Why to Not Not Start a Startup

Tuesday, April 3rd, 2007

Paul Graham explains Why to Not Not Start a Startup:

We’ve now been doing Y Combinator long enough to have some data about success rates. Our first batch, in the summer of 2005, had eight startups in it. Of those eight, it now looks as if at least four succeeded. Three have been acquired: Reddit was a merger of two, Reddit and Infogami, and a third was acquired that we can’t talk about yet. Another from that batch was Loopt, which is doing so well they could probably be acquired in about ten minutes if they wanted to.

So about half the founders from that first summer, less than two years ago, are now rich, at least by their standards. (One thing you learn when you get rich is that there are many degrees of it.)

I’m not ready to predict our success rate will stay as high as 50%. That first batch could have been an anomaly. But we should be able to do better than the oft-quoted (and probably made up) standard figure of 10%. I’d feel safe aiming at 25%.

Even the founders who fail don’t seem to have such a bad time. Of those first eight startups, three are now probably dead. In two cases the founders just went on to do other things at the end of the summer. I don’t think they were traumatized by the experience. The closest to a traumatic failure was Kiko, whose founders kept working on their startup for a whole year before being squashed by Google Calendar. But they ended up happy. They sold their software on eBay for a quarter of a million dollars. After they paid back their angel investors, they had about a year’s salary each. [1] Then they immediately went on to start a new and much more exciting startup, Justin.TV.

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