Is a 10-15% annual risk of failure for a two-year-old startup alarming? I thought base rates were higher, which makes me think I’m misunderstanding your comment.
You also mention that the 10% was without loss of costumer funds, but the Metaculus 1.3% was about loss of costumer funds, which seems very different.
10% chance of yearly failure without loss of customer funds seems more than reasonable, even after Sequoia invested, in such a high-variance environment, and not necessarily a red flag.
A 10-15% annual risk of startup failure is not alarming, but a comparable risk of it losing customer funds is. Your comment prompted me to actually check my prediction logs, and I made the following edit to my original comment:
predicting a 10% annual risk of FTX collapsing with FTX investors and the Future Fund (though not customers)FTX investors, the Future Fund, and possibly customers losing all of their money,
[edit: I checked my prediction logs and I actually did predict a 10% annual risk of loss of customer funds in November 2021, though I lowered that to 5% in March 2022. Note that I predicted hacks and investment losses, but not fraud.]
Is the better reference class “two-year old startups” or “companies supposedly worth over $10B” or “startups with over a billion invested”? I assume a 100 percent investor loss would be rare, on an annualized basis, in the latter two—but was included in the original claim. Most two-year startups don’t have nearly the amount of investor money on board that FTX did.
Is a 10-15% annual risk of failure for a two-year-old startup alarming? I thought base rates were higher, which makes me think I’m misunderstanding your comment.
You also mention that the 10% was without loss of costumer funds, but the Metaculus 1.3% was about loss of costumer funds, which seems very different.
10% chance of yearly failure without loss of customer funds seems more than reasonable, even after Sequoia invested, in such a high-variance environment, and not necessarily a red flag.
A 10-15% annual risk of startup failure is not alarming, but a comparable risk of it losing customer funds is. Your comment prompted me to actually check my prediction logs, and I made the following edit to my original comment:
Is the better reference class “two-year old startups” or “companies supposedly worth over $10B” or “startups with over a billion invested”? I assume a 100 percent investor loss would be rare, on an annualized basis, in the latter two—but was included in the original claim. Most two-year startups don’t have nearly the amount of investor money on board that FTX did.