Just like a lot of other things, I first heard about the survivorship bias from Nassim Taleb. It's the idea that the winners are the ones who live to tell the tale, confounding the odds and characteristics of success. This is best demonstrated in the phrase "the winners write the history books." By definition, we don't hear from the losers of war. We mostly get the stories of the winners, automatically assuming that something about them helped them succeed -- what if the losers had the same things but lost because of some other reason? We simply wouldn't know.
The survivorship bias in business is particularly insidious because of this mythical culture surrounding startups. I feel like it leads people down a path of delusion, failure, and sometimes, fraud. The sad reality is that most startups fail. Even the ones with a star-studded list of VCs and founders. The whole industry's model is set up to deal with this reality; a VC fund's portfolio is largely dependent on that single company generating a 10x return, leaving the rest to fizzle out.
If this is the case, why does every single successful startup founder preach about being optimistically delusional? About their productivity hacks, cold showers, and the quirks that they think made them successful? Do we ever hear from the thousands of failed entrepreneurs? No. They're not the ones writing books, going on podcasts, or doing interviews with the New York Times. As a result, all you hear about is the glory, the riches, and how the only way forward is by pushing through the pain. The founders of AirBnB talk about their binder of credit cards during the early days with pride, as if enduring through extreme debt was the reason they survived. What we don't hear about is the hordes of people who did the same exact thing but failed, going broke in the process.
It's an endless spiral of positive bullshit about how YOU are the one to disrupt X industry or fix Y problem for good, making history in the process. We dissect the successful founders, hoping to glean the list of tips and tricks that made them who they are. I'm not discounting the role of skill, raw talent, and hard work here. I just think that making every person who's starting a business believe in their greatness is bogus.
I used to buy into this crap. How could you not? It pumps you up, emphasizes the cultural lessons you learned about work ethic, sacrifice, and the true grit of visionaries changing the world. Yet, the survivorship bias in entrepreneurship lures in suckers like flies to honey. It reminds me of a related quote by Taleb:
The survivorship bias in business is particularly insidious because of this mythical culture surrounding startups. I feel like it leads people down a path of delusion, failure, and sometimes, fraud. The sad reality is that most startups fail. Even the ones with a star-studded list of VCs and founders. The whole industry's model is set up to deal with this reality; a VC fund's portfolio is largely dependent on that single company generating a 10x return, leaving the rest to fizzle out.
If this is the case, why does every single successful startup founder preach about being optimistically delusional? About their productivity hacks, cold showers, and the quirks that they think made them successful? Do we ever hear from the thousands of failed entrepreneurs? No. They're not the ones writing books, going on podcasts, or doing interviews with the New York Times. As a result, all you hear about is the glory, the riches, and how the only way forward is by pushing through the pain. The founders of AirBnB talk about their binder of credit cards during the early days with pride, as if enduring through extreme debt was the reason they survived. What we don't hear about is the hordes of people who did the same exact thing but failed, going broke in the process.
It's an endless spiral of positive bullshit about how YOU are the one to disrupt X industry or fix Y problem for good, making history in the process. We dissect the successful founders, hoping to glean the list of tips and tricks that made them who they are. I'm not discounting the role of skill, raw talent, and hard work here. I just think that making every person who's starting a business believe in their greatness is bogus.
I used to buy into this crap. How could you not? It pumps you up, emphasizes the cultural lessons you learned about work ethic, sacrifice, and the true grit of visionaries changing the world. Yet, the survivorship bias in entrepreneurship lures in suckers like flies to honey. It reminds me of a related quote by Taleb:
The wise, like the fool, makes mistakes. The difference is that the wise is prepared & knows way ahead of time the cost of every mistake. For the wise, a mistake is local; for the fool, the mistake is global.
I'm sure all of the failed startup founders thought that they were the ones to beat the odds, that their startup would work if only they poured more time, money, and work into it. The cost of failure, then, is usually a decade of work, millions of dollars, and your entire identity. This reflects a completely backward approach to the inherently risky nature of new business. The odds are what they are for a reason and you have to act to minimize your damage. Treating the bad outcome as likely means that you hedge your life in a way such that a sinking ship doesn't consume you. Too many money bonfires are lit, worshipping the startup gods only to regret spending a decade and millions of dollars on something that didn't end up working out.
This denial of delusional optimism also fixes another frequent problem that I've seen in the startup world. If you constantly believe that you are the one to beat the odds, despite all external signs, well, you're going to convince yourself that you're pretty darn special. That the world owes you this success because of your genius, how much time you've put in, or how much money famous people have given you. More often than not, what you get is not Steve Jobs, but fraudsters like Elizabeth Holmes, Sam Bankman-Fried, or the other cohort of crypto founders going to jail. This extreme end of the self-absorption spectrum had us all convinced for a while that they were technological messiahs bringing about global prosperity and ending disease.
You're not special, no matter how smart you are. The belief of your uniqueness and the constant need to prove it is what leads to scams, fraud, imposter syndrome, and a bunch of other dysfunction. No matter how much of a genius you think you are, there are a million other reasons that you might or might not make it. I'm sure many of the people who failed thought that they were special. This is an uncomfortable idea to accept, since it throws you into existential Mount Doom. But it's also liberating because it's the truth. Accepting that you are average means that doing something different is something to work towards. And depending on the context, average is more than fine!
This isn't pessimism or unamibition. It's the ONLY way to deal with uncertainty in a space where the odds are stacked against you. It's also the only way to not end up with a dysfunctional self and industry, where one "mission statement" or product is your ENTIRE life. We don't need another billion dollar company built by 20 year olds whose entire lives are optimizing clicks, eyeballs, ads, and usage numbers.