[HN Gopher] Highly differentiated startups raise 117% more funding
___________________________________________________________________
Highly differentiated startups raise 117% more funding
Author : tdmckinlay
Score : 16 points
Date : 2022-07-20 16:39 UTC (6 hours ago)
(HTM) web link (tips.ariyh.com)
(TXT) w3m dump (tips.ariyh.com)
| __alexs wrote:
| Do they get 117% higher valuations too?
| smt88 wrote:
| This is terrible research. The results are meaningless.
|
| At best, it's a case of confirmation bias. The most highly-
| differentiated startups don't raise anything and no one ever
| hears about them. Crunchbase doesn't capture the majority of
| these, so the data used here isn't representative.
|
| Then they use NLP to determine how different the products are.
|
| Those of us who get pitched by SaaS vendors all the time know
| that two companies can do the exact same thing and have totally
| different product descriptions. Salesforce started talking about
| IoT for a while, and they still bill themselves more as an ERP
| when most people still use them as a CRM.
|
| There's also the issue of those who pivoted. Most startups pivot,
| and the author admits to ignoring pivots altogether!
|
| > "2. Found the websites of all these companies, in the year each
| startup was launched (using WaybackMachine, a historical archive
| of web pages)."
|
| > "3. Scraped the text on these websites and ran them through a
| natural language processing (NLP) machine learning algorithm
| (doc2vec)."
|
| > "4. Measured how different the startups' value propositions
| were to those of competitors (e.g. focused on a niche product
| feature vs others that talked about price)."
| simonw wrote:
| Pet peeve: does "117% more" mean 1.17 times the expected amount,
| or 2.17 times the expected amount?
|
| I avoid using this kind of terminology in my writing because I'm
| never completely sure that my readers will share the same exact
| definition of how those numbers should be interpreted.
| jrockway wrote:
| I completely agree with you, but I don't think it's ever
| ambiguous. I think it always means 2.17 times the expected
| amount. If a normal startup raises $100, then a highly
| differentiated startup will raise $217. That's because the
| article could have been "X raises 20% more", in which case
| they'd get $120 over the $100 baseline. Basically, I think
| "more" is the signifier that you don't multiply by 1.17. If
| that's missing, the number is meaningless.
| simonw wrote:
| I know that, and you know that. But did the person who wrote
| the article also know that? How careful were they?
|
| Probably? But not definitely. Which is why I never use that
| term myself.
|
| Similar to the reason I never say "bi-monthly" - it could
| mean twice a month, it could mean once every two months. So I
| don't use the term.
| jrockway wrote:
| Yeah, sorry, I meant to say I totally agree with you. I
| mentally explain this to myself every time I see it; 1 hour
| to understand what the % means, 5 seconds to actually read
| the article. It's terrible.
| site-packages1 wrote:
| The latter is the standard meaning. If the author means
| something different, that means the author is being unclear and
| it shouldn't be on the reader to parse the author's nonstandard
| intentions.
|
| From a common sense perspective: If I say something contains
| "100% more whatever", you would expect it to contain double
| what it normally contains.
| namecheapTA wrote:
| It has to be the latter, otherwise they'd say 17% more??
| simonw wrote:
| That's my assumption to, but I'm never entirely certain
| that's what they mean.
| yunohn wrote:
| Do you have some examples where this intuition has turned
| out to be false and the author meant the former case?
| pjbeam wrote:
| So startups that convince VCs they aren't just "uber for x" or
| similar clones excite greater investments? Seems pretty
| intuitive.
| guywithahat wrote:
| > Startups can have a more or less differentiated value
| proposition from their competitors. For example, a company that
| sells iPhone cases is not very differentiated. One that sells
| iPhone cases with a built-in earbud holder is more
| differentiated.
|
| I mean this makes sense, although I worry this is much too broad
| of a definition to glean data off of, especially when looking in
| hindsight when it's not as obvious how "differentiated" the
| company was when they first pitched compared to the rest of the
| market
___________________________________________________________________
(page generated 2022-07-20 23:02 UTC)