Re:The Man Who Knows Whether Any Startup Will Live or Die
by joshyeager on Friday January 30, 2015 @08:54AM
(#8971974)
That only works if startups fail 50% of the time. If they fail more frequently, a coin flip would be wrong.
Re:The Man Who Knows Whether Any Startup Will Live or Die
by kylebrown on Friday January 30, 2015 @10:32AM
(#8972463)
Its not clear from the article which factor the 50% figure applies. I doubt its the overall odds ratio, but rather the likelihood given some priors. For example, given a prior that 90% of startups fail, what is the likelihood that this particular startup will succeed? If the prior is already factored in, then the model predicts no better than a coin flip.
The point made in the article is that investing at the odds of a coin flip would be better than investing with incorrect risk assumptions (ie. buying into "particularly bad ideas").
Re:The Man Who Knows Whether Any Startup Will Live or Die
by sickpig on Friday January 30, 2015 @09:10AM
(#8972047)
I stand corrected, you're right. I'm supposed to know better.
Re:The Man Who Knows Whether Any Startup Will Live or Die
by jgeralnik on Friday January 30, 2015 @10:33AM
(#8972470)
Nope, you're still right.
Assume startups fail 90% of the time. 50% of the time your coin comes up tails, and you claim the startup will fail. 50% of the time your coin comes up heads and you claim the startup will succeed.
You guess correctly 0.5 (the chance your coin comes up tails) * 0.9 (the chance the startup fails) + 0.5 (heads) * 0.1 (success) = 0.5 of the time.
He admits the models will never be perfect, but thinks that even a model that’s only right about 50 percent of the time could help investors and entrepreneurs avoid particularly bad ideas
dunno why but I can't stop thinking that tossing a coin could achieve the same goal :)