Revisiting the Startups Turd to Gold Ratio
For startups, the Turd to Gold Ratio is a measure of quality density. It isn’t enough to just judge the number of startups in an attempt to gauge the vitality of any startup ecosystem. One must separate the wheat from the chaff.
Crunchbase and AngelList are simple non-prioritized, unfiltered, non-vetted lists of startups. There is no pretense of a measure of quality. Alternatively, Technical.y DC and DC Inno are vacuous frauds pretending to analyze and report on the quality of a startup while loving everything and rarely spotting a gem. They are more heavily weighted to turds than gold… perhaps because Turds seek meaningless glitter over meaningful progress while Gold companies do shit that matters. To be fair the “journalists” are not asked to be accurate or critical and they are primarily judged by the number of bits they can vomit into the ether. The click-baiters at these rags ability to distinguish good from bad has atrophied. There is no reward to seek out quality at the expense of quantity. (For more background on the Turd to Gold see these posts: Mr Cranky’s Startup Turd To Gold Ratio, Mr Cranky’s New Startup Turd To Gold Ratio, and The State Of The Turd To Gold Ratio).
Now back to the Turd to Gold Ratio. My notional supposition when first positing the Startup Turd to Gold Ratio was that high turds to low gold ratios would be experienced during economic downturns. According to the theorem, the unemployed had nothing to lose by following their dream of a specialized search engine for gerbil villages or developing a $200 battery operated, phone connected water bottle. (Author’s Note: please take note of the pretentiousness of the prior two sentences that utilize the words, notional, supposition, positing, and theorem, as well, referring to oneself as an Author and as oneself as oneself in this note. This is intended to counteract the low-brow nature of the constant use of the word turd. Is it working?).
The corollary to “Hellman’s Axiom On The Effects of Economic Hardship on the Density Level of Turds Populating the Startup Turd to Gold Ratio,” was the Mr. Cranky’s Economic Abundance Postulate. Which speculated that during economic abundance and full employment, the gold population would dominate the ratio. My thought was that workers would never leave a secure, high paying job to develop something as stupid as a GrubHub for Dog Food.
Yet in our current state of economic boom, there are as the dictum predicted fewer total startups… yet of those fewer startups, the percentage of pure crap is high… very high as compared to the number of true golden gems.
Here are some possible explanations for the preponderance of crappy turd startups compared to the total number of recent startups:
- The Rule of Small Numbers – The sample size startups launched in one boom cycle is not large enough to derive a meaningful conclusion
- Correlation is Not Causation – There may be no correlation between economic strength and the ratio of quality startups to trash. Correlation is often not proof of causation as demonstrated in these two examples:
- Luck – Finding gold in a pile of turds is just a thing of luck. Therefore the more turds in which you pan for gold the more chances that you may find startups worthy of sifting through poo.
- Jocularity – Really not relevant to this issue but I just wanted to slip in another great SAT word in honor of Danny Boice, the guy who embezzled from SAT producer College Board.
I am still a strong believer that there is a correlation between the total number of startups to the strength of the economy. Yet the postulate that the density of quality startups is increased in a strong economy is being challenged in today’s economic cycle.
Warning: I know you will find this difficult to comprehend yet I must admit, I am neither a trained social scientist or economist and therefore do not make investment decisions or choose a penis enlargement product (especially if you are a woman) without consulting a professional.