If you’ve started a tech company to make a lot of money, chances are you’re bad at math—or simply delusional. Statistically speaking, your odds of a big-time payday are somewhere between zero and almost zero.
Ninety-two percent of startups fail within three years. Only one percent of apps in the Apple App Store are financially successful. And even for the fortunate few companies that raise venture funding, seventy-five percent will fail to generate a return on investors’ capital.
Why do some companies scale to millions of users while others wallow in obscurity? What explains the runaway success of a company like Facebook while a startup like Viddy, a mobile app for video, attracted millions of users and millions of dollars in financing, only to lose both?
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Nir’s Note: My friend Jake Knapp just published a fantastic book titled, Sprint: How to Solve Big Problems and Test New Ideas in Just Five Days. The book details a process he and his colleagues at Google Ventures use to quickly go from idea, to prototype, to live test. Jake put together an exclusive excerpt from the book for NirAndFar.com readers. Here it is:
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Whenever I feel uncomfortable writing about a topic, that’s when I know I should write about it. So here goes. This article is about how a new way of designing apps changed my life. But to explain the power of this trend, I need to tell you about poop. That’s the uncomfortable part.
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Addiction can be a difficult thing to see. From outward appearances, Dr. Zoe Chance looked fine. A professor at the Yale School of Management with a doctorate from Harvard, Chance’s pedigree made what she revealed in front of a crowded TEDx audience all the more shocking. “I’m coming clean today telling this story for the very first time in its raw ugly detail,” she said. “In March of 2012 … I purchased a device that would slowly begin to ruin my life.”
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This article originally appeared in the Harvard Business Review
A friend called me heartbroken, crying. She had spent months looking for investors to fund her fledgling startup and now she had a big problem. Someone was ready to give her the money.
Trouble was, the cash came with a catch. The only investor willing to pony-up the money was someone she didn’t like. She also got the feeling he did not like her much either, and yet, he wanted to invest. “If he was involved, I have the feeling I would quit my company down the road,” she told me over the phone.
Time was running out, she needed the funds and with no other investor ready to commit, she feared she’d have to take the money from someone she couldn’t stand. The very thought made her sick in the stomach.
I felt for her and her dilemma piqued my curiosity. What differentiates a great early-stage investor from someone no entrepreneur wants to take money from unless they absolutely have to?
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