Re: Why SIAI is a nonprofit

From: J. Andrew Rogers (
Date: Sat Oct 23 2004 - 11:16:50 MDT

On Oct 22, 2004, at 11:35 PM, Marc Geddes wrote:
> 80% of all new businesses fail. Even with an
> excellent business plan, I think Eliezer is right, the
> chances of success wouldn't rise above 50%. Also
> correct is that the business would become your life.
> You'd have to do nothing else for at least 5-10 years.

80% of all new businesses fail because of 80% of all people starting
new businesses are new TO business -- the distribution of who fails is
far from random. For people that have been around long enough to have
figured out how it all works in practice (i.e. been through a few
failures or marginal businesses), it seems that they have something
around an 80% *success* rate. There is a learning curve.

This is one of the reasons that it is always a good idea to hand over
the reins to a competent and experienced executive if you are new-ish
to the game if possible. First-timers hate to do this because they
feel like they are losing control of "their" business, and they usually
learn the lesson the hard way by making all the same mistakes
first-timers do. If you can't pull off both attracting competent
executive talent and giving up control of the company, you probably
shouldn't be betting the farm on a venture.

Most people are neither careful enough nor disciplined enough (or lucky
enough) to be successful in business the first time around. My first
attempts at starting companies were ridiculous failures. I haven't had
a venture fail in many years (though some never really took off), but I
would *still* defer to a really experienced and competent executive
given the opportunity to do so in a business. After all this time, the
most I can really say is that I am confident that when I start
businesses they are unlikely to crash and burn.

j. andrew rogers

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