Oscar_Cunningham comments on Good resource for marketing research? - Less Wrong

3 Post author: Mercurial 19 August 2011 08:52PM

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Comment author: Oscar_Cunningham 19 August 2011 09:02:34PM 0 points [-]

Paul Graham (guru of internet startups) has this to say:

And what I discovered was that business was no great mystery. It's not something like physics or medicine that requires extensive study. You just try to get people to pay you for stuff.

Comment author: Jayson_Virissimo 19 August 2011 10:43:58PM 4 points [-]

This has got to be the most ignorant quote I have even seen from Graham. If it is "no great mystery" and doesn't require study, then why do so many fail at it?

Comment author: Oscar_Cunningham 19 August 2011 11:38:44PM 1 point [-]

Thinking through Graham's essays an example that comes to mind is being so excited about your own product that you fail to see that it has no market. He claims that most successful startups change their product entirely at least once.

Comment author: atucker 20 August 2011 01:08:19AM 0 points [-]

I think the ignorance depends on the target audience of the quote.

For normal people, its actually a fairly large insight. Starting a business isn't impossible, you just need to get paid to do something.

For entrepreneurs who already know that starting a business is possible, its pretty useless. Of course you're trying to get paid, the question is how.

Comment author: Jayson_Virissimo 20 August 2011 01:40:05AM 2 points [-]

Right, and playing professional basketball isn't impossible; you just need to throw a ball through a hoop.

Comment author: Mercurial 19 August 2011 10:31:01PM 2 points [-]

Hah! That's pretty clever!

The thing is, most businesses fail. I keep hearing slightly different statistics on this, but roughly speaking, any given random American business has somewhere around a 98% chance of failing in the first five years. This means that if you are trying to start a business and you listen to others who are trying to start a business and you hear the same kinds of thoughts and business strategies from them as you are using, the chances are extremely good your business will fail.

In other words, common sense is utter trash for starting a business that works. Pragmatic sense is important, I'm pretty sure, but common sense is entrepreneurial poison. So if we "try to get people to pay [us] for stuff" using our naive intuition, we will probably just lose the business game.

So, what to use instead of naive intuition?

I really don't know!

Comment author: gwern 20 August 2011 12:29:15AM *  1 point [-]

I keep hearing slightly different statistics on this, but roughly speaking, any given random American business has somewhere around a 98% chance of failing in the first five years.

From Mike Darwin's "The Armories of the Latter Day Laputas, Part 5":

"While it is well known that most start-up businesses fail, the uniformity of that failure is generally under-appreciated by members of the general public. Historically the rate of start-up failure in the US has been in the range of 98%, however, since the 1940s this has declined to ~5% of all new business enterprises.[1]"

Better than you thought, perhaps, but the mortality doesn't go away:

“In 2009, the Japanese business analysis and survey firm Tokyo Shoko Research (a combination of Dunn and Bradstreet and TRW in Japan), conducted an examination of the founding dates of the 1,975,620 enterprises in their database.They found 21,666 companies which have existed for over 100 years. The Bank of Korea conducted a similar evaluation of their database and found that there are 3,146 firms founded over 200 years ago in Japan, 837 in Germany, 222 in the Netherlands and 196 in France. There are 7 companies in Japan over 1,000 years old; 89.4% of the companies with over 100 years of history are for profit businesses. However, a closer examination of the history of these long-surviving enterprises reveals that many underwent takeovers, buyouts and essentially a complete restructuring of mission and the nature of the business the firms were engaged in – often more than once in their history. Thus, the chances of a business entity (excluding religious and academic institutions) surviving for >100 years is 1.096%.”

If those two quotes don't help, possibly other statistics in Darwin's article would?

Comment author: Mercurial 20 August 2011 01:45:10AM 0 points [-]

Ah, this does look quite valuable! It's not quite what i was looking for, but it'll be helpful nonetheless. Thanks!

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