Max Nisen wrote an interesting piece on Quartz today, it looked at Start Ups and the value of good timing and picking a good name. The article delves into research from MIT and some of the datasets they used to determine patterns and trends for success.
Figuring out which companies are likely to succeed is one of the toughest problems in business. But even very dry data from business registrations can tell you a great deal, according to a new NBER working paper from researchers at MIT. Even though the authors have come up with a robust way to predict growth, one of the biggest factors is still timing.
In a dataset from Massachusetts, 77% of growth outcomes (an IPO or acquisition within 6 years of being founded) came from companies in the top 5% of the quality measure the authors created, based on everything from how a company is named to how quickly it files for patents. Nearly 50% of successful outcomes were in the top 1%. A similar dataset from in California produced remarkably similar resultsfor the researchers (paywall).
When it came to names the article went on to say:
Names matter: successful firms tend to have short ones (3 words or less). An company named after a founder has only a 5% chance of success, compared to one that isn’t. And an early mention in the Boston Globe business section was associated with a 30 times greater likelihood of success.
Read the full article on QZ