Why Facebook and Google succeeded

first_imgIf you want your new business to be successful, make sure to set up shop in one of about a dozen ZIP codes around San Francisco. That finding, published online today in Science, may not be a revelation, but the study does have its surprises. Researchers scoured registration data for every for-profit company founded in California between 2001 and 2011. They found that companies with short names—think Google and Facebook versus long-named failures like Cryptine Networks—are 50% more likely to succeed. Having a trademark boosts a firm’s chances by a factor of 5. Having patents multiplies the chances 25 times. And if a patent-holding company is also incorporated in Delaware—home to an extremely high concentration of corporate lawyers and an efficient corporate court system—it boosts the chances of success a whopping 200-fold. The vast majority of startups still fail: Even firms with the optimal location and characteristics had dismal success rates of less than 5%. As the map above reveals, businesses founded in Silicon Valley are 20 times more likely to succeed on average than those in the median Californian city. But there is hope beyond the valley: Patches of entrepreneurial success tend to sprout up around all research institutions, such as the University of California, Davis.last_img

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