[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.