What is the statistic on number of startups that have made it?

I know that the term "making it" might be a very subjective term but I think we all have a sense for what it means. At some point in time having an actual revenue was considered "making it" but with the recent valuations for companies with no revenue that is also an old concept and not a very good representation. I guess I am looking for two answers:

1. How do you measure success of a start-up?
2. What is the stats on start-ups that have made it?

Arman,

How do you measure the success of a startup? I think the most valid answer is did it achieve the goals the founders have for it. Some startups (microISVs - self funded, 1-3 founders) would say that making 3X what they could make as developers on an ongoing basis is success.

Someone doing their first startup might say that any kind of early exit that creates a successful track record and nets positive is a success.

What are the stats on startups? Jason's stats at http://blog.asmartbear.com/starting-a-business-isnt-as-crazy-and-risky-as-they-say.html are the best I've seen, but are not IT specific, nor are there good stats just for IT because the environment changes so quickly that stats from say 5 years ago have little meaning now. Here's two things to mull:

• In 8 months Microsoft signed up over 15,000 startups for its BizSpark program. Since I'm a network partner (unpaid, don't work for microsoft) I've approved about 350+ of them. Some are more specific and skilled than others, but most of these people are .NET developers cash-constrained who are eager to build startups.
• I've been actively engaged with the Startup community for about 5 years now. It is at least triple the size it was then.

Before you can ask the question of whether a business has acheived success, you have to be able to set and deliver the goals that are critical to the launch and continued well being of the company.

As for successful start ups, I think the UK statistic is approximately 90% fail within 3 years which equates to about 300 per day closures. It sounds dramatically high but I suspect that most of these are lifestyle type businesses and not long term ones however if you're one of the 300 or so that close, it can still be a traumatic experience.

The solution to this is to ensure that you try to answer the what if questions before you start. This way you begin to plan around the risks rarther than have to deal with each problem as it develops.

Hope this helps to progress the discussion?

Richard
www.rcbusinesssupport.co.uk

It's hard to get good numbers on startups because there's so much un-reported stuff that happens in houses and "on the side."

However, here's a bunch of data from the US Census and several other sources.

It doesn't sound like the intent of your question is an analysis of risk before taking the plunge. But I'm guessing others will find your question with that intent in mind, so here is my answer to them:

In many fields you only see a 1%
success ratio because the other 99%
are merely taking up space. They’re
just dabblers, not serious contenders.
You’ll often see this 1% figure in
fields with a low barrier to entry
such as blogging, acting, or music.
You’ll find a small percentage of
people who are really committed to
mastery, but the rest have virtually
no hope of notable success.

I'm wondering about the intend of the question. Lets say there's some, arbitrary determined, statistic on startups "making it". What would that number mean?

• Would you jump in because the numbers seem favourable? Statistics will not guarantee you success. Startups take a lot of work. If the stats come from a self-selected group determined to work hard, the numbers will be deceiving.
• Alternatively, would you give up on a dream of pursuing your own idea, just because the field is flooded by mediocre ideas and many just don't follow throw, driving the average down? If you are really interested in your own idea, this will hardly be a vetoing factor.

There are different statistics... There was a study that showed that the number of ideas that people had to generate and test in order to have an IPO was 3000. Those are not just ideas that people had, but the number of ideas that people actually did something with, like try to raise money for.

If you are interested in a business rather then an IPO, there are a lot of other statistics. 9 out of 10 businesses fail in the first five yours. 9 out of ten of those that survive fail in the next five years. Once you make it past the 10 year mark your chances get better. That being said, 95% of family owned businesses collapse in the 3rd generation, since usually the 1st generation is the founders, the 2nd generation are the leeches and the 3rd generation are the destroyers.

If you are looking for safety and security, starting your own business is not the safest route. Regardless of the risk, if you are an entrepreneur deep inside, then its the only way to live. You can try to reduce the risk by improving your education, building a wining team and asking for advice in places like this website, but the odds are stacked against you any way you look at it. The good news are that its better then the casinos, since you can win, and it is far more satisfying.

I'm a big fan of analyzing potential failure points and keeping your eyes open as you walk through the life of your business, but the over/under on businesses that fail isn't useful information.

You really don't want to know the statics. As Guy Kawasaki once said, and I agree with him, Ignorance is Bliss and then-some. The best way to push the boundaries of what is possible is to not know the boundaries were there in the first place. If you go into this thinking you're going to fail, then you're going to fail.

Instead, read case studies and interviews with founders in your line of business and their related fields. You can learn more by hearing about the decisions founders made and the outcomes of those decisions than from statistics.