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Survivorship Bias

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Re: Survivorship Bias

#31

Post by jacquesm »

backpropaganda wrote: post #26
jacquesm wrote: post #22

Earlier quoted context omitted.

Peter Thiel should be the last person on earth to argue against survivorship bias, being an excellent example of it himself.

Peter Thiel isn't arguing for startups here, but arguing against the idea that the world is just coin flips and some people randomly end up with 10 heads. So your comment is mostly ad hominem.

He can only argue for that with a platform because he ended up with 10 heads. So no, it is not an ad hominem, it goes for anybody in that position, but also for Peter Thiel.

What's the last time you met a poor person giving seminars on the world not just being coinflips?

You can improve the odds by hard work and trying to grasp whatever opportunities come your way. But it would be a terrible mistake to assume that that would lead to a specific outcome given the number of hidden variables.

Re: Survivorship Bias

#32

Post by aaron-lebo »

BoiledCabbage wrote: post #27
pipio21 wrote: post #24

Like fear, you should take Survivorship bias into account, but it should not dominate you. If you do you will do nothing in life. When I created my first company my parents told me about how hard it was going to be, how few succeed... On the contrary I found it was way easier and natural than studying engineering was, for example, and hundreds or thousands of people could do it. I found most serious people succeed in…

> I found most serious people succeed in business. It is not that hard to become a millionaire, way easier than being a salaried person This is the trouble with discussions on this topic. Everytome Survivorship bias comes up, someone provides "counter evidence" which happens to be a picture perfect example of survivorship bias. Most serious people don't succeed in business. It is hard to become a millionaire. Way mor…

It's far easier to say "they weren't successful because they didn't try hard enough". You can move the goalposts on "serious" any time contrasting examples come up.

It's not that far from victim blaming, even if not intentional.

Re: Survivorship Bias

#33

Post by thenomad »

arximboldi wrote: post #28
pipio21 wrote: post #24

Like fear, you should take Survivorship bias into account, but it should not dominate you. If you do you will do nothing in life. When I created my first company my parents told me about how hard it was going to be, how few succeed... On the contrary I found it was way easier and natural than studying engineering was, for example, and hundreds or thousands of people could do it. I found most serious people succeed in…

> It is not that hard to become a millionaire, way easier than being a salaried person Sure. If it is not so hard, everyone would do it. If everyone was a millionaire, who would do actual unpleasant work? Who would clean, run hospitals, build infrastructure? Who would work for your startup so you can make money? Your comment is such an example of survivorship bias! Capitalism is a competition. You won, good for you.…

The "actual unpleasant work" is to a significant extent the domain of entrepreneurs.

For example, cleaning companies - often started by one person doing the cleaning - are an absolutely textbook example of entrepreneurship.

Some of those entrepreneurs then become millionaires :)

(Updating this post: obviously a lot of unpleasant work is done by non-entrepreneurs. But the maxim of "find something necessary but unpleasant and start a company doing it as a high-success-chance play" is also very true: entrepreneurs don't, as a class, all avoid the nasty stuff.

In the UK, the phrase I'm looking for is "where there's muck, there's brass.")

Re: Survivorship Bias

#35

Post by iamgopal »

pipio21 wrote: post #24

Like fear, you should take Survivorship bias into account, but it should not dominate you. If you do you will do nothing in life. When I created my first company my parents told me about how hard it was going to be, how few succeed... On the contrary I found it was way easier and natural than studying engineering was, for example, and hundreds or thousands of people could do it. I found most serious people succeed in…

Haha, nice try.

Re: Survivorship Bias

#36

Post by moulder »

thenomad wrote: post #33
arximboldi wrote: post #28

Earlier quoted context omitted.

> It is not that hard to become a millionaire, way easier than being a salaried person Sure. If it is not so hard, everyone would do it. If everyone was a millionaire, who would do actual unpleasant work? Who would clean, run hospitals, build infrastructure? Who would work for your startup so you can make money? Your comment is such an example of survivorship bias! Capitalism is a competition. You won, good for you.…

The "actual unpleasant work" is to a significant extent the domain of entrepreneurs. For example, cleaning companies - often started by one person doing the cleaning - are an absolutely textbook example of entrepreneurship. Some of those entrepreneurs then become millionaires :) (Updating this post: obviously a lot of unpleasant work is done by non-entrepreneurs. But the maxim of "find something necessary but unpleas…

Congrats: you made me register just to tell you to shut the f*ck up.

Re: Survivorship Bias

#37

Post by aaron-lebo »

thenomad wrote: post #30
BoiledCabbage wrote: post #27

Earlier quoted context omitted.

> I found most serious people succeed in business. It is not that hard to become a millionaire, way easier than being a salaried person This is the trouble with discussions on this topic. Everytome Survivorship bias comes up, someone provides "counter evidence" which happens to be a picture perfect example of survivorship bias. Most serious people don't succeed in business. It is hard to become a millionaire. Way mor…

Way more people with the exact traits you'd describe as being what's needed for success have failed than succeeded. Do you have proof of that assertion? I'd tend to largely agree with the OP, although I think he's overstating the point a bit. It's certainly not a great deal harder to get to the millionaire point as an entrepreneur than as a conventional salaried worker - assuming you have the appropriate character tr…

Just take a look at the average YC batch. If anyone is set up to succeed, it is those guys with coaching, resources, and connections. Most of them don't become wildly successful and are only successful in any sense because of the ability to pivot, learn lessons, etc. (see Schwartz's Infogami -> Reddit transition). Or check out small business failure rates. More anecdotally and less scientifically, watch retail/food locations which have business after business after business open in them.

A successful lifestyle business takes a lot of learned knowledge, and by virtue of building a single one you've had more success than most. Just beating the odds on one was your survival, once you did that you had a lot of advantages.

Bigger serial entrepreneurs often have similar patterns. One success allow you to make another which allows you to make another, all with varying degrees of success and with failure effectively subsidized. See Mark Cuban, Ev Williams, Pewter Thiel.

Re: Survivorship Bias

#38

Post by majani »

I believe that success does largely depend on capitalizing on lucky breaks. However, I also believe that each and every one of us gets lucky breaks. What matters is can you spot lucky breaks,and when you do spot them, how do you react? I think it's very possible to train yourself to have the awareness to be able to analyze situations, recognize lucky breaks frequently and just run with them. In a word, you could call this approach "opportunism."

Re: Survivorship Bias

#40

Post by thenomad »

aaron-lebo wrote: post #37
thenomad wrote: post #30

Earlier quoted context omitted.

Way more people with the exact traits you'd describe as being what's needed for success have failed than succeeded. Do you have proof of that assertion? I'd tend to largely agree with the OP, although I think he's overstating the point a bit. It's certainly not a great deal harder to get to the millionaire point as an entrepreneur than as a conventional salaried worker - assuming you have the appropriate character tr…

Just take a look at the average YC batch. If anyone is set up to succeed, it is those guys with coaching, resources, and connections. Most of them don't become wildly successful and are only successful in any sense because of the ability to pivot, learn lessons, etc. (see Schwartz's Infogami -> Reddit transition). Or check out small business failure rates. More anecdotally and less scientifically, watch retail/food l…

YC companies are, to the best of my knowledge, mostly looking for unicorn-style plays. That's a very different game to a lifestyle business, and one where I would agree 100% that the failure rate is extremely high.

Small business failure rates: well, for starters, the usually-quoted numbers have been updated as of late. A quick Google shows that most sources are converging on around a 60% success rate for small businesses at the moment. (I think that's actually unrealistically high - I'd estimate more like 40% and guess they aren't accurately polling online businesses, but hey.)

Secondly, there's a significant difference between small business failure rates and small businessperson failure rates. As I mentioned above, most people's first businesses will fail. That will obviously skew the numbers in favour of failure: indeed, given that it's surprising the survival rates are as high as they are.

You're correct that it's (sometimes) easier to build a successful business after you've already built one. However, you don't mention the secondary point, which is that it's also much easier to build a successful business after you've already tried really hard and failed at one.

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