Startup Genome Project

The Startup Genome Project is going to shake things up.

Posted on: 05-28-2011 Posted by: Bob Walsh

For an industry at the cutting edge of science, the Startup Industry for too long has relied on myth, folklore and tribal tales to explain why some startups become Google and most die.

Now, Hermann Björn (of Startup School), Prof. Steve Blank (one of the Lean Startup Amigos) and the rest of the Startup Genome Project have changed the discussion by releasing their first survey of 650 startups – stripping away the myths and old VC tales about what makes a startup successful and contributing real data and real facts to the discussion.

The Startup Genome Project team came together 3 months ago to attempt to crack the “innovation code” of Silicon Valley and share it with the rest of the world. Today they released the first Startup Genome Report— a 67 page in depth analysis on what makes Silicon Valley startups successful based on profiling over 650 startups.

Here’s some of the conclusions that caught my eye – I’d strongly suggest you read the full report:

1. Founders that learn are more successful: Startups that have helpful mentors, track metrics effectively, and learn from startup thought leaders raise 7x more money and have 3.5x better user growth.

2. Startups that pivot once or twice times raise 2.5x more money, have 3.6x better user growth, and are 52% less likely to scale prematurely than startups that pivot more than 2 times or not at all.

3. Many investors invest 2-3x more capital than necessary in startups that haven’t reached problem solution fit yet. They also over-invest in solo founders and founding teams without technical cofounders despite indicators that show that these teams have a much lower probability of success.

4. Investors who provide hands-on help have little or no effect on the company’s operational performance. But the right mentors significantly influence a companyâ€™s performance and ability to raise money. (However, this does not mean that investors donâ€™t have a significant effect on valuations and M&A)

5. Solo founders take 3.6x longer to reach scale stage compared to a founding team of 2 and they are 2.3x less likely to pivot.

Don’t want to read 67 pages? Check out the cool infographic that summarizes the findings: