The Venture Edge

 I just finished the semester at USC and for one of my graduate courses, Technology Commercialization, the students, who come from science, engineering, fine arts, psychology, and business have to write a reflection paper of about 4,500 words on the insights they gained and novel connections they made across all the various activities and requirements of the course. This is always an eye-opening experience for me because I learned long ago that students are frequently learning things you never thought you were teaching!

Today I ran across an article by Malcolm Gladwell in the January 18, 2010 New Yorker magazine. The title is "The Sure Thing: How Entrepreneurs Really Succeed." Whether or not you are a fan of Gladwell's work, he definitely has a way with words. He has a real knack for digging up interesting facts and weaving them into compelling stories. The main point of the article was that -- despite the popular myth -- successful entrepreneurs are NOT risk takers. Instead, they constantly strive to take the least risk possible.

It's not often that I disagree with Peter, and actually I'm not really disagreeing with Peter.  I'm disagreeing with one of the entrepreneurs he cited in his most recent post.  The entrepreneur, Justin Kan of Justin TV, claimed that "90 percent of start-ups fail because the founders get bored, discouraged, or something else, and they move on to other things, not because of some catastrophe."  Well, I don't know where he got his statistics but let me give you the top five reasons new businesses fail.

I have to thank Nassim Nicholas Taleb for writing one of the best business books I’ve read in a long time—The Black Swan: The Impact of the Highly Improbable. It has really changed the way I think about start-ups, success, failure, and the ubiquitous and annoying bell curve. Let me explain. Taleb’s core thesis is that the inventions, companies, and events that have the biggest impact on society, either positively or negatively, are not predictable. You can’t see them coming because there are no obvious signs announcing their arrival. In other words, you can’t plan for Black Swans (BS). You can’t, for example, come up with a business concept and an ingenious strategy to create the next Google (a Black Swan business). Even the founders of Google didn’t know when they started what impact their little search engine would have. After all, there were plenty of other search engines out there. Why did the funky, plain toast version offered by Google hit the mark? The truth is: BS technologies, inventions, and businesses—those that change the world—are rare events that hit us when we’re not looking and when we least expect them.