Analysis of unicorn startup founders(slimsaas.com)
slimsaas.com
Analysis of unicorn startup founders
https://slimsaas.com/blog/data-driven-analysis-startup-success
55 comments
You'd probably have far more 40-50 somethings with a couple decades of experience in the industry their startup is in, who raise funding from co-workers/customers/family members/former employers and not institutions. At that point, your 20 years of experience in the field will outweigh any Ivy League degrees.
Got data to support your claim?
Among the top 0.1% of startups based on growth in their first five years, we find that the founders started their companies, on average, when they were 45 years old. Why might this be? Although there are many other factors that may explain the age advantage in entrepreneurship, we found that work experience plays a critical role. Relative to founders with no relevant experience, those with at least three years of prior work experience in the same narrow industry as their startup were 85% more likely to launch a highly successful startup.
https://hbr.org/2018/07/research-the-average-age-of-a-succes...
https://hbr.org/2018/07/research-the-average-age-of-a-succes...
> how this landscape changes when you don't consider VC funding as a necessary part of being a startup
Unicorns are defined by scalability. There are scalable opportunities with low barriers to entry. But they tend to be hypercompetitive and thus a better domain for small business than unicorns. The moment you have barriers to entry and economies of scale you have a decisive advantage for the players with more capital. As such, when talking about unicorns, VC is a necessary condition. (VC firms may not be.)
Unicorns are defined by scalability. There are scalable opportunities with low barriers to entry. But they tend to be hypercompetitive and thus a better domain for small business than unicorns. The moment you have barriers to entry and economies of scale you have a decisive advantage for the players with more capital. As such, when talking about unicorns, VC is a necessary condition. (VC firms may not be.)
Elite schools could just mean "otherwise wealthy enough to take risks".
This is how I interpret things. People from that kind of background are also notoriously well-connected, so attempting a startup early or mid career isn't going to damage their ability to go back to the job market. For the rest of us, that would take some explaining at the interview table.
The bet is that if they fund 20 Harvard grads, one of them might be like Gates. Even if the rest are duds. The math still kind of works out, they need an outlier.
> The math still kind of works out
How many Gates are there in a typical Harvard grad cohort? Are 5% of Harvard grads a Gates?
If we're looking at lightning strikes, it seems like we should look at some of the most successful tech CEO's in history, in no particular order.
Gates & Zuck - Harvard (Microsoft and Facebook; both dropped out by end of second year or earlier)
Larry Ellison (Oracle, third richest man in the world in 2000's and currently 9th richest) - dropped out of Univ Illinois and Chicago
Larry Page, Sergein Brin (Google, dropped out of Stanford)
Elon Musk (Tesla/SpaceX/X/PayPal/etc, richest man in world, attended Queen's and then transferred to ivy league U Penn, one of the very few that completed a degree, BS in both Physics and Econ)
Jeff Bezos (Amazon, second richest in world, earned BSE in EE/CS from Princeton, summa cum laude)
Steve Jobs (Apple, dropout Reed College)
Of course, these numbers have such a high p-value that really it amounts to nothing more than a guess or, at best, a hypothesis, and I get that you're just suggesting that those who both get admitted to Harvard and actually complete a full education there have much higher than average rates of being successful, but it seems that the extreme ends of such a graph end up being counter-intuitive, because:
From a very quick review of an admittedly hand-picked assortment of the very small number of "most" successful tech CEO's (whatever that might mean), we can identify a few common characteristics:
1. most did attend a university of varying quality.
2. A minority attended an elite school.
3. most did not complete even their second year.
There are a lot of things that can be read into this, but it does seem to be borne out across most less-regulated industries: founders tend to be smart enough to get into university but perhaps too impatient to stay in for the duration, but leaders of older companies (such as larger and public companies) tend to have at least a four-year degree, although I don't have any hard data about this (particularly because there seems to be a dearth of data for "successful" startup founders outside of the VC world, for any meaning of the word "success".)
How many Gates are there in a typical Harvard grad cohort? Are 5% of Harvard grads a Gates?
If we're looking at lightning strikes, it seems like we should look at some of the most successful tech CEO's in history, in no particular order.
Gates & Zuck - Harvard (Microsoft and Facebook; both dropped out by end of second year or earlier)
Larry Ellison (Oracle, third richest man in the world in 2000's and currently 9th richest) - dropped out of Univ Illinois and Chicago
Larry Page, Sergein Brin (Google, dropped out of Stanford)
Elon Musk (Tesla/SpaceX/X/PayPal/etc, richest man in world, attended Queen's and then transferred to ivy league U Penn, one of the very few that completed a degree, BS in both Physics and Econ)
Jeff Bezos (Amazon, second richest in world, earned BSE in EE/CS from Princeton, summa cum laude)
Steve Jobs (Apple, dropout Reed College)
Of course, these numbers have such a high p-value that really it amounts to nothing more than a guess or, at best, a hypothesis, and I get that you're just suggesting that those who both get admitted to Harvard and actually complete a full education there have much higher than average rates of being successful, but it seems that the extreme ends of such a graph end up being counter-intuitive, because:
From a very quick review of an admittedly hand-picked assortment of the very small number of "most" successful tech CEO's (whatever that might mean), we can identify a few common characteristics:
1. most did attend a university of varying quality.
2. A minority attended an elite school.
3. most did not complete even their second year.
There are a lot of things that can be read into this, but it does seem to be borne out across most less-regulated industries: founders tend to be smart enough to get into university but perhaps too impatient to stay in for the duration, but leaders of older companies (such as larger and public companies) tend to have at least a four-year degree, although I don't have any hard data about this (particularly because there seems to be a dearth of data for "successful" startup founders outside of the VC world, for any meaning of the word "success".)
Page and Brin dropped out of a Ph D program. They have Masters degrees.
Excellent point, thanks for the correction!
1. Went to a top school
Prestigious people are essentially handed capital. This drives most of the funding at the very early stage. A random founder with no connections or background needs an MVP product with real traction, and even then may raise on worse terms than a stanford/harvard grad.
Raising venture funding can be thought of as a career path. Its not entrepreneurship. VC backed founders are more similar to hedge fund managers, they essentially get paid out a percentage of the capital they manage, assuming they manage it well. Raise 20M, you are bound to build a business with some revenue.
The bet is that if they fund 20 Harvard grads, one of them might be like Gates. Even if the rest are duds. The math still kind of works out, they need an outlier.
Prestigious people are essentially handed capital. This drives most of the funding at the very early stage. A random founder with no connections or background needs an MVP product with real traction, and even then may raise on worse terms than a stanford/harvard grad.
Raising venture funding can be thought of as a career path. Its not entrepreneurship. VC backed founders are more similar to hedge fund managers, they essentially get paid out a percentage of the capital they manage, assuming they manage it well. Raise 20M, you are bound to build a business with some revenue.
The bet is that if they fund 20 Harvard grads, one of them might be like Gates. Even if the rest are duds. The math still kind of works out, they need an outlier.
I wouldn't look at that as a "rich get richer" situation. Spend some time with people who attended different calibers of schools, and you'll see that it's not quite so simple to explain, especially when you spend time listening to different peoples' insights about life, and their self discipline. (The kind of insights and discipline needed to start a successful company with VC money.)
The schools aren't gatekeepers to VC networks.
I wouldn't put too much weight on this article. It's just statistics without interpretation, because it doesn't really explain what makes a successful startup founder.
The schools aren't gatekeepers to VC networks.
I wouldn't put too much weight on this article. It's just statistics without interpretation, because it doesn't really explain what makes a successful startup founder.
I have worked closely over the years with people from Ivy League/Oxbridge schools to small universities from developing countries and I would not put the people from the elite institutions at the top of the rankings of discipline or ability from my experience.
I live in NYC and have raised capital/am part of social networks of founders in NYC. I have first hand experience with this, I understand the game really well.
The schools absolutely are gatekeepers.
The schools absolutely are gatekeepers.
Correlation does not imply causation.
I'm being a little cagey because I don't like to generalize in public forums.
In this case, what I'd say is that Ivy League schools both recruit and attract certain people.
> The schools absolutely are gatekeepers.
To put weight behind that statement, we'd need to somehow believe that someone who can attend an ivy league school, when attending a less prestigious school, is substantially less likely to find VC money.
I personally believe that such a person is attracted to an ivy league school, such that I would argue that someone who is likely to raise VC money is more likely to attend an ivy league school. It's not that the schools are the gatekeepers, it's that if they change their admittance criteria, the "minds that think alike" will attend other schools, and then those other schools will get a reputation for their grads gobbling up most of the VC.
IE, a certain kind of person is likely to raise VC, and that certain kind of person is likely to attend an ivy league school: Correlation does not imply causation.
I'm being a little cagey because I don't like to generalize in public forums.
In this case, what I'd say is that Ivy League schools both recruit and attract certain people.
> The schools absolutely are gatekeepers.
To put weight behind that statement, we'd need to somehow believe that someone who can attend an ivy league school, when attending a less prestigious school, is substantially less likely to find VC money.
I personally believe that such a person is attracted to an ivy league school, such that I would argue that someone who is likely to raise VC money is more likely to attend an ivy league school. It's not that the schools are the gatekeepers, it's that if they change their admittance criteria, the "minds that think alike" will attend other schools, and then those other schools will get a reputation for their grads gobbling up most of the VC.
IE, a certain kind of person is likely to raise VC, and that certain kind of person is likely to attend an ivy league school: Correlation does not imply causation.
Dude just go look at the founders at ycombinator, huge percentage went to top schools. They only interview them for 10 minutes. Without some kind of proof of being able to run a startup (MVP and traction), capital is allocated based on education.
are you successful then? what unicorn are we talking about?
I'm saying at the seed stage, in nyc, the funding is like 80% ivy league grads
But that doesn't prove your point. Plenty of startup founders raise funding without an Ivy degree, or a degree at all. Most people without a degree, however, don't try to raise funding, whereas more people from 'prestigious' schools see it as an option.
In biotech, this is an understatement. PhD's get to develop stuff for years using university funds while on a salary.
That feels like a slightly different can of worms, though.
That's an entirely different topic
And they work slavery hours,6 am to 1am
so? most founders are doing that without pay, without a budget, and (most importantly) without the credibility that comes from the org/lab/prof
It's apples and oranges.
If a founder is successful they stand to earn billions in intellectual property value, not to mention the income from the product itself.
PHD's earn practically no money even if they are succesful, apart from earning their degree. (Which has an abstract long-term monetary value)
Seems very different to me. Apart from this, PHD's are employees, while founders are... well... bosses ;)
If a founder is successful they stand to earn billions in intellectual property value, not to mention the income from the product itself.
PHD's earn practically no money even if they are succesful, apart from earning their degree. (Which has an abstract long-term monetary value)
Seems very different to me. Apart from this, PHD's are employees, while founders are... well... bosses ;)
> No plan B
That really hits home for me. I decided to start my current company (https://ipcopilot.ai) when I had already been out of work 3 months, I had 4-6 months runway when I left my prior role. Meaning, I had 1-3 months left before I couldn't pay my mortgage when I incorporated my company.
My responsibilities were high: 3 kids, wife due with another baby in 60 days, no source of income, and an estimated 45-60 days of runway. I passed up two mid-six figure jobs to start this business. My wife just said "better make this work", which fair enough haha.
I was able to get 3 funding offers in 45 days & signed the paperwork for funding the day my 4th child was delivered (1 hr after). 48 days after my first VC meeting. Barely able to make my mortgage payment (my co-founder offered to lend me money).
Obviously, didn't tell the VCs how up against the wall I was, but to say it was stressful is an understatement. That said, everything worked out well and business has been doing great. I had to make it work, there literally wasn't another choice. And if this sounds insane, it kind of was, but I saw the opportunity and took it. I'm also sure I would have figured it out if things didn't work out as well, but inexplicably I knew it would work out. Might also play into the: "Unlimited self-belief"... haha
That really hits home for me. I decided to start my current company (https://ipcopilot.ai) when I had already been out of work 3 months, I had 4-6 months runway when I left my prior role. Meaning, I had 1-3 months left before I couldn't pay my mortgage when I incorporated my company.
My responsibilities were high: 3 kids, wife due with another baby in 60 days, no source of income, and an estimated 45-60 days of runway. I passed up two mid-six figure jobs to start this business. My wife just said "better make this work", which fair enough haha.
I was able to get 3 funding offers in 45 days & signed the paperwork for funding the day my 4th child was delivered (1 hr after). 48 days after my first VC meeting. Barely able to make my mortgage payment (my co-founder offered to lend me money).
Obviously, didn't tell the VCs how up against the wall I was, but to say it was stressful is an understatement. That said, everything worked out well and business has been doing great. I had to make it work, there literally wasn't another choice. And if this sounds insane, it kind of was, but I saw the opportunity and took it. I'm also sure I would have figured it out if things didn't work out as well, but inexplicably I knew it would work out. Might also play into the: "Unlimited self-belief"... haha
Intriguing product, definitely something that is a major pain point for inventors.
I do wonder however, I see a couple of the profiles listed show 500+ patents.
Does this indicate that we are now in an era of full fledged "IP spam" or can you argue that inventors have in fact historically been under-rewarded by the difficulty of filing patents? Otherwise that is a lot of patents for someone who isn't building a spacecraft :)
I do wonder however, I see a couple of the profiles listed show 500+ patents.
Does this indicate that we are now in an era of full fledged "IP spam" or can you argue that inventors have in fact historically been under-rewarded by the difficulty of filing patents? Otherwise that is a lot of patents for someone who isn't building a spacecraft :)
Haha to be fair, the team I ran was an applied research group that’d partner with teams within the organization. So every month we’d do designs & bring in ML expertise to a new project. Plus we maintained a ton of tools. This resulted in a lot of patents every month. Particularly, around generative AI, autoML, federated learning, etc years before it was popular. So it was a fairly open space, resulting in a high number of patents
Well I got the impostor syndrome thing down 100%.
The top university factor is probably bias. I mean those schools are good and lots of good people come from them, but people from those schools are also more likely to get funding and other things like top tier employees and co-founders. That's going to create an outsized effect.
Solo founders being older makes a lot of sense because to be successful as a solo founder you need a deeper skill set. You really need to be both technical and business/sales until you can get far enough to hire for the ones you are weaker on.
The top university factor is probably bias. I mean those schools are good and lots of good people come from them, but people from those schools are also more likely to get funding and other things like top tier employees and co-founders. That's going to create an outsized effect.
Solo founders being older makes a lot of sense because to be successful as a solo founder you need a deeper skill set. You really need to be both technical and business/sales until you can get far enough to hire for the ones you are weaker on.
> people from those schools are also more likely to get funding and other things like top tier employees and co-founders
You are also likely to come from a family with stable finances, and might be able to afford not working on something tied to a direct income for a while.
You are also likely to come from a family with stable finances, and might be able to afford not working on something tied to a direct income for a while.
That may be true for Stanford and Harvard (I don’t know), but a wild majority of MIT students were there on financial aid. There was clearly a spectrum, but overwhelmingly the people at MIT did not seem to be well off.
As someone from a mid tier state school, I've definitely found that people from elite schools work harder and produce more consistently good work. I think this is just anti-elitism cope.
Do they work harder because they attended elite schools or did they attend elite schools because they worked harder?
It’s all multipliers: a bias existing doesn’t mean that there isn’t also a factor that relates to the quality of the education. You’re more likely to attend a top university if you have good contacts, good finances, and good test scoring already — those are also probable significant factors to whether you’ll successfully start a company. Location also matters–and at least in Europe–VCs, engineering staff, and top-tier universities are often in the same area.
None of that is dismissive of the schools’ qualities, but all those factors contribute to a bias that likely exaggerates the reader’s perception thereof.
It’s all multipliers: a bias existing doesn’t mean that there isn’t also a factor that relates to the quality of the education. You’re more likely to attend a top university if you have good contacts, good finances, and good test scoring already — those are also probable significant factors to whether you’ll successfully start a company. Location also matters–and at least in Europe–VCs, engineering staff, and top-tier universities are often in the same area.
None of that is dismissive of the schools’ qualities, but all those factors contribute to a bias that likely exaggerates the reader’s perception thereof.
I don't disagree. I don't think the quality of education at Harvard is that different from other schools. But the quality of the people that get into these schools is way higher. Yes having a good upbringing makes you more likely to get into a good school, and as a result of your upbringing you're more disciplined, educated, and capable. The good have already been sorted from the bad before they've even been accepted into a a school.
Would have been interesting to see the following factors considered:
• Presence of one or more mentors in their life
• Exposure to successful adult role models in childhood
• Financial ability to survive for extended period of time without income
• Access to talent in their personal network
• Presence of one or more mentors in their life
• Exposure to successful adult role models in childhood
• Financial ability to survive for extended period of time without income
• Access to talent in their personal network
The title definitely needs to say is "What unicorn startup founders have in common". There are plenty of 'successful' startup founders who never become household names and make billions of dollars.
Bootstrapping a simple startup that eventually generates enough revenue to sustain the founders and perhaps a small team of ICs, is much more common than unicorn companies (they call them unicorns for a reason). Those companies are successful in my book.
Bootstrapping a simple startup that eventually generates enough revenue to sustain the founders and perhaps a small team of ICs, is much more common than unicorn companies (they call them unicorns for a reason). Those companies are successful in my book.
> Unlimited self-belief
> History of feeling like an imposter
How is this not contradictory?
How is this not contradictory?
I know that I can achieve anything I put my mind to. I feel like I can shoot lightning from my hands and I wield 2 lightsabres.
However, as a primarily computational and business-oriented founder, I am trying to disrupt an industry that is dominated by scientific PhDs and institute spinouts. So even if my science is really novel, I'm still an outsider.
I'd imagine that most founders are, to an extent, outsiders. You kind of have to be in order to develop a radically new thing. You have to be dissimilar to the status quo.
However, as a primarily computational and business-oriented founder, I am trying to disrupt an industry that is dominated by scientific PhDs and institute spinouts. So even if my science is really novel, I'm still an outsider.
I'd imagine that most founders are, to an extent, outsiders. You kind of have to be in order to develop a radically new thing. You have to be dissimilar to the status quo.
"I can accomplish anything, but I won't be really worthy until I accomplish that next big thing."
Rinse and repeat after every significant accomplishment.
Rinse and repeat after every significant accomplishment.
Not a founder (yet) but I think it's relatable. I believe in myself that I can learn and achieve anything and be really good at it but when I see the seniors and people doing amazing things, I feel like I still have a long way to go and prove myself.
I don't see a contradiction. Self belief means you believe that you can accomplish what you set out to so are willing to bet on yourself and take risks. Feeling like an imposter is a motivational drive from the other end of the spectrum pushing you to continuously improve, holding yourself to a progressively higher standards, and never resting on your laurels.
> Feeling like an imposter is a motivational drive from the other end of the spectrum pushing you to continuously improve, holding yourself to a progressively higher standards, and never resting on your laurels.
And also making you depressed. It’s something real to look out for.
And also making you depressed. It’s something real to look out for.
LOL
"Psychological Factors: No plan B + Unlimited self-belief + History of feeling like an imposter"
no sane person would start a company ;)
As a joke goes, an entrepreneur is someone who is willing to work unlimited hours, with no clearly specified days off, for wildly unsure income figures, just so they don't have to work 8 hours 5 days a week with 28 paid vacation days and a stable pay check.
I appreciated the simplicity of this page
Couldn't find much (didn't look through the source reports) on socioeconomic background - any interesting statistics there?
There's a difference in "No plan B" if you have a family or network that you can fall back on, or if it means you'll end up as a homeless person.
There's a difference in "No plan B" if you have a family or network that you can fall back on, or if it means you'll end up as a homeless person.
Immigrant founders piece is interesting.
Forgot to mention "lucky" part.
In what way is luck important? One part of me says someone that identifies an urgent market need and executes on it doesn't need too much luck. On the other hand, maybe luck is important in terms of your network: meeting the right person at the right time. (This leads to "luck surface area" arguments.)
Warren Buffett, Bill Gates, Elon Musk, Jeff Bezos, Charlie Munger, Ray Dalio, Mark Cubam, Ophray, Richard Branson, Steve Jobs, Jack Ma, Howard Schultz, Sheryl Sandberg. And many more mentioned Luck played a big role in their success.
Please use google.com search for the name of the person + "interview" + "luck" and you will find the first results to be the relevant ones.
Please use google.com search for the name of the person + "interview" + "luck" and you will find the first results to be the relevant ones.
Yes, I have seen many of the interviews from these extreme outliers. But I am curious to hear regular people's experiences with luck, and whether they have succeeded without much of it, even if they didn't become billionaires.
Another interesting point, and this is likely outside the scope you are wanting to do, is to do democraphics -> positive personal financial outcome (ie: people who successfully landed it). The past few years has shown it isn't difficult to start a 'startup' but still difficult to get a positive financial outcome for the people who founded it. I am not saying it will change or one group is better, just curious to see how the demographics hold or if all the "elite school" and "elite employer" ends up washing out where it becomes a coinflip.
From my personal experience, people who went to "elite schools" and/or "elite employers" for an extended period aren't as good of a fit as people who are more 'underdog' background (more startup experience, no big school name or maybe even any college, etc). The Harvard / etc junk in my opinion is just Zuckerbergs/Gate overfitting by VCs (some are great, some are awful; essentially the same as any other school).