Everyone is both lucky and unlucky .. the universe is pretty random. IMO, those achieve great things notice quicker and react better to turns of fortune (good or bad).
Random =/= an even distribution of lucky and unlucky. Randomness clumps together and can be decidedly un-random looking at times. Some people do not get a fair shake, and despite their notable efforts, still find themselves on the short end of the stick.
That's the point of saying "is a function of". No one knows exactly what the function IS, but the function for luck comes from those two qualities. Others, too.
You can't fail if you don't try. Sounds stupid, but not every opportunity is worth it. Risk can and will bite. You don't get an INC cover story by ruining your personal life though.
More drastically, use the Omaha Beach landing, as depicted in Saving Private Ryan, as an example:
All soldiers were equally equipped, motivated, trained. But then a grenade falls from the sky and hits your landing vessel. Completely outside of your control, but still you're fucked and die.
Happens to the best, to this day, SEAL, DEVGRU or not.
Bad luck is bad luck.
Same in business.
Do everything right and still fail.
Luck is underrated.
There is Risk Management, I wonder if Luck Management is something that will arise in the future. Chance works both ways.
However, while you can fail multiple times, you only have to strike "super success" once.
(As Nassim Taleb is also trending on HN right now) It's an antifragile situation: Facing extreme events, the upside is large whereas the downside is limited.
So, yes - (bad) luck as a function of hard work is highly volatile. But as it is antifragile, volatility is a good thing.
> - The founders are nice. I'm sure this doesn't always apply, but the most successful founders I know are nicer than average. They're tough, they're very competitive, and they are ruthless, but they are fundamentally nice people.
ruth·less, ˈro͞oTHləs/, adjective
1. having or showing no pity or compassion for others.
what does "ruthless" mean nowadays in valley newspeak? or did i miss a memo about "nice"..?
No, I meant in the course of the game. In tennis, every point Roger Federer wins, his opponent loses. Every game winning jumpshot Michael Jordan made, the other team lost.
I can't imagine you'd get very far in any competitive enterprise if you spent all your time feeling bad about that.
Lance Armstrong isn't a great athlete .. he's a cheater.
> Lance Armstrong isn't a great athlete .. he's a cheater.
Going off on a tangent now but...
He's a cheater and a lying scumbag, but you can't say he isn't a great athlete. He is in fact one of the best competitive athletes the world has ever known. Even a guy who rides the Tour de France once and comes in at last place fits in that category.
If you are ruthless in cutting unnecessary spending, you're probably going to end up cutting salaries, firing people, or going cheap on other things that actually affect staff, which is likely to be your largest expense.
The quote was either phrased worded or the author doesn't understand the word. Ruthless people are not nice.
Like you said it's unnecessary spending. Firing a slacker can be both ruthless and nice (towards employees that put in real work). There is no obligation to pay people and no right to be paid. Cutting wages is not some horrible or cruel act if it's done for good reasons.
but the point is that "ruthless" doesn't mean "great at seeking out waste" but specifically "having no compassion". it applies only where compassion would reasonably be applied by others.
I think it's ruthless in regards to their suppliers/competition/clients, not their employees. The reality of the capitalist system is that you can't be "nice" to your competition or suppliers.
Ruthless can be an outlook you adopt in order to understand the field of competition. Whether or not you actually start throwing elbows sometimes doesn't matter as much as knowing which elbows you could throw if it came to it.
Really, it's that hard to understand what he means by ruthless in the context of a nice person?
I know plenty of doctors who are wonderful people, and who are ruthless in their work, meaning they will see it that a task gets done no matter what convoluted channels he/she must use. They're not mean people. They're not assholes, but they're serious about their responsibilities. For a founder, it could mean being ruthless in getting a meeting with an important person, or being ruthless in managing finances, or being ruthless in getting investors on the phone.
You can be ruthless in seeking success while being a nice person. The two aren't mutually exclusive, and it's not hard to see that that's what the OP was getting across.
tl;dr - In plain terms, ruthless here means being unforgivingly persistent.
No. Without knowing a priori what the writer was trying to say, his use of the word 'ruthless' /was/ confusing, because he used it in an uncommon (and possibly incorrect) way.
And yet, @kyro and I and I suspect many others were able to understand perfectly well what @sama meant. The original comment
> what does "ruthless" mean nowadays in valley newspeak? or did i miss a memo about "nice"..?
reads as if the commenter didn't even attempt to understand what @sama meant. Instead, it appears as if he saw that what @sama wrote was technically inconsistent and glommed onto that without actually engaging with the essay. If the commenter was simply offering up copyediting advice, well, he could've left out the color ("valley newspeak", etc.).
As it stands, the comment is utterly boring and, I suspect, reflects the attitude @kyro meant to highlight with the phrase "forced stupidity." "Technically correct" is not actually the best kind of correct (https://www.youtube.com/watch?v=hou0lU8WMgo).
You can be kind & compassionate in your personal life and in general to other people, but ruthless when they get in the way of your business. The two traits can exist in the same person, and simply applied to different spheres of your life.
Something along the old lines of, I'll be your best bud, but if you cross me...
There's an immense amount of qualities not indicated in IPA, like aspiration (difference between the p's in pin and spin), vowel length (fit and feet), palatalization (the difference between the n's in nine and new), all of which are not binary but analog qualities, some of which are differences between languages and some of which just quantify interpersonal differences.
It just can't be done, I'm sorry.
You're much better of using a tts engine tuned for a certain language.
There exist many football players who are very nice people. They're attentive dads and loving husbands. They're true and loyal friends. They give generously of their time and are considered pillars in the community. If you are a fraction of a second too slow, they will push your face into the dirt, commit an act of violence upon a good friend of yours, and cause a collective endeavor you deem very important to end in painful failure.
I generally treat business as more PVE rather than PVP (as you could have guessed, football is not my game or metaphor of choice), but I sometimes work with great people who have rather the opposite inclination. They're ruthless cutthroats, but I mean that in the best possible way.
This may not apply to entrepreneurs, but in my experience working in large corporations there appear to be 2 kinds of people:
1) Those who will cut you some slack if you make an error, on the understanding that we are all human and we all make mistakes and one day you may mean forgiveness yourself
2) Those who operate to extremely high standards of perfection and expect everyone else to do the same.
Type 2 people often achieve great results, until they make an error and all the people they have "punished" in similar circumstances get their revenge.
Another important trait Ron Conway highlighted at Startup School that really stuck with me was that Founders of 'super successful companies' can careless about other distractions, especially the media. He highlighted the example of Ben Silbermann and how he used to reject several interviews so as not to lose focus on Pinterest.
So although it's a hybrid of two traits mentioned in the article ("They are obsessed with the quality of the product/experience" and "They don't get excited about pretending to run a startup"), it is still one that should be there by itself.
That's not really how biases work. For example, I'm sure many of the founders of failed startups were nice people, who got stuff done and moved fast (while responding to emails quickly).
I do believe that the people at YC have a lot of experience (and are likely to be quite systematic in their analyses when they do them) but that doesn't mean I'm going to take every post at face value.
That's exactly how survivorship bias, in particular, works:
"Survivorship bias is the logical error of concentrating on the people or things that 'survived' some process and inadvertently overlooking those that did not because of their lack of visibility." [Wiki]
Sam's saying that very successful companies tend to hit all of these points, in contrast to less successful or unsuccessful companies, which will miss one or more of them.
You don't need to take the post at face value, but if you're claiming this is a result of survivorship bias, then you're arguing that successful companies just happen to have these traits, and they don't actually help the companies succeed. I don't think that's true.
> You don't need to take the post at face value, but if you're claiming this is a result of survivorship bias, then you're arguing that successful companies just happen to have these traits, and they don't actually help the companies succeed. I don't think that's true.
I think this is exactly what he's arguing
If you're of the opinion that startup successes are mostly luck and timing, then this makes perfect sense.
If a team/company had every single positive/beneficial trait on that list, then how much more likely are they to "succeed"?
They are good guidelines, may not necessarily or sufficiently make a company successful. In reality, things are too complicated by simple following guidelines.
I like this one: "They respond to emails quickly." It always amazes me just how many would-be "founders" are unbelievably flaky, miss appointments, drop off the face of the earth for days or weeks at a time...
Great points. I would also add: They have serious intestinal fortitude.
You can possess all of the other traits, and you're still pretty much guaranteed to run into numerous points in the life of a company where you're staring into the abyss of imminent failure. The ability to withstand that kind of pressure is probably a prerequisite for highly successful founders.
"*They grow organically. And they are generally skeptical of inorganic strategies like big partnership deals and to a lesser extent PR. They certainly don't have huge press events to launch their startup. Mediocre founders focus on big PR launches to answer their growth prayers."
Most startup companies are looking for big partnership deals with PR support intensively. But they are focusing on building customer base. It's really not easy.
This started out with some boilerplate SV platitudes (obsess over your product, obsess over talent), but got quite good by the end. The concrete items, particularly "They make something a small number of users really love" and "They don't get excited about pretending to run a startup" really resonate with my experience and are things I think everyone should keep in mind when running a company.
"They don't get excited about pretending to run a startup"
That's the biggest difference between me now and starting my first company - I was ultra-excited to call myself "CEO of startup" the first time around, this time around we don't even have titles because we don't give a shit. We have a CEO because you need to know at whom the buck stops, but we've even discussed using that interchangeably depending the situation (decided against it) because of how thoroughly we don't care.
I don't think the way I felt the first time around was bad or the reason we failed - but it was a pretty good signal, and I even knew it at the time.
There's always exceptions to rules, although citations would be nice. Most of it seems like sound advice; ie. Quality over quantity, keep expenses low, offer great customer service etc...
"They generate revenue very early on in their lives. Often as soon as they get their first user."
Is this true?
If "super successful" can be understood as "the biggest tech IPOs of the last 15 years", then I think that Google, Facebook, LinkedIn & Twitter would be at the very top of that list. I guess it depends on how we define "very early".
It's a rule of thumb, not a rule of physics. I'm sure the majority of highly successful startups are generating revenue (and probably even profitable) very early. Relying on viral growth and VC with a promise of revenues later is more likely to fail than succeed.
Facebook was selling ads almost immediately in reality. The movie made a big deal about Zuckerberg wanting to avoid running ads on FB, but from launch, FB had a nifty native ad system in place and even gave equity in the company to an ad agency in return for guaranteed spend over time.
In fact, Facebook would not move on to a new campus unless they have made enough money to buy the new servers that they would need to move there. The worst thing that movie did was misrepresented how scrappy early Facebook was.
Great article ... Some of the points might seem obvious in hindsight, but are rarely followed in practice. Perhaps it is because they are so obvious as to be somewhat invisible, or they are repeated so often as to be ignored.
I thought one of the less obvious, and especially interesting, insights was the following:
Another way this trait shows itself is "right-sized" first projects. You can't go from zero to huge; you have to find something not too big and not too small to build first. They seem to have an innate talent for figuring out right-sized projects.
I wonder how much of this talent (which I'd call a "knack") can be acquired from experience.
I noticed in myself an instinct for categorizing projects as "right time"/"right place". By "instinct" I don't mean I'm particularly good at this, I may be really bad. I mean that I have a feeling, which I can imagine as some sort of neural pattern recognition algorithm. I'd guess everyone has this same feeling .. to what extent can it be tuned into a "knack"?
Good stuff. Only nitpick is the "partnership" comment. I actually think too many startups are too insular and not comfortable working with other companies early on. However perhaps here he meant the "hit it out of the ballpark" partnership type.
Please add to "They don't get excited about pretending to run a startup" - they're not on Twitter tweeting cliche's around vision/team/culture/design/customer love all day. That's a big red flag to me.
While there is some laudable-if-extremely-conventional wisdom in here, almost every point suffers from either survival bias ("Successful companies succeed by being successful.") or from having obvious counter-examples ("Was Steve Jobs a nice guy?"), or both.
thanks, that was a great article. my favorite quote:
> After any process that leaves behind survivors, the non-survivors are often destroyed or muted or removed from your view. If failures becomes invisible, then naturally you will pay more attention to successes.
another one:
> As the psychologist Daniel Kahneman writes in his book Thinking Fast and Slow, “A stupid decision that works out well becomes a brilliant decision in hindsight.”
Yeah, and the article starts off with some disclaimers, so I'm being a bit unfair.
Still, I think most of these points are either obvious or tautologies, and many of them can cause harm when they are focused on obsessively.
And, so I'm not just another critic, let me offer two points I'd make about startups that stand, somewhat, in opposition to the points made here:
1) Successful companies ship. This is often in direct opposition to obsessing over quality: you have to accept that your app, which is a piece of shit, needs to get out there, so you can get feedback, before you make it a gleaming cube of perfection.
2) Random chance is going to factor in your startups success far more than you'd like, so building a startup that will not die no matter what (rev/run > 1) is going to give you a better shot at making it over the hump. This often means putting up with uncertainty and not knowing exactly what you should be or will be doing. And it will be hard on you, mentally.
A counter example might just be an outlier, I don't think he was arguing in absolutes.
<Super-Succeess> is typically the outlier. You could have 100 companies with these traits, and 98 of them could fail. Its not clear with that type of failure rate you can really differentiate meaningful information, because the overlap of explanatory "data points" is just too noisy.
Super success is typically more of a black-swan. This is essay is less relevant in that endeavor. But it probably is not bad at all if it was merely aiming for "nice/er places to work". Or, "avoiding a bad bet" type of argument. That makes it closer to describing a "white swan", which again is not altogether useless. Its just not really what the title is proclaiming. Not that Sam would be unique in that regards, thoug. I think its fair to cut him some slack on that.
Of course, it begs the question: Do "super successful people" tend to eggagerate? Which is even itself an enlightening question. It seems many people believe in "fake it to you make it". But on the otherhand, many people who have "made it" tend to revert to understatement. And many more become successful merely with true confidence. So again...who knows.
Because if you notice a trend in successful companies (Aha! They all have employees!), you need to cross-check and make sure this is something unique to successful companies (or at least over-represented), and not something both successful and unsuccessful companies share in equal parts. (Gee, it seems all the failures had employees too...)
To be fair, Sam Altman has seen the early stages of lot more unsuccessful companies than pretty much anyone has seen companies at all. Plus, he explicitly says that a lot of unsuccessful startups have some of these traits, so it's not like he hasn't considered the idea.
I think it's pretty unlikely that he's not taking unsuccessful startups into account. But it's not a statistical paper, it's an essay. You can't attack the guy for not including likelihood ratios and p-values in his prose.
"Sam Altman has seen the early stages of lot more unsuccessful companies"
Sam Altman has experience with a particular group of companies. A small subset of companies out of a huge set of people who do business. In a wide variety of places.
This writeup certainly makes some good points but it is specific to companies of a certain type and Sam has not qualified that at all in his post.
"than pretty much anyone has seen companies at all."
I've been observing companies (as have many other HN readers) since before Sam was even born. (I started my first company right out of college and that a very long time ago.)
He didn't list things as trivial as having employees. He listed things he has noticed that good founders tend to do better than mediocre founders. He obviously cross-checked and referenced it.
Consider a very likely example: since first to market is very important, one would expect most successful ventures to be quick at decisions.
Yet still one would expect that most quick decisions are bad decisions. I would conjecture there are far more failures that come from quick decision than successes.
But if the market strongly favors speed then it will select those few that just happen through chance to make the right quick decision.
Good point. These kinds of list imply that if you attain all the characteristics on the list then you are bound to also be super successful. Which is not true at all. You have all the listed properties but if your product/service actually sucks or if you no competitive advantage then you will still not be super successful.
Your product/experience could be totally awesome but also totally irrelevant to market needs. Poof. No success.
And "obsessed with the quality of the product/experience" is BS wording. It means nothing. I could say the same thing about any subject without making any distinctive point. It's not about being "obsessed", it's about "making the right choices in terms of priority regarding the product/experience". That's more like it, and that says that decision/compromise is needed in everything you create.
The list also has items like "they are focused on growth" and "they generate revenue early". Those things force you to pivot if you chose the wrong market or if you didn't get the market needs.
I made the mistake in my first years. I made consultingware products which didn't grow but paid expenses and helped me keep my company alive and even grow it very slowly. Then, I dropped the non-growth products and focused on a single growing product.
Just how he behaved in the 1999 IE anti trust case makes a certain 7 letter word starting with an 'a' seem appropriate.
More on topic, this seems like the very definition of cargo culting to me. Why not just focus on what makes sense for your company? There generally is no simple catch-all solution, especially not to success.
It's clear we mostly look at success as an example, but then again there could be a cause/effect confusion in the accusation of "Survival bias"
I think PG's advice "Don't Die" combined with some of these traits like They generate revenue very early on in their lives, They keep expenses low and They are focused on growth logically seems to lead towards a company biased towards survival.
It would be interesting to build a Bayesian model of these traits.
Change of subject: I'm very interested in Bayesian modelling. Would you be as kind as to provide me with some resources to learn the ins and outs of this?
Also, I feel like akinator.com is using a Bayesian tree. Would you confirm this? What algorithm do you think they are using?
Thank you a lot :) I'm further bombarding you with questions:
I'm trying to list the usages of Bayesian inferences in industry. So, there is spam filtering, I bet there would be recommandation engines (ex: amazon's product recommandation, ad targeting). Would you know of other uses?
Do you know of some kind of tutorial of how one particular bayesian engine is applied to a particular dataset in a commercial venture?
In a different subject, Judea Pearl has been awarded the Turing award for using Bayesian networks to calculate probability of causality. Which is different than traditional Bayesian analysis, where we calculate probabilities of a property being true. In his theory, he claims one can calculate the probability of a property being a necessary condition, the probability of a sufficient condition to another property (and the probability of both combined). I'm really having trouble understanding the ins and outs of this too. Have you heard about an usage of this theory? Do you think it has a viable shot at having commercial applications?
We use it on our phishing filter for our form builder app. We have a tool which we use to review forms created in our site and teach it if a form is a phishing form or not. It works so well that we trust it to auto-suspend phishing accounts. Number of false positives is less than 1%.
It appears you are looking for Deep Insight into field x where x = "applications of Bayesian filtering". This is not a reliable way to do this (random posts on non specialist forums). A more reliable path is to study the topic exhaustively over n years where n > 1. Take classes, or do a ph.d, or find a good academic library and read the related textbooks and journals. Thus developing expertise, apply imagination => profit!
Every opinion or observation suffers from at least one of dozens of biases -- from the crucial ("should I marry her?") to the mundane ("does this outfit match?"). In fact, the tendency to quickly label and dismiss said advice is probably a bias itself.
Instead, take it as input and context, and then form your own opinions (and biases). We knowingly ask for biased opinions of our friends, family, and coworkers all the time; apply the same process here.
the tendency to quickly label and dismiss said advice is probably a bias itself.
That's a good point, and I definitely have this tendency.
On the other hand, I don't think a list like this is that helpful. With as much experience as Sam Altman has, I'd prefer to see him do deep dives into particular items on the list, with an attempt to establish causality between the item on the list and the success of a particular company within a particular context.
Why did this particular strength help this particular company at this particular time in its lifecycle, facing this particular environment? Has that strength proven a weakness in a different context?
That seems more useful to me than, effectively, "Be tough, be smart and care a lot", which is great advice, but not something anyone with passing familiarity with startups doesn't already know.
As I said below, this seems like nothing but cargo culting to me. Every business is in a unique situation when you look close. I don't believe that imitating Steve Jobs or whomever will do anything but hurt the company. (I've seen founders that honestly believe they have to be an arse to be successful. In all seriousness. Imagine how well that went.)
It would surely help if the survivors themselves would acknowledge survivor bias more. Not seeing much of that.
The point is that using traits of successful companies isn't useful without looking at unsuccessful companies. Yes, these are all traits of successful companies. But other companies did these same things and failed.
That's true, but not, IMO, a valid criticism of the article. This article emphatically does not say that if you do the stuff on this list that you will become successful. It makes the implicit claim that if you don't do this stuff you won't become successful. Remember that those two statements are very different, and the second one is valuable even though it doesn't prescribe a path to success.
There was an extremely popular business book back in the 80s called In Search of Excellence which chronicled a set of characteristics of large successful companies. "Stick to your knitting" and the like. The problem was that there were loads of counterexamples including 1.) Successful companies that DIDN'T stick to their knitting and 2.) Failed companies that did.
Right. So the question then is not whether the premise is correct or not, but whether the information Sam is putting out is accurate, which is a different thing entirely.
So you really need some sort of statistical study. (Which is hard/expensive/time-consuming in a context like this.) Otherwise you're arguing by anecdote. Which isn't necessarily bad. Most arguments of this sort are. But they're vulnerable to this counterargument.
Did you have a list of extremely successful companies you were looking at specifically when you wrote this? If so, I'd be interested in seeing that list to compare
> *They grow organically. And they are generally skeptical of inorganic strategies like big partnership deals and to a lesser extent PR. They certainly don't have huge press events to launch their startup. Mediocre founders focus on big PR launches to answer their growth prayers.
153 comments
[ 3.1 ms ] story [ 224 ms ] threadHere is a quote: "In a great market -- a market with lots of real potential customers -- the market pulls product out of the startup."
E.g. http://www.damninteresting.com/you-make-your-own-luck/
You will not find opportunity if you're not searching. You will not profit from opportunity if you're not seizing it.
You can't fail if you don't try. Sounds stupid, but not every opportunity is worth it. Risk can and will bite. You don't get an INC cover story by ruining your personal life though.
More drastically, use the Omaha Beach landing, as depicted in Saving Private Ryan, as an example: All soldiers were equally equipped, motivated, trained. But then a grenade falls from the sky and hits your landing vessel. Completely outside of your control, but still you're fucked and die.
Happens to the best, to this day, SEAL, DEVGRU or not. Bad luck is bad luck.
Same in business. Do everything right and still fail. Luck is underrated.
There is Risk Management, I wonder if Luck Management is something that will arise in the future. Chance works both ways.
So, yes - (bad) luck as a function of hard work is highly volatile. But as it is antifragile, volatility is a good thing.
The reality is probably a little of both.
ruth·less, ˈro͞oTHləs/, adjective
1. having or showing no pity or compassion for others.
what does "ruthless" mean nowadays in valley newspeak? or did i miss a memo about "nice"..?
I can't imagine you'd get very far in any competitive enterprise if you spent all your time feeling bad about that.
Lance Armstrong isn't a great athlete .. he's a cheater.
Going off on a tangent now but...
He's a cheater and a lying scumbag, but you can't say he isn't a great athlete. He is in fact one of the best competitive athletes the world has ever known. Even a guy who rides the Tour de France once and comes in at last place fits in that category.
The quote was either phrased worded or the author doesn't understand the word. Ruthless people are not nice.
I know plenty of doctors who are wonderful people, and who are ruthless in their work, meaning they will see it that a task gets done no matter what convoluted channels he/she must use. They're not mean people. They're not assholes, but they're serious about their responsibilities. For a founder, it could mean being ruthless in getting a meeting with an important person, or being ruthless in managing finances, or being ruthless in getting investors on the phone.
You can be ruthless in seeking success while being a nice person. The two aren't mutually exclusive, and it's not hard to see that that's what the OP was getting across.
tl;dr - In plain terms, ruthless here means being unforgivingly persistent.
> what does "ruthless" mean nowadays in valley newspeak? or did i miss a memo about "nice"..?
reads as if the commenter didn't even attempt to understand what @sama meant. Instead, it appears as if he saw that what @sama wrote was technically inconsistent and glommed onto that without actually engaging with the essay. If the commenter was simply offering up copyediting advice, well, he could've left out the color ("valley newspeak", etc.).
As it stands, the comment is utterly boring and, I suspect, reflects the attitude @kyro meant to highlight with the phrase "forced stupidity." "Technically correct" is not actually the best kind of correct (https://www.youtube.com/watch?v=hou0lU8WMgo).
Something along the old lines of, I'll be your best bud, but if you cross me...
Is there any software that takes IPA or ASCII IPA as inpit and gives speech as an output?
Or does IPA not work like that?
It just can't be done, I'm sorry.
You're much better of using a tts engine tuned for a certain language.
http://paulgraham.com/convince.html
I generally treat business as more PVE rather than PVP (as you could have guessed, football is not my game or metaphor of choice), but I sometimes work with great people who have rather the opposite inclination. They're ruthless cutthroats, but I mean that in the best possible way.
1) Those who will cut you some slack if you make an error, on the understanding that we are all human and we all make mistakes and one day you may mean forgiveness yourself
2) Those who operate to extremely high standards of perfection and expect everyone else to do the same.
Type 2 people often achieve great results, until they make an error and all the people they have "punished" in similar circumstances get their revenge.
So although it's a hybrid of two traits mentioned in the article ("They are obsessed with the quality of the product/experience" and "They don't get excited about pretending to run a startup"), it is still one that should be there by itself.
I do believe that the people at YC have a lot of experience (and are likely to be quite systematic in their analyses when they do them) but that doesn't mean I'm going to take every post at face value.
"Survivorship bias is the logical error of concentrating on the people or things that 'survived' some process and inadvertently overlooking those that did not because of their lack of visibility." [Wiki]
Sam's saying that very successful companies tend to hit all of these points, in contrast to less successful or unsuccessful companies, which will miss one or more of them.
You don't need to take the post at face value, but if you're claiming this is a result of survivorship bias, then you're arguing that successful companies just happen to have these traits, and they don't actually help the companies succeed. I don't think that's true.
I think this is exactly what he's arguing
If you're of the opinion that startup successes are mostly luck and timing, then this makes perfect sense.
If a team/company had every single positive/beneficial trait on that list, then how much more likely are they to "succeed"?
"They are obsessed about their customers' success."
Everything else is a byproduct.
You can possess all of the other traits, and you're still pretty much guaranteed to run into numerous points in the life of a company where you're staring into the abyss of imminent failure. The ability to withstand that kind of pressure is probably a prerequisite for highly successful founders.
> They are tough and calm. Founders of great companies are always tough and unflappable.
I would add - Don't mind not sleeping.
I noticed this one is not quite easy to make:
"*They grow organically. And they are generally skeptical of inorganic strategies like big partnership deals and to a lesser extent PR. They certainly don't have huge press events to launch their startup. Mediocre founders focus on big PR launches to answer their growth prayers."
Most startup companies are looking for big partnership deals with PR support intensively. But they are focusing on building customer base. It's really not easy.
That's the biggest difference between me now and starting my first company - I was ultra-excited to call myself "CEO of startup" the first time around, this time around we don't even have titles because we don't give a shit. We have a CEO because you need to know at whom the buck stops, but we've even discussed using that interchangeably depending the situation (decided against it) because of how thoroughly we don't care.
I don't think the way I felt the first time around was bad or the reason we failed - but it was a pretty good signal, and I even knew it at the time.
Is this true? If "super successful" can be understood as "the biggest tech IPOs of the last 15 years", then I think that Google, Facebook, LinkedIn & Twitter would be at the very top of that list. I guess it depends on how we define "very early".
And, frugality is good in the beginning but after you prove yourself, you have to step on the gas.
I thought one of the less obvious, and especially interesting, insights was the following:
Another way this trait shows itself is "right-sized" first projects. You can't go from zero to huge; you have to find something not too big and not too small to build first. They seem to have an innate talent for figuring out right-sized projects.
I wonder how much of this talent (which I'd call a "knack") can be acquired from experience.
I noticed in myself an instinct for categorizing projects as "right time"/"right place". By "instinct" I don't mean I'm particularly good at this, I may be really bad. I mean that I have a feeling, which I can imagine as some sort of neural pattern recognition algorithm. I'd guess everyone has this same feeling .. to what extent can it be tuned into a "knack"?
Please add to "They don't get excited about pretending to run a startup" - they're not on Twitter tweeting cliche's around vision/team/culture/design/customer love all day. That's a big red flag to me.
While there is some laudable-if-extremely-conventional wisdom in here, almost every point suffers from either survival bias ("Successful companies succeed by being successful.") or from having obvious counter-examples ("Was Steve Jobs a nice guy?"), or both.
> After any process that leaves behind survivors, the non-survivors are often destroyed or muted or removed from your view. If failures becomes invisible, then naturally you will pay more attention to successes.
another one:
> As the psychologist Daniel Kahneman writes in his book Thinking Fast and Slow, “A stupid decision that works out well becomes a brilliant decision in hindsight.”
Still, I think most of these points are either obvious or tautologies, and many of them can cause harm when they are focused on obsessively.
And, so I'm not just another critic, let me offer two points I'd make about startups that stand, somewhat, in opposition to the points made here:
1) Successful companies ship. This is often in direct opposition to obsessing over quality: you have to accept that your app, which is a piece of shit, needs to get out there, so you can get feedback, before you make it a gleaming cube of perfection.
2) Random chance is going to factor in your startups success far more than you'd like, so building a startup that will not die no matter what (rev/run > 1) is going to give you a better shot at making it over the hump. This often means putting up with uncertainty and not knowing exactly what you should be or will be doing. And it will be hard on you, mentally.
<Super-Succeess> is typically the outlier. You could have 100 companies with these traits, and 98 of them could fail. Its not clear with that type of failure rate you can really differentiate meaningful information, because the overlap of explanatory "data points" is just too noisy.
Super success is typically more of a black-swan. This is essay is less relevant in that endeavor. But it probably is not bad at all if it was merely aiming for "nice/er places to work". Or, "avoiding a bad bet" type of argument. That makes it closer to describing a "white swan", which again is not altogether useless. Its just not really what the title is proclaiming. Not that Sam would be unique in that regards, thoug. I think its fair to cut him some slack on that.
Of course, it begs the question: Do "super successful people" tend to eggagerate? Which is even itself an enlightening question. It seems many people believe in "fake it to you make it". But on the otherhand, many people who have "made it" tend to revert to understatement. And many more become successful merely with true confidence. So again...who knows.
http://youarenotsosmart.com/2013/05/23/survivorship-bias/
(Taken from reply below)
I think it's pretty unlikely that he's not taking unsuccessful startups into account. But it's not a statistical paper, it's an essay. You can't attack the guy for not including likelihood ratios and p-values in his prose.
Sam Altman has experience with a particular group of companies. A small subset of companies out of a huge set of people who do business. In a wide variety of places.
This writeup certainly makes some good points but it is specific to companies of a certain type and Sam has not qualified that at all in his post.
"than pretty much anyone has seen companies at all."
I've been observing companies (as have many other HN readers) since before Sam was even born. (I started my first company right out of college and that a very long time ago.)
OK, fine. If you have lots of relevant experience, then write a counter-argument that's more substantial than "selection bias!"
I'm sure we'd all like to read a comment that outlined some specific, well-thought-out points of disagreement with Sam's arguments.
I see mostly opinions, not arguments. An argument is generally what follows if you ask someone "why?".
In the very first paragraph, Sam writes "It’s from personal experience and I’m sure there are plenty of exceptions."
What should be done to satisfy people like you?
Yet still one would expect that most quick decisions are bad decisions. I would conjecture there are far more failures that come from quick decision than successes.
But if the market strongly favors speed then it will select those few that just happen through chance to make the right quick decision.
If lots of unsuccessful companies were frugal with money (say), then maybe being frugal with money doesn't help your chance of success.
"They are obsessed with the quality of the product/experience"
Maybe "competitive advantage" is not so directly addressed, but I feel some of the other points touch on it, like "do things that don't scale".
And "obsessed with the quality of the product/experience" is BS wording. It means nothing. I could say the same thing about any subject without making any distinctive point. It's not about being "obsessed", it's about "making the right choices in terms of priority regarding the product/experience". That's more like it, and that says that decision/compromise is needed in everything you create.
I made the mistake in my first years. I made consultingware products which didn't grow but paid expenses and helped me keep my company alive and even grow it very slowly. Then, I dropped the non-growth products and focused on a single growing product.
Same goes for Jeff Bezos. Yet, incredibly successful. That's a few major counter-examples.
Bill Gates is certainly ruthless when it comes to business. You don't want to come to him if you work at microsoft and your project is failing.
However I'm sure on a personal level he is very nice, and he is certainly doing a lot of good with his foundation.
More on topic, this seems like the very definition of cargo culting to me. Why not just focus on what makes sense for your company? There generally is no simple catch-all solution, especially not to success.
It's clear we mostly look at success as an example, but then again there could be a cause/effect confusion in the accusation of "Survival bias"
I think PG's advice "Don't Die" combined with some of these traits like They generate revenue very early on in their lives, They keep expenses low and They are focused on growth logically seems to lead towards a company biased towards survival.
It would be interesting to build a Bayesian model of these traits.
Also, I feel like akinator.com is using a Bayesian tree. Would you confirm this? What algorithm do you think they are using?
I thought PG's explanation in "A Plan for Spam" was pretty good: http://www.paulgraham.com/naivebayes.html
Also, I feel like akinator.com is using a Bayesian tree. Would you confirm this?
It's possible, but I doubt it.
What algorithm do you think they are using?
A plain binary search tree would work perfectly. I guess it could be broken by people entering deliberately wrong data, but..
It's clearly some kind of search tree, because the questions are influenced by previous answers.
You could do a Bayesian version, but I'm not sure it would perform any better.
I'm trying to list the usages of Bayesian inferences in industry. So, there is spam filtering, I bet there would be recommandation engines (ex: amazon's product recommandation, ad targeting). Would you know of other uses?
Do you know of some kind of tutorial of how one particular bayesian engine is applied to a particular dataset in a commercial venture?
Also, I have been looking at weka (http://www.cs.waikato.ac.nz/ml/weka/), and j48 in particular. j48 is an implementation of the C4.5 algorithm, (which is close to ID3 and C5). Here is how I learned about C4.5: http://www.cs.umd.edu/~samir/498/10Algorithms-08.pdf. Would you happen to know if one of these algorithms have commercial applications?
In a different subject, Judea Pearl has been awarded the Turing award for using Bayesian networks to calculate probability of causality. Which is different than traditional Bayesian analysis, where we calculate probabilities of a property being true. In his theory, he claims one can calculate the probability of a property being a necessary condition, the probability of a sufficient condition to another property (and the probability of both combined). I'm really having trouble understanding the ins and outs of this too. Have you heard about an usage of this theory? Do you think it has a viable shot at having commercial applications?
Instead, take it as input and context, and then form your own opinions (and biases). We knowingly ask for biased opinions of our friends, family, and coworkers all the time; apply the same process here.
http://en.wikipedia.org/wiki/List_of_cognitive_biases
That's a good point, and I definitely have this tendency.
On the other hand, I don't think a list like this is that helpful. With as much experience as Sam Altman has, I'd prefer to see him do deep dives into particular items on the list, with an attempt to establish causality between the item on the list and the success of a particular company within a particular context.
Why did this particular strength help this particular company at this particular time in its lifecycle, facing this particular environment? Has that strength proven a weakness in a different context?
That seems more useful to me than, effectively, "Be tough, be smart and care a lot", which is great advice, but not something anyone with passing familiarity with startups doesn't already know.
It would surely help if the survivors themselves would acknowledge survivor bias more. Not seeing much of that.
Of the companies that became very successful, what were some common traits? That's what this post is about.
"Yeah but you only looked at the successful companies." ::smacks head::
Has Google+ written all over it.