Puny Little Human

The 9 out of 10 startups fail statistic needs to be discredited NOW

While I am by no means a Silicon Valley veteran, 3 weeks is more than enough time for me to hear the “9 out of 10 startups fail” statistic more times than I could care to count.

It is a false and misleading data point that has lodged itself into the community consciousness and drives home a cynicism that should not be tolerated.

There’s a fantastic Quora post on the topic here: http://www.quora.com/What-is-the-truth-behind-9-out-of-10-startups-fail

I highly recommend taking a moment and reading the responses. I excerpted some key lines:

From Chuck Eesley (emphases are by me)

Phillips and Kirchhoff (1989) find, using the 1976-1986 United States Establishment Longitudinal Microdata (USELM) files of the U.S. Small Business Administration, new establishments show an average survival rate of 39.8% after 6 years.

Audretsch (1991) similarly uses a nationally representative sample of businesses from the U.S. and shows that survival rates vary with certain industry characteristics. As one might expect, in industries where small firms do more innovation, survival rates are higher and in industries with scale economies and with high capital intensity, failure rates are higher.

Survival rates also are likely to be higher for technology-based businesses, for VC-backed firms, and for more highly educated entrepreneurs. Ed Roberts in his 1991 book, Entrepreneurs in High Technology, finds that out of a sample of spin-outs from MIT Lincoln labs, only 15 percent had gone out of business at the end of five years. He also finds that those with a Master’s degree had the best performance.

Only 15% of venture backed startups go out of business after 5 years.

There are some excellent answers, especially by the always-wise Brandom Smietana. 

But the spirit that I want to get to is this: I have too often heard entrepreneurs or investors say something along the lines of the following:

“9 out of 10 startups fail, therefore…

• You should not even try.”
• VCs will be incredibly risk averse to back you. Beware.”
• You have to protect your secrets.”

Cynicism. Antagonism. Paranoia. The cavalier attitude by which so many Silicon Valley denizens throw around this statistic feeds these negative attitudes.

To be sure, while the vast majority of venture backed startups survive, not all of them return the 10x type returns that investors crave. But even that meme is hyperbole at best.

If an investor is looking for a 25% IRR with an average holding time of 5 years on the invest, he needs a 3x return. A 50% IRR on 5 years is 7.5x.

High, certainly, but not untenable. A $20 million post-money valuation would need a $140 million exit value. This is, of course, assuming no dilution and liquidation preference shenanigans. Even so, looking at the exit environment that exists today, those are not absurd outcomes!

Bottom line: is there great and tremendous risk involved with starting a company? Absolutely. But when faced with such starkly pessimistic accepted wisdom, behavior becomes influenced and not in an agreeable fashion.

Let’s ditch the 9 out 10 statistic as a wildly inaccurate harbinger of a dark future that we want no part of.

Related articles

• Growth startup v/s lifestyle startup: why should there be a difference at all? (paraschopra.com)
• 500 Startups Adds 21 New Companies (blogs.forbes.com)
• A Look At The Three Startups That Wowed The Judges At Plug And Play’s Summer EXPO (techcrunch.com)

How could Quora generate revenues?

Phoning it in again with an answer I wrote on Quora over the weekend here.

Right now, one of the things that is a pain point for me is that a lot of the time, I will send questions off into the ether, knowing that there’s a low chance of having one of them answered. Every once in a while, I’ll get a really interesting hit with someone who is a subject matter expert popping in and blowing my mind with a deep and thoughtful response. Other times, the answer just kind of sits there. Which brings me to…

the “Ask to Answer” box

I have always found this feature to be a missed opportunity. When you click into the field, it’s empty. No suggestions, no prompts, nothing. If you know who you want to ask, just pop their names in.

But what about those times when you don’t know of anyone to answer?

I believe that’s where the opportunity lies. First of all, there could be a prompt of “knowledgeable individuals” that drop down. Right now, we already rank people as “Top Answerers in various topics (I’m #4 on the China topic). That could be a good starting point for populating that list.

But there may also be opportunities for individuals to promote themselves.

[Quick aside: I know the topic of promoted individuals is an insanely controversialtopic for social media sites. But I think in this case, it can be an elegant solution.]

So as you can see, when you click into the field, a list of suggested users comes up. Depending on the context of the question, knowledgeable folks get pushed up. ATST, people people who pay for some kind of “promoted” status within a topic also get pushed up as well. BUT, users ultimately decide who they want to ask to answer.

Why I think this is a good revenue generating solution:

• Individuals want to be sought out. And there are certain individuals who would be willing to pay to be top-listed every time. I could imagine there are certain angel investors who would want to be top promoted whenever an entrepreneur asks about seed stage financing.
  
  Of course, the dirty word that I left out was “brands”. But if Quora policy makers ever got comfortable with the thought of accounts for organizations, I think this could really blow up. But, the danger to the community is… uncertain.
• Promoted status still has to be earned. Charlie Sheen shouldn’t be allowed to just sign up for Quora and get a promoted account. The status should be earned thru use and respect of community norms and values before they are given the opportunity to buy into that account. Abusing or not upkeeping ones reputation should result in revocation of the status through some sort of service level agreement.
• Users ultimately decide who they want to ask. There will still be a split second decision for users who they want to go with. It is still just… a suggestion.

Why I think that this solution is good for Quora:

• Extend the long tail of answered questions. Many questions get fired off into ether and have no response. Some are awkward, but some could really stir the pot of sweet human interaction.

• Enhance the benefits of being a good Answerer. Right now, I get a lot of satisfaction in being the #4 Top Answerer on the China topic, but not much else. But this would be an interaction that could drive people to pursue excellence. Of course, the risk is if quantity was emphasized over quality. But if knew this would drive others to seek me out for my expertise, it would scratch my ego, and drive me to provide better answers.

Related articles

• Cleaning up my Quora feed: experimenting with unfollowing topics (zdanielshi.com)

My Quora answer to: How do I create a social life after college that rivals or is better than the average college social life

Don’t eat alone.

Right after you graduate, and especially if you graduate into the white collar work force, you may find yourself often times eating at your desk or ducking out awkwardly for a bite by yourself. One of the trite realities of our corporate world.

It isn’t necessarily a bad thing. But if you can avoid it, your social life will improve (in a grown up kind of way).

1. When I lived in Beijing, I tried to make it a point to schedule lunch with someone at least every other day. It could be colleagues, friends, a business contact, or even a random acquaintance. I made and strengthened friendships, kept up to date on local developments, and extended my business network.
   
   I also tried my best to be tapped into a regular group of colleagues who headed out to lunch together. This served the dual benefit of improving my Chinese and not eating alone.
2. Dinners - I tried to organize a group outing at least once every 2 or 3 weekswith the folks in my urban tribe. Luckily, I attended a dynamic megachurch in Beijing and had plenty of interesting friends from all over the world to hang out with. And my small group Bible study met every Wednesday night for dinner.
3. If you have roommates, eat out with them. Seems kind of a no-brainer for some, but you would be surprised how many people rarely interact with the person they split their rent with. But who better to explore the neighborhood lamb kabob stalls with?
4. Go on regular dates with your significant other. Seems simple enough, but if you tend to be a high volume person with a volatile schedule, this takes a little more effort.Plan ahead. Pencil it in. Make it special. You won’t regret it.

I had a great time in college. The Claremont Colleges has one of the most fun and lively social scenes balanced with thoughtfulness (usually).

My 3 years after college in Beijing were a blast, just in a different way.

Sorry guys, but going to dial it in with one of my Quora Q&A response. Been too busy or apathetic to write… much.

Related articles

• Cleaning up my Quora feed: experimenting with unfollowing topics (zdanielshi.com)
• Has Quora Peaked? (loosewireblog.com)
• Forget about Facebook, Google. Start fearing Quora. (quorareview.com)

MBA’s: Should you get an iPad? (Part 1: reading)

Image via Wikipedia

For several days now, I have gotten a number of business school classmates coming up to me and asking me: What do I think of the iPad? Is it worth getting? Will it be a good purchase, especially if I am going to be a consultant/banker/something else.

And the answer I always give is YES. The iPad is an incredible device for entertainment, but it is also an incredible utility.

I’ll start by covering what I think is the killer app for the iPad: reading. And I’ll try to also cover some other topics as well:

• Media consumption
• Other utilities

I read way more on the iPad than before

The iPad is a pleasure to read. There are a number of apps that, when combined with the experience of the iPad, makes it a joy to hold text and pictures in your hand and settle into a zen like state of reading.

Before, I would split my reading between online and offline. I had my blogs, my news sites, and Quora on my laptop, which I would have to fire up. I also had my books and (after coming to business school) my class notes. With my iPad, I use:

• Reeder for my RSS feeds.
• Flipboard for aggregated and beautifully formatted displays from my social media feeds.
• NYTimes, WSJ, and Slate for news.
• Stanza for my books.
• ESV Bible for my Bible.

Initially, I wasn’t sure if I wanted to have so much of my data on one place. But now, with backups and clound syncing (Plaintext and Dropbox), I am starting to read almost exclusively on the iPad. I don’t have to have a huge bookshelf (and as an MBA student here for only 2 years, why would you want one?), and so, having all of these huge texts on such a thin device is endlessly compelling.

And I don’t think I have to say much more about how gorgeous the screen is.

The resulting effect is that I likely read 10x more than I did before. The social discovery elements in the apps linked to RSS, Twitter, Facebook, and Quora help me to discover super interesting news way in excess of what even professors would think to introduce in class.

The iPad takes the weight off of your shoulders

As a business school student, you get a ton of readings, whether it is hand outs or HBS cases to read. The class handouts usually will also be available online from the profesor, so I will throw it on my iPad and leave my physical binder, bursting with papers, sitting in my locker.

Cases which aren’t necessarily available online, I will usually take an afternoon to scan at a high capacity scanner and convert to PDFs.

Now, instead of a heavy binder, oftentimes, I will just bring my iPad to class. With the introduction of fast switching, you can take notes and refer to handouts easily.

PDFs are way better than .docx, .pptx, and .xlx

One weakness of the iPad is the native rendering of formatting, charts, tables, and graphics from MS Office apps. If you try to view that uber cool Powerpoint you made the night before on your PC, it will show up in a disappointing fashion on the iPad. This is one of its shortfallings. But its easily solved by saving your files as a PDF, which the iPad displays gorgeously and smoothly.

FYI, I have a PC and therefore haven’t tried this with Keynote yet.

Some apps that really take the reading experience to the next level

• Reeder ($2.99) - this was the first app that I ever shelled out money for. It literally has the best RSS reading experience ever. The integration of gestures makes reading fun. It is well organized and slick. It also has incredible linking to all of your social media services. 
• Flipboard (free) - this app is like voodoo magic. It pulls in the articles being pulled from various Tweet streams and then somehow arranges them into a supremely evocative magazine format. The first week I got this app, I would open it just to look at how beautiful it was.
• Dropbox (free) - I won’t retread on why I love Dropbox. The ability to access ALL of my files from Dropbox and be able to pull them up is fantastic. It does not 100% replace the ability to read certain documents on your PC, but it is getting there. 
• ESV Bible (free) - I used to do my Bible reading on Youversion, but found the interface to be rather clunky. But the ESV makes reading Scripture wonderful. But I think the thing that really makes it stand out is the fact that you would normally have to pay $36 to get the physical version, but you get this one for free. The text is clear and readable. The bookmarking, highlighting, and note taking functions are superb. It’s a great way to start your day. 
• NYTimes (free) - I love reading the NYTimes. In a way that’s 60% of what Flipboard does, it converts the regular web layout of NYT.com into something that is beautiful and wonderful to read.
• WSJ (free) - I actually use the iPhone version vs. the version developed for iPad. Why? I much more prefer the categorization available in the iPhone version over how the iPad version is formatted like the daily paper. I only read a few sections of the WSJ: most popular, editor’s choice, technology, management, etc and don’t want to flip thru other things to get to it.
• Stanza (free) - still my overall preferred ebook reader. I love it for how customizable the reading experience can be. Furthermore, I have over 50 books on Stanza, and it takes up the space of one thin magazine on my table.
• Safari - don’t overthink it. Some of the best reading is on raw web pages.

I think one thing you will notice is the ridiculous amounts of usage of the words like “beautiful”, “gorgeous”, “joy”, etc. These are not exaggerations. The design of the iPad and its accompanying applications are an absolute thing of beauty. There are times when you will be sitting in bed reading and feel a tiny sense of joy from using it.

Takeaways

The applications for your business school education are endless. You will read more, learn more, and discover more. You will be less physically burdened. You will integrate the future into your lives.

Next time: Media

Related articles

• Flipboard CEO Talks New Version, iPad 2 (macstories.net)
• What are the top 5 apps I should get for my iPad 2? (quora.com)

Quora Q&A: How hard is it to get an ICP from China?

Chinese Internet: How hard is it to get an ICP from China? 4 cool answers on Quora, including 1 from my buddy Terry Crawford, former Greater China M&A lawyer and current Internet entrepreneur.

How hard is it to get an ICP from China?

Use Quora for interview prep

Last week, a friend of mine at Johnson had an interview with a well known venture capital firm and I was trying to help him prepare. We were wracking our brains, searching for meaningful questions and thoughtful responses on the innovations and exciting new stuff that has been coming out.

A cool thing happened. I realized that we could actually use Quora as a tool to prepare for the interview.

Where can you find the leading lights in venture capital and technology entrepreneurship asking each other deep meaningful questions and providing equally deep thoughtful responses? The startups and venture capital topic pages on Quora.

What are some examples of good term sheets? Why don’t we ask Mark Suster?

What motivates an early employee to work at a startup? Edmond Lau, one of the early guys at Quora has a very thoughtful answer.

The most powerful and sustainable motivator for an early employee at a startup, or for employees at any company for that matter, is the sense of meaning derived from work.

[more]

Why has Dropbox been so successful when cloud based document management and syncing solutions have been around forever? Isaac Hall, Cofounder of Syncplicity, a competitor, talks about the reasons why they got it right (and got >1,000 upvotes).

For some of the more tech and venture related interviews, if you are doing it over the phone, I would just have Quora open in front of me and start typing in the questions as they come. See what you get. And, given the right culture of the firm, if you tell them that’s what you did, they might love you for it.

Related articles

• Why I [heart] Dropbox (zdanielshi.com)
• Cleaning up my Quora feed: experimenting with unfollowing topics (zdanielshi.com)
• Open question: What is Marc Bodnick going to do at Quora? (venturebeat.com)
• A $300 Million Valuation Isn’t Enough For Quora (businessinsider.com)

Why I [heart] Dropbox

Image via CrunchBase

I have spent a lot of time over the last few weeks gushing about Quora. But there’s another services, which I love just as much.

Dropbox is amazing. While Quora is about learning and discovery, the other has vastly improved my life.

Quora constantly demands more time and attention. Dropbox is about freeing you to be more productive with your time and thoughts.

For me, Quora excites obsessive compulsion, Dropbox is the opposite instinct: calm.

Related articles

• Dropbox: Why is Dropbox more popular than other tools with similar functionality? - Quora (quora.com)

The Moto Atrix: the return of the consumer thin clients

Image via Wikipedia

Over half a year ago, when I first joined Quora, I answered a question titled: What is the future of mobile?

My prediction was:

Ten years from now, there will be no more PCs.

You’ll have a thin client mobile device that connects to your services and data over super high speed Internet access that is always on. The thin client can be your principle means of interacting with your services.

When you’re at home or at work, you’ll be able to dock your mobile thin client into a work station which will have a more expansive user configuration. Definitely a bigger screen, but it might not be a mouse or keyboard. Again, your key apps, services, and data would be connected from the cloud, through the thin client, to the workstation.
…
Who knows if the future will be supplied by Apple, Google, or some undreamed new enterprise.

Surprise, suprise. A glimpse of the future is actually supplied (not by Apple or Google), but my Motorola.

I remember talking about this up in a cab ride in Beijing, thinking this would likely be at least 3 to 5 years away, mainly because of the constraints of processor power, battery life, and even just the willpower to go ahead and do something like this.

But I was wrong. The Atrix smartphone package has 1Ghz dual core, coupled with an Nvidia Tegra 2 in the thin client. That’s not superpowerful, but it is a spoiler for what’s ahead. In a year or two, we are going to see devices powered by Qualcomm’s quad core chips with 2.5Ghz for each core.

And the Atrix essentially solves the problem of battery life since the thin client packs a battery as well. The thin client is essentially an extended life battery pack that recharges your phone while you work. As David Pogue puts it: “you’ll finally be able to get off of the plane with more battery life than when you got on!”

Right now, the Atrix is nowhere near a laptop nor a netbook. And I am willing to bet it will not even compare to an iPad in terms of usability. Indeed, I wouldn’t be surprised if the Atrix gets a lukewarm reception upon arrival. What I am excited about, is the possibilities. Sure, the thin clients have never gotten much love, but I think that was largely due to the limited connectivity options available. With an always tethered device, and the mobile computing ecosystem of 2010 vs. 2007, what always felt like 5 to 10 years away, may be here by the time I graduate business school.

Related articles

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Cleaning up my Quora feed: experimenting with unfollowing topics

A while back, I decided to clean up the clutter that I was starting to see in my Quora feed. Quora was something that I had grown incredibly addicted to when I first joined at the end of summer last year. But in recent months, the deluge of new users had started to dilute my experience.

I ended up trying an experiment: I would unfollow all topics. Usually, my stream on Quora was a mix of new activity on the topics that I followed (“China” and “Startups” I think were the most active) and the people that I followed. I would be cutting off all of the updates that would be coming in from the topics I followed.

When I was clicking thru and unfollowing more far flung topics, it was not a big deal. But when I started getting to the topics that I had grown attached to, I hesitated. Did I really want to unfollow “China”, “Venture Capital”, “Startups”, and “Christianity”? These were really great sources of information and stories for me. I was really invested in them. But, in the end, click the unfollow button did I. Even those great discussion streams were starting to get a lot of traffic that I did not find particularly useful.

After about 2 weeks of using Quora, I started to notice a few things:

• The quality of the answers increased dramatically. I came near the end of the early adopter phase for Quora. It was still early enough to be able to find and curate very high quality Quorans that post thoughtful, analytical, and very long answers to equally thoughtful questions. These are folks like Yishan Wong, Xianhang Zhang, Marc Bodnick, Shannon Larson (she really does listen), Brandon Smietana, etc. Since I was following people I generally liked, my stream of content was also the content that they liked (or upvoted) or answered. Quora generates a lot of empty questions that awkwardly float by, hoping for an answer. Oftentimes they receive answers that are throw aways that don’t have the gravitas to rise to the top.
• The quality of the questions also increased. Meaning questions that had yet to be answered. This can be attributed to many of the people I followed following questions that they found interesting.
• In terms of broad topics, I found it limited. Most of my topics were along the lines of tech startups, Silicon Valley, etc. Again, this is not surprising. I joined Quora just as they were ramping up new invites. Most of the people who came before me were either in Silicon Valley, working in tech, or somehow related to the brainy and wonky parts of the world. Since they make up the bulk of the people I follow, that tends to be the bulk of the Q&A that comes thru my stream. (BTW, if you want to dive into a very interesting read on the virality and spread of social networks, check out this Inc. interview of Jonathan Abrams, Founder of Friendster, especially page 5, when they talk about “Patient Zero” in the Philippines.)
• But, good new stuff still comes thru. For example, I got the following two items in my stream just now: Which is harder, being poor in America or being middle class in the developing world? and What does it feel like to be stupid? Although… there seems to be somewhat of a theme developing in my feed of certain privileged smarties wondering what life is like if some life variables hadn’t been cast in their favor.
• I found myself answering less and less. This was actually a question posed to me when I first said I might try something like this on the Quora Review. What ends up happening is that many of the questions that pass thru my way end up being answered by some Quora powerhouses and I feel a little inadequate to respond. I know, I know, it’s not a popularity contest, but in many ways, social media can be a harsh reflection on our own insecurities. When you have a feed of answers all with upvotes north of 300… you end up looking at yourself and wondering just what kind of content you can put out there?

There is a trade off in this experience. On the one hand, you are getting excellent content. If you curate the people you follow well, they act as a smooshy kind of filter so that what you see is high quality.

Ultimately, this is a great method of managing your Quora content is you are happy being a consumer of content, rather than a creator. Right now, as I am about to hit the steeper slope of the business school workload, I am ok with being a consumer. Plus, I can tell the stuff we talk about in business school isn’t really what the average Quoran (in my network anyway) is that interested in ;-)

Related articles

• I’m unfollowing every topic on Quora. (zdanielshi.com)
• It’s not my fault you are new to Quora (quorareview.com)