Predicting success of start-ups is his business
Klout's office in San Francisco (Photo via OnGig)
The Silicon Valley college dropout-cum-billionaire scenario is well known to anyone reading this on either a Mac or a PC. However, what might be the Steve Jobs or Bill Gates of this generation isn’t tinkering with a computer processor in his bedroom: he’s analyzing his California business' database of metrics in search of numbers that will tell him of his client’s companies will sink or swim.
His name is Max Marmer, a 21-year-old Stanford dropout whose start-up, Startup Compass, collects the data of other entrepreneurs’ start-ups to gauge just how prepared these businesses will be to survive in a dog-eat-dog economy. “Job growth is coming from technology start-ups, but a huge portion of start-ups are failing,” Marmer told the Wall Street Journal. “We would like to impact hundreds of thousands of start-ups and help these companies as they mature. We want to empower them to make better decisions.”
By using the information self-entered by entrepreneurs on their start-up’s team, product, sales, and customers, Startup Compass judges whether the company will survive and turn profitable, or fall into the 90 percent figure of start-ups that fail.
At least, that’s how it’s supposed to work. Marmer’s company began operating in August of 2011, and in the last year 20,000 start-up founders used the free Startup Compass tool on its website. All this data offers some interesting results. One, start-ups with two or three founders are best suited to decide whether to stay the course or change strategies for the business: too many founders generally means changing too much, and one founder doesn’t change enough. Two, over two-thirds of start-ups end up hiring too rapidly, creating products too quickly, or other forms of scaling when the market just isn’t there.
Still, Startup Compass’s service is free…what do Marmer and his team plan on doing to ensure that own startup doesn’t become the irony of ironies and fail itself?
“We’ll be putting in a premium model soon so there will be more advanced with features that people can pay for, where you can get more granular insights,” Marmer said. “We may also look into a lead-generation model, to recommend service providers and products we know companies will need as they hit a certain stage of growth.”
Creating a company to fill a need businesses didn’t even know they had by utilizing metrics? It’s ambitious and innovative, and not to toot our own horn, but it sounds like it comes straight out of the Summit Action Plan. Marmer’s entrepreneurship plays right into our plan for smart innovation, which begins first and foremost with creating an economic competitiveness plan that not only positions California businesses to create growth, but specifically engages start-ups to facilitate their success.
The plan, which is to be updated every two years to keep up with the rapidly shifting tides of the Golden State’s economy, will be metrics-driven in order to act with the assurance of hard data when making lasting decisions for the growth of our economy. In much the same way that we approve of the ambition and outside-the-box thinking Max Marmer, we’re sure he’d look to the Summit Action with much the same respect.