UPDATED 18:08 EDT / AUGUST 21 2012

Building a Data-Driven Service for Startups

Max Marmer, a 21-year-old college dropout from Stanford has created an online service called Startup Compass, based in Palo Alto, that allows newly ripe companies to compare themselves to other companies in other areas. The data enables them to check on what customers bought as well as whether or not their company has the potential to fail and lose money.

Startup Compass collects data from other companies by simply asking entrepreneurs to enter information about their companies such as: questions about their team, product, sales and customers.

According to Marmer, the company has had around 20,000 tech founders use the online tool within the past year. The site has been operating since August 2011. Interestingly enough, the Silicon Valley entrepreneurs only make up 8.5% of users, even though they are the most represented.

Marmer found that 70% of startup companies display some form of premature scaling, which means companies are hiring too fast or they are building a product without following market trends. Startup Compass discovered that start-ups with only a few founders were more likely able to have a healthy balance between sticking to a solid plan and changing the direction of the business, which means that they were able to raise more money and were less likely to scale prematurely. Solo start-ups hardly ever changed direction at all and start-ups with four or more founders appeared to change too often.

As of right now, Startup Compass is free, but Marmer plans to create a premium model as well as a lead-generation service which will both charge users.

According to Marmer, there are a lot more start-ups now than there were a decade ago and a huge increase in job growth is coming from technology start-ups, but a very large portion of start-up companies are failing.

“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,” Marmer says.

Other services to help startup companies include KEXINO and enloop. Enloop’s concept is to help people decide whether or not starting up a business is a good idea, whereas KEXINO focuses more on marketing and making a company look good.


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