Why would I start a business if I only have a 5% chance of succeeding?

echojason@gmail.com'

JASON LEMKIN

Don’t do it.

With both my start-ups (maybe three, if you count SaaStr and SaaStr Fund) … I was 100% sure we’d succeed.

And I was 99% wrong once I got into it.

  • The first one, we sold for $50m after 12.5 months. I closed $6m in revenue in the first 180 days. But we almost lost all our customers. I almost had to declare bankruptcy to cover the $750k note I put in. We lost our key outside hire, our COO, who we couldn’t do it without. Our odds went from 100% on the model to 1% in the real world.
  • The second, the founding team imploded. Yes, we sold for a lot more this time. But we almost died the first year. And the second. The market evolved in a very different way than we thought. We spent all the venture money. We barely, barely got to $1m in ARR and $2m ARR. (After that, the issues faded).

What I do know, is if I’d had less than 100% conviction — we would have failed for sure.

Of course the odds of success in a start-up are low — by the numbers.

But if you think the odds are less than 100%.

I say pass.

More here: https://www.saastr.com/the-saas-…

View original question on quora

Published on May 22, 2017
  • Jason,
    the fact that founders believe in their startup doesn’t increase the objective statistical odds.
    BUT, I think it’s wrong to look at these statistics and infer about your chances because every entrepreneur begins from a different starting point.

    Take these two:
    Startup #1:
    3 founders
    combined 10 years relevant experience
    2 of them founded and sold a previous startup to Salesforce for $30 million within 4 years
    Been friends for 10+ years

    Startup #2:
    3 founders
    met at a pair-up event 2 months ago
    3rd year in a middle tier Uni (all technical, no biz guy)
    No relevant experience

    Obviously startup #1 has a better starting point, but the data I provided is still lacking critical information (maybe startup #2 has world-class mentors, maybe their industry is growing 20% MoM in the past year etc.).

    I think that the way “chances” to succeed are calculated is too general and simplistic (“99 out of 100 will fail”), it should be calculated differently for each case, each startup has different chances to succeed based on their starting point.
    You said it well in your answer “How do you get your first (or first couple) major customers?”:
    “every story is different.”

Share This