[larrys]

"A lot of people think that they want to be an entrepreneur because it’s a good way to make money. It just isn’t, that’s just wrong. Depending on how you count, 95% to 99% of companies fail."

Excuse me. It is a way to make money. That figure assumes the definition of entrepreneur is only startups as discussed in places like HN, Techcrunch etc.

Not only is the figure of 95% or 99% wrong with respect to "entrepreneurs" (unless of course you increase the time to, say, 100 years at which case it may be true across the board) but its like saying "don't apply to Harvard or YC because the chance...". It doesn't take into account any particular persons idea or qualifications to be a success.

But most importantly, the definition of being an entrepreneur also includes running a small restaurant or opening a physical warehouse and selling exercise equipment or starting a website to sell new and used office desks or a million other ideas that will never make it to HN or TC that can make you a good living.

[jpdoctor]

> Not only is the figure of 95% or 99% wrong with respect to "entrepreneurs"

I believe he's quoting numbers from Shikhar Ghosh at HBS. Here's one article that google brought up with a little more detail about how "failure" is defined:

The statistics are disheartening no matter how an entrepreneur defines failure. If failure means liquidating all assets, with investors losing most or all the money they put into the company, then the failure rate for start-ups is 30 to 40 percent, according to Shikhar Ghosh, a senior lecturer at Harvard Business School who has held top executive positions at some eight technology-based start-ups. If failure refers to failing to see the projected return on investment, then the failure rate is 70 to 80 percent. And if failure is defined as declaring a projection and then falling short of meeting it, then the failure rate is a whopping 90 to 95 percent.

http://hbswk.hbs.edu/item/6591.html

[mediaman]

Great detail on the source of that stat. The use of that 90-95 percent metric is next to meaningless in defining failure rates of startups. There are tons of successful companies generating great returns who have not met the initial projections, because initial projections tend to be unrealistic.

I founded a startup that's profitable and doing $5mm in revenue but would be considered a "failure" because at the beginning we played the hockeystick revenue projection dance (partly to appease potential investors, who discount whatever number you give them anyway, and partly because we were wildly optimistic).

[ImprovedSilence]

Yup. But I'd like to see the numbers for second or third try entrepreneurs. of all types. If my first three goes tank it, but the fourth one makes it, OHBOYOHBOYOHBOY!. Then I've got a 75% fail rate, but I'm still a success. (insert inspirational "fall down seven times, stand up eight",I havent failed, I just found 99 ways that don't work" etc...)

[lusr]

Don't know why people are voting you down. I'd rather hit middle-age penniless but full of experience and no regret, than look back and say "Well, I sure managed to scrape by in life without taking any chances or attempting any of my dreams!" There are plenty of stories of people who didn't start successful business until their 40s but the net effect of the preceding 20/30 years gave them a massive boost (e.g. http://en.wikipedia.org/wiki/Duncan_Bannatyne).

[lusr]

I don't follow this logic as a valid reason not to become an entrepreneur.

1. The 90..95% definition is stupid. Projections are irrelevant other than for purposes of planning, appeasing investors and roughly determining whether the business model is viable. Depending on the entrepreneur's goals, actual long-term ROI is all that matters.

2. In that respect, 70 to 80% failure to generate projected ROI is not bad. I've never been in the 80-percentile of anything of I've done, therefore these statistics are actually pretty encouraging to me.

[eli_gottlieb]

So the actual failure rate is 30-40%, but start-ups are subject to the Planning Fallacy.

[carguy1983]

"projected" return, "declaring" a projection then "falling short"...

These terms invalidate the given statistics, rendering them essentially meaningless. These figures are geared toward being consumed by finance professionals, not by people actually running small businesses or who found startups.

[vibrunazo]

Also, it's important to note that most startups that fail to make money, also fail to change the world. So if statistics are the reason why you shouldn't start a company for money. That's the same reason why you shouldn't start a company to change the world.

The argument Phil Libin is making very silly and very typical kind of advice from people who are not really trying to help you at all.

[eli]

The average expected income from working at a large corporate may well be higher than founding a startup. But there's at least the chance of making a lot of money in a startup. It's very unlikely that you'll stumble into a windfall working for a large corporation.

[cynicalkane]

Beware this logic; it leads to playing the lottery.

[beneth]

"You can't win if you don't play" isn't any less true with the lottery, you're just looking at much worse odds than other, more preferable, situations.

[moocow01]

Its also very unlikely you'll stumble into a windfall founding or working for a startup. Its something some may not want to hear but from a purely financial perspective of startup vs corp, 99% of cases it is always going to be financially better to work for a corp.

If you're working for a startup hopefully you are doing it for better reasons.

[lusr]

There's nothing stopping you from hedging your bets. I work full-time and put away 60%+ of it. This is capital for whatever investments I make, including into my own startup that I work on when I get home. Fact is I get paid what I do by the corp because I'm worth at least that much. As a single, unmarried software developer there's nothing stopping me from exploiting my value generating capabilities directly, so not attempting a startup is nonsensical IMO.

[EricDeb]

In the same way one could argue that a person like Kevin Rose has almost a 99% chance of succeeding in a startup he founds.