Henry Blodget is a smart journalist who knows how to drive pageviews. He certainly got me to click through when he picked the headline, “DEAR ENTREPRENEURS: Here’s How Bad Your Odds Of Success Are”
Blodget riffs on a tweet by Paul Graham to estimate the odds of startup success:
“Graham says that 37 of the 511 companies that have gone through the Y Combinator program over the past 5 years have either sold for, or are now worth, more than $40 million.
Most entrepreneurs would probably view creating a company worth more than $40 million as a success (unless the company raised more capital than that). And, on its face, the “37 companies” number seems relatively impressive.
In fact, however, the number tells a scary and depressing story.
This number suggests that a startling 93% of the companies that get accepted by Y Combinator eventually fail.
If only 37 of the companies that have applied to Y Combinator over the years have succeeded, this is a staggeringly low 0.4% success rate.
Put differently, only one in every 200 companies that applies to Y Combinator will succeed.”