Improbable != Irrational

I want to start a company.  Therefore, I must be nuts.  Right?

With high probability, whatever company I might start will fail.  Even many conceivable “successes” will result in a smaller economic return than could be obtained from an ordinary job.  Bad financial results coupled with long hours and lots of stress?  Yes, my desire to start a company seems indicative of some kind of insanity.

Dice

Just how likely am I to fail?  Scott Shane (in his book on angel investing) claims that U.S. Census Data for 1996 indicates that 510,654 new U.S. businesses were formed in 1996.  Six years later 260,970 (just over half) had completely failed.  Only 1.6% achieved revenues of at least $5M/yr.  A $5M/yr. business is something of which one could be proud, but it’s hardly the next Google.  A mere 474 (about 1-in-1000) had achieved revenues of at least $50M/yr.  Even a $50M/yr. company is only medium-sized.

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Learning to be a Business Artist

I left my job at Mentor Graphics on November 15th with the stated goal of starting a new business.  But, I haven’t yet figured out what that new business should be.  In fact, I’m finding the process of thinking about what new business to start to be a real challenge.

I have certainly eliminated some businesses.  Businesses focused primarily on open-source development tools are right out because I have no desire to compete with my good friends at Mentor Graphics.  I love living in Bonny Doon, California, so businesses that require living elsewhere are out.  It seems generally desirable to make some use of my software engineering background, so businesses with no high-tech component are out.  And, as I would like the new business to have the chance to reach significant scale, starting an artisanal bakery featuring only goods made from recently-picked olallieberries doesn’t seem like a good idea.  Though it does sound yummy!

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Edward Tufte: Presenting Data and Information

I recently attended Edward Tufte‘s one-day course entitled “Presenting Data and Information.”  Tufte is widely recognized for his expertise in the visual presentation of data; his book “The Visual Display of Quantitative Information” has been called “a visual Strunk and White” by the Boston Globe.

Tufte focused on presenting data with integrity and on empowering the consumer of the data to understand the data, reason about it, and make decisions based on it.  He does not seem particularly interested in persuasive use of data, which is of course one of the primary uses in business.  In other words, he comes at the problem from the perspective of a scientist who wants to discover truth, not from that of a salesperson, marketer, or manager who wants to convince people to take a particular action.  (And, yes, I do believe that you can and should present data with integrity, even if you are attempting to persuade people of something.)

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