The point is that if there was a strong (presumably) causal connection between P and success, then almost all start ups should adopt P. But they don’t.

If that’s what the post said, it would make sense, but it’s not. It says “P is correlated with success, but failed businesses tend not to have property P”. I still don’t see how this could fail to be true.

Lousy methodology can mean there is no substance, are you familiar with the phrase “lies, damn lies, and statistics”?

Why do so many failed businesses tend to cluster in undercapitalized retail businesses? Because that’s what people know – not a big surprise, but obviously a surprise to the failed businesses people. This must mean that there are alot of missed opportunities in business services that are underexploited.
What are the success rates in retail vs. business services, and how does this vary with different prior experience? Given that failed businesses are “usually” in retail, does this just mean that new businesses overall are “usually” in retail? The fasted-growing business are selling to other businesses… does this mean that there’s overall market growth and room for newcomers,,or is the market consolidating from many competitors to just a few oligarchs?

But adopting P and adopting not P aren’t equal choices where you can grab one as easily as the other.

I fail to believe that a given entrepreneur doesn’t realize that more capital would help. They have chosen not to pursue more capital (or a corporation, etc) for other reasons (including not having the personal charm, communication skills, risk tolerance or resources to acquire these things).

On the other hand, anyone can open a shoestring business, an Ebay shop, an Etsy shop, a lemonade stand, or what have you, without those resources, and why not? If they fail you’re not in any worse shape than you were before you began.

What if prediction markets existed where speculators could bet on the success of private businesses? Wouldn’t this give entrepreneurs valuable feedback on whether they are making good decisions?

I think these forays might be rational (I haven’t formally modeled this) as part of an ‘optimal stopping problem’. Consider creative efforts as your best metric of any comparative advantage you might have in that field. You try writing poetry, creating websites, applying GMM to 19th century exchange rates, and one of them generates the highest feedback. You then specialize there, mainly doing conventional stuff better than everyone else (eg, Gregg Mankiw wrote a now pretty clearly irrelevant paper on menu costs and business cycles, but now he’s rich and successful because he wrote a nice textbook for undergrads). So, trying something with low objective odds is not stupid if it is merely a costly datapoint for you to guide your vocational (or avocational) focus.

A failure mode I see at least as often as not doing something essential is prioritizing these activities based on experience with a venture that is structurally different. It is not that they do not know the elements of success but that they misprioritize those elements early on when the prioritization needs to closely match the nature of the current venture. This is why, among other reasons, serial entrepreneurs that stick to the same type of venture can frequently produce a string of successes rather than the hit and miss pattern that is more common when they diversify.