In Silicon Valley, Failing Is Succeeding.

Twenty years ago, Netscape ignited the dot-com boom with its initial public offering. And ever since, everybody in tech has been trying to figure out how to consistently spot the embryonic startups that are going to become the next supernovas.

The industry still sucks at it…which, perversely, is Silicon Valley's global competitive advantage.

This is a big point that's missing from most of the conversations about so-called unicorns—tech startups valued at more than $1 billion. The only way for the industry to breed a handful of unicorns is to fail a whole helluva lot. The type of failure we're talking about is like how frogs lay 20,000 eggs so a few wind up as adults sitting on a lily pad sucking down mosquito dinners.

The data from startup trackers like CB Insights show that less than 1 percent of venture-backed companies end up as enduring billion-dollar businesses—a stat that hasn't gotten any better since Netscape's time. Tech investor Mike Maples talks about seeking to put his money into "thunder lizards," his term for unicorns. "Thunder lizards are rare," he tells the class he teaches at Stanford University. "If in a given year there are 10,000 startups that get funded by angels and 1,500 get a Series A funding, then 80 companies will likely do well—but only 12 will be thunder lizards."


By Kevin Maney.
Full story at Yahoo News.