Compass

The Startup Genome was born last February and today at the anniversary mark we’d like to take the time recognize its growth and accomplishments in its first year of existence.

Over the last few years technology entrepreneurship has exploded around the globe and has come to be recognized as the primary engine of new job creation and a leading driver for economic growth. At the same time, more than 90% of startups fail, primarily due to self-destruction rather than competition. This struck us as an enormous lost opportunity for personal and societal value creation, so we initiated the Startup Genome Project to crack the code of innovation and enable businesses all over the world to be more successful. In February 2011, we announced the Startup Genome Project and shared our first call to action: contribute data to the Startup Genome Project and help us bring the magic of Silicon Valley to the rest of the world.

Several months earlier Max was doing independent research at Stanford with adjunct professor and retired serial entrepreneur Steve Blank. Under his guidance he designed a lifecycle model that synthesized Steve’s insights with other entrepreneurship thought leaders that included Alex Osterwalder, Janice Fraser, Eric Ries, Sean Ellis, Dave Mcclure and Geoffrey Moore.
After Bjoern and I tested the model hands on with 50 startups, we built a survey and asked the greater startup community to contribute data to the project so we could take the Startup Genome to the next level. To our excitement more than 650 startups participated.

Three months later, at the end of May, we released the findings from research in the first Startup Genome Report: a new framework for understanding the success and failure of startups. The response was overwhelming: 50,000 unique visitors, 100+ publications in more than 15 languages, including Huffington Post, CNet, GigaOm CNN Money, more than 10,000 downloads of the report, 3,200 new survey responses and hundreds of emails from entrepreneurs all around the world thanking for us our work. Central to our success was the addition of Ron Berman to the Startup Genome team, a 3rd year PhD at UC Berkeley doing quantitative marketing research.

In the summer we were ready to take the Startup Genome to the next level. The Startup Genome Report generated a lot of attention and acclaim, and got us a lot more data, but we needed to take the big step of building our first software product. The only challenge was we still hadn’t found someone who could lead the Artificial Intelligence part of the product we envisioned. We met with a few dozen potential candidates, many of whom were our friends, but circumstances or interest level never aligned. In the midst of the search, Bjoern and I continued to make progress. I continued to refine the Startup Genome as a predictive model, Bjoern worked on the design and front end for the application and we both did a lot of customer development.

Then we caught two amazing breaks. Radu Spineanu, a serial entrepreneur, amazing engineer and friend of Bjoern’s from Romania came to stay at our startup house, Blackbox Mansion and in his spare time helped us build the architecture for our prototype. The other big break started to unfold a week before Radu arrived. Ertan Dogrultan, who recently dropped out of his Machine Learning PHD from UCLA to move out to the Bay Area and pursue building a startup in the datamining space. Before he graduated he had done a data mining project that used Crunchbase data to try to predict startup success. His professor saw the Startup Genome Report when we launched it in May and he encouraged Ertan to reach out to us. The three of us met, liked each other right away, and Ertan started working with us part time during the summer, helping us to translate the whole Startup Genome data model from linear formulas to much more robust bayesian classifiers.

We launched the Startup Genome Compass in combination with a new report on Premature Scaling on August 29th and it was another homerun. We received coverage all across the web including TechCrunch, Forbes, and PBS, reached more than 25,000 downloads of our reports, the research was recognized by various top Universities & found its way into the curriculum of 50+ Universities and had 13,000 companies use the product over the next few months. Shortly after, Ertan joined full time and the founding team solidified the dream combination of bottom up data mining (Ertan), top down conceptual modeling (Max) and product vision (Bjoern). 

In the last few months we have turned our attention to the future. While our communication with you all has primarily been as a research endeavor, it has been our intention all along to build a software company. Harnessing the massive leverage of information technology for societal impact is a core tenet the Startup Genome Project and we would be short sided not to utilize that leverage ourselves.

The research conducted so far was merely the necessary foundational work to build the increasingly intelligent business software tools of the future. In recent years, large companies like Google, Amazon and Zynga have leveraged predictive analytics technology to run circles around their competitors. Predictive Analytics haven’t been accessible to small companies because they require large datasets, expensive data warehouses and custom models built by specialists. We are looking to change that by building the next layer of the software as a service stack, what our friend Evangelous Simoudis at Trident Capital calls Insight as a Service. We will share more details as the vision becomes reality. Meanwhile we will have new writing, research and tools coming out next month in March. Stay tuned. We look forward to continuing to share this journey with you of empowering business all over the world.