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If you can 'cut out the bottom 50%' reliably, I think a lot of VCs would want to hire you.


The easiest way to figure this out is simply to look at the founding members previous work. It's no different than hiring an employee. Past work is the best tell against future success.

Granted this is tougher with higher level dudes, as it's hard to ascertain credit in success, but it usually works.


Effective hiring is incredibly difficult, and "past work" is never a sure fire indicator of ones aptitude for your companies' needs. A person hiring needs to consider how a candidate will fit within a work environment and get along with the current team (an otherwise very nice and highly skilled person sometimes just doesn't mesh with the way a team likes to work, not out of unwillingness on anyone's part, but simply out of the fact that we all have habits).

Are they the sort of person that can hit the deadlines we need and doesn't mind the stress and extra hours involved?

Will they be comfortable with our business philosophy and practices?

What kind of outlook do they have on their career? What at this point in their life is important to them (career? kids? sailing around the world?)

Hiring is messy, mainly because it involves humans. Past work may be a good chaff filter, but it's by far not the only consideration to finding a good candidate for your needs.


That's true, but I never said sure fire.

I'm just saying if I'm looking to work for a startup as a non-founder, the first thing I'd want to know is... what did the founders do before this? If it's related and was successful that's going to give me more confidence than just about anything else.


So choosing between

- Harvard dropout

- couple of Stanford grad students

- seasoned guy who started a major national bookstore chain

third sounds like a winner?


You can throw in there the senior VP of an investment firm.

The answer depends on whether you are trying to maximize expected value or the probability of hitting a black swan event.


If you feel you can reliably judge this, you should open a VC fund.


I can substantially increase the probability of success of this particular startup by becoming an early employee and applying my skills and talents. I believe that, and founder who is hiring me believe that -- if either of didn't think so then the hiring wouldn't happen. That is different from an investor who may not see me as exceptional (except maybe they do... after all, investors care a lot about the team, including not just founders but also early hires).


While I have no data in support of this, and thereby could be totally fooling myself, it does not look hard to spot irrationality in human behavior, which happens to be a lot more common than what most people think. I am assuming that such irrational thinking on part of the founders and key executives would correlate at least somewhat with a startup's success or failure.


You are likely wrong. Here's why.

Taking the "outside view", the success rate of startups is small. VC's, whose entire living depends on picking the right startups, are still living with low odds.

It's true that VC's have different priorities, in that they are optimizing for large successes and therefore are part of the reason that the success rate is so low. On the other hand, if you join a startup and get options, it almost certainly raised VC money, and is therefore also being pushed in the "get big" direction. And if it's not, your payday won't be particularly big either.

In other words, taking an outside view in this case, you probably can't do better than VC's, and their success rate is what the article talks about.


I am not confident that I understood you in full, so am rephrasing what I am understanding:

1. Given the experience VCs have, having seen much larger number of startups than a common founder, some validation of the startup's concept and also the founders' rationality quotient already comes from a money raising event.

2. Success statistics are very different if you include vs. not the startups that are unable to raise money. A startup that is unable to raise funding is probably not even getting included in the statistics, even if the founder may loose all his savings into it to consider it a failure.

3. I follow your point about optimization for getting big.

Thanks


The article compares startups that received seed funding - which is mostly given out by experienced investors like Paul Graham.

If your decision to join or not join a company hinges on the assumption that you're better at picking winners than Paul Graham, well, that's a big assumption.


Perhaps not from the outset. But if you put your mind to it, you can probably make a good guess about whether to cut and run after 12-18 months, and go for another lottery ticket.


This is a good point. Employees in particular have a unique perspective that investors are largely shielded from - they get to see the politics, the inefficiencies, and all the dark corners that are smoothed over or hidden from board decks.

I would imagine if you took a sample of failed companies, and interviewed their investors and their employees, in most cases the employees knew the ship was sinking long before the investors did.




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