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Stats and factoids on entrepreneurship success and failure

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sixdisciplines.com pulled a few high level takeaways from this Harvard Business School study on entrepreneurship.

I've included them below:

-"All else equal, a venture-capital-backed entrepreneur who succeeds in a venture (by our definition, starts a company that goes public) has a 30% chance of succeeding in his next venture."

-"By contrast, first-time entrepreneurs have only an 18% chance of succeeding and entrepreneurs who previously failed have a 20% chance of succeeding."

-"Oddly enough, a new entrepreneur is more likely to get funded by a VC firm (compared to a tried and true one.)"

-"Starting a company at the right time in the right industry is a skill."

-"Entrepreneurs with previous successes can get their hands on more capital and services if suppliers think they are persistent performers."

-"If a startup is founded by previously successful entrepreneurs, then the VC firm doesn't really matter."

-"Most entrepreneurs get their ideas - from former employers. (Make sure employees sign those non-competes!)"

-"While 45% of first-time ventures receive initial venture capital funding at an early stage, close to 60% of entrepreneurs receive initial venture capital funding at an early stage when it is their second or later venture."

Starting a company at the right time in the right industry is a VERY hard skill to learn.

Non-competes are mostly illegal in California, and in fact trying to have one in a contract will generally invalidate the ENTIRE contract. And yet I think California is doing great on innovation-based businesses! So... maybe non-competes are unnecessary and dumb? :) In any case, please check with a lawyer before taking any advice on this site that involves contracts!

[I am not a lawyer but ...] Most contracts I've seen have a severability clause intended to protect the rest of the contract if one clause is invalid or illegal.

Are non-competes a special case in that situation?

I've edited the above to clarify that these aren't my words -- they're sixdisciplines takeaways from the study. :)

Starting a company at the right time in the right industry is a "not" skill. It is an ability. A skill is a learnt ability whose output is -- with high certainty or definitiveness -- utterly predictable, given an alarmingly minimal set of seeming input parameters whereas others must exert considerably more effort (input parameters) to achieve such similar outcome or anything close. The difference between a skill and an ability is that not all abilities are skills.

Since "the right time" and "the right industry" are only evident a posteriori -- that is to say, after the fact -- then it is not humanly possible to know what the right time really is, as there is, in fact, no such thing before it occurs. Is a decision "good in itself" or "good based on its outcome"? Skills define an exact outcome a priori (before the outcome is born).

Consequently, starting a company at the right time or in the right industry is not a skill. It is a necessarily popular fallacy and is rather, largely, an ability that mercenary entrepreneurs could possess, and missionary ones -- by essential definition -- do not. The latter go with their guts. As Einstein said, the only real valuable thing is intuition.

Are you saying that choosing an industry and a time is all luck?

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