Getting Rich By The Numbers, A CrunchBased How-To | Hacker News Reader

Getting Rich By The Numbers, A CrunchBased How-To

techcrunch.com

53 pointszher16 comments

There's obvious sampling bias here. The companies in CrunchBase are not chosen according to objective criteria. They're chosen because someone visited the CrunchBase website and added them.

It's not a big surprise that the only semiconductor companies anyone bothers to add tend to be the successful ones.

And, your company can be a cash cow even if it never gets acquired or has an IPO. I suspect this applies to a lot of consulting companies, but what would I know?

So, if you want to get covered in Techcrunch, start a consumer internet company. If you want to get rich, don't start a consumer internet company.

What I find interesting is that biotech and semiconductor have barriers high enough that you need to be high quality to even think of attempting. But lower barrier areas like web and software have a lot more people trying but similar numbers as biotech getting funded. This to me means that the hard stuff needs lower barriers because a larger sample size should be correlated with a wider variety of ideas. More stupid ideas sure, but also more of ideas so stupid they just might work.

The numbers funded is strange. Take other for example. Are the ideas in Other really that bad? Why are the numbers funded all within 2 magnitudes of each other regardless of number of people trying? My guess is that active VCs form a bottleneck on ideas and the numbers funded is more strongly coupled to the number of active VCs in the area than the average merit of the ideas. And that the number of VC per area does not vary too much, with areas like software and web having the most participants.

Or could it be that dealing with atoms, vs. bits requires more OpEx and CapEx?

Nassim Taleb makes a good argument in Fooled By Randomness that the best way to maximize the expected value of your net worth is to go into dentistry. But this isn't Dentist News...

http://en.wikipedia.org/wiki/Fooled_by_Randomness

Hmm, I don't think that's a fair representation of what Taleb wrote. Dentistry is just a profession he chose to illustrate his point. A stereotype. And the point is not so much the high expected value of a dentist's income, it's the very low variance of that income, i.e. a dentist's lifetime earnings are pretty much predictable within a certain range. He could have said "train conductor" and it would still be true.

Of course, dentist has the added merit of allowing you to get moderately rich. But the real distinction is between dentistry vs. fiction writing or entrepreneurship, fields where the difference between #1 and #10 can be an order of magnitude.

I suppose Taleb's caveat here would be that while a table of past results can be very useful for someone working in insurance or logistics, they are not so useful or are even harmful if we're talking about startups. Until the other day, the largest exit in the "web startups for sharing pics" category was (say) $50 million, then the next day we saw a $1 billion acquisition.

(+) Past performance is no guarantee of future results.

Edit: to clarify, the intro paragraph is extremely misleading. This analysis looks back in time several years; he might as well tell you to start a social network or a search engine. It would be honest to say that it's simply an analysis of what has done well, but of course it would not be as sensationalistic.

to further your point Diego, maybe there hasn't been an IPO or major acquisition in something like education because few companies are focusing on that, and therefore it is an opportunity.

I will love the day that I can start a biotech company with a laptop and an internet connection.

That day is coming: http://t.co/E1oURlQ9

Reads like a TechCrunch advert.

Good thing this isn't Reddit else I'd have phrased that less politely.

This is terrible, simplistic advice. The supposed "get rich" acquisition industries both involve so much fundraising that by acquisition time, the founder is likely to be buried under such a large liquidation preference that he won't see a cent.

Total funding should never be an indicator "getting rich" -- it either correlates with failure or a capital intensive project, neither of which have anything to do with improving the founder's net worth.

It sounds like there's supposed to be a table at the end, but it's not showing up for me.

The first question I have, without seeing the numbers, is: do the higher percentages of IPOs/acquisitions for more capital-intensive fields just mean that it's harder to start and fund a company in those area without a much more fleshed out idea?

Here you go: http://i.imgur.com/R7cZ5.png

"Well, if you want to make TechCrunch, you might want to start one of those web companies. [...] At the bottom of the list was Biotech, with less than half a percent of Biotech startups getting any coverage."

For all the kind of derision in the article, I don't feel anymore knowledgeable about startups, other than some vague thing about only worthwhile business being biotech or semiconductors.

I would say don't let this article be any real part of your decision making process, unless you're doing biotech, in which case I guess you can let it boost your confidence. :)

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