5) Doing all the hustle in your 20s & 30s helps as a first time founders as you meet others who will become your customers from similar age group
6) Good brands - University, previous tech companies help.
7) Be near elite talent, every day. 'Everyday' part is very important.

 

[jannday]

@rtljs26 if you hit a home run in business (get lucky), the reward can be 1000000x (infinite upside). increase your chance of hitting that home run by setting ur self up to be at bat as often and frequently as possible. more reps, more shots, more at bats -> gets you to more home runs, and often times you’re just looking for that 1 home run that results in a bunch of other things falling into place. so you increase the surface area of luck with more reps, because more reps gives you more dice rolls, and eventually you’ll hit. that’s why lucky can seem luck based but in the long run you could argue it isn’t, because most people don’t even consistently show up to bat every day. it’s simple but not easy at all

 

[shelbyrenae92]

@jannday Agree with this I am my own annuity has been a wonderfully successful mantra for me .

 

[winepress777]

@jannday It’s only “luck” if you hit the right idea/people/sector early on. If you get “lucky” 10+ years into your profession, it’s not luck at all.

 

[dharmmy]

@johndaniels 1-5 are absolutely 1 million percent spot on correct

6-8 are contrived, sound-smart-without-saying-anything, vague nonsense.

 

[johndaniels]

@dharmmy Thank you

 

[brknbutrfly35]

@dharmmy Why do you think that?

Increasing the surface area of luck means being available to capture and execute when the opportunity appears, like don’t just go head first into an idea be open to what comes up. Not that you should just hop from idea to idea but being prepared enough to take advantage of lucky situations is key in my opinion. I am sure that’s what they meant as I’ve seen similarly worded statements before.

7 is saying that if you have high quality, talented people, lining up to work for you then you are more efficiently able to adapt, adjust, and adhere to client expectations and/or demands. This means you’re more likely to keep customers after the first interaction because you can make (and keep) promises that aren’t possible without that line of talent outside the door. I’m not a founder but as an employee this is very very true. I’ve worked for fantastic companies that can’t hire anyone worth a damn because of location and I’ve worked for companies that are garbage but have extremely skilled employees coving the gaps in the company because they were in areas people wanted to be in.

8 I do not understand, so you may be right, but I won’t say anything more on that unless OP is able to add clarity to his intentions/meaning with that bullet point.

 

[dharmmy]

@brknbutrfly35 I think that because they are at best in group jargon.

I mean, why say some guff like “increase the surface area of luck” when you can say plain English like “always be in a position to take opportunities when they arise”.

 

[dharmmy]

@brknbutrfly35 I’ve replied in another comment but I wanted to add this.

This is why: https://www.plainenglish.co.uk/component/content/category/24-campaigning-and-awards.html

I can’t explain it any better than those guys already do.

 

[fessjoz]

@johndaniels B2B SaaS is becoming less of a venture business and more of a commoditized formula business. Higher chances of success, but low probability of solving our civilization’s most pressing issues or being something that won’t exist unless the founders make it happen.

 

[kreative333]

@fessjoz Yep, thanks for reminding me I'm looking to change education (b2c, mostly) not just because I'm a gambler (), but mostly because I want to solve a problem many people have, not just a few wealthy ones

 

[taepdec]

@johndaniels Noob here. What’s CAC?

 

[chrissum]

@taepdec Customer acquisition cost

 

[taepdec]

@chrissum Appreciate it!