Photo by: Alex Knight
*Disclaimer: This post is mainly a stream of consciousness that I tried to somewhat organize into something substantial and meaningful; so at points or during the entirety of reading it, it may feel directionless and convoluted.*
Survivor-ship bias is loosely defined in this post as the “phenomenon” where the success stories receive the lion-share of attention and the multitudes of failures receive almost none. This gives the false impression of a higher probability of replicating the success if you base your actions around those who succeeded when in reality their success was more-so a combination of factors that can’t be replicated and their own personal efforts (with the ratio between the two varying greatly in some circumstances).
A very rough example would be someone proclaiming, “I won the lottery, and here’s how you can as well. First, buy a lottery ticket. Next, you will win.”
It sounds ludicrous, because it’s a ludicrous example, but I feel that it illustrates the concept well enough. The ratio in this case swings wildly in the favor of uncontrollable factors; Yes, he did buy the ticket and you can as well, but his success was not simply the result of that action.
Maybe a more realistic example would be something like: “I built enough passive income to support my lifestyle by investing in rental property. Here’s how…” But as you dig deeper, you begin to discover that simply replicating the actions in the post or book doesn’t guarantee similar levels of success or any success at all.
Perhaps, they were in a position following the 2008 recession to capitalize on multiple foreclosures and bought a large amount of real estate at a discount essentially.
Where did they receive the capital from?
Oh, they had invested in a tech company prior to the dot-com bubble’s burst and happened to sell before the value dropped coincidentally.
Good luck replicating those factors.
That’s not to discount that there may be your own small windows of fortunate opportunities.
But is survivors-ship bias a thing?
But is it something that should always be considered when perusing the content of blog and book authors in popular blogs and business books?
Does it invalidate their points and the content of their material.
It depends on the specific post or book. But not always.
I enjoy reading the personal testimonials of successful business owners and entrepreneurs whether from the entrepreneurs themselves or some third-party that has collected and consolidated their stories in a easily digestible format.
However, I can’t help but carry some sense of cynicism when I read through the material. Some may call it personal defeatism but I feel like this is a trap that most people fall into when they, themselves, have not experienced similar success. It doesn’t help that sometimes these stories are boiled down to the point of success with very limited information on the person’s backstory or their multiple failed attempts (if there are any).
It sometimes feels like there is a mystical entity that bestows a magical eureka moment on these individuals that eventually leads to some successful business idea, product, or service. Or that certain individuals have an innate ability, a biological component or a superpower, that gives them the ability to see business ideas in every corner of their everyday lives even if they aren’t actively looking for it.
*Jim was walking along one evening after work when he decided to settle into a nearby coffee shop and begin reading a newspaper. A car sped by and Jim noticed that the coffee shop could use Widget, he frantically raced home and did some preliminary research. Sure enough, lots of coffee shops lack Widget and absolutely no one else made Widget. So Jim did, and Widget became a very successful business for Jim and everyone loved him and his Widgets.*
I know these stories are meant to motivate and inspire, to present the idea that anyone could easily enough discover their own successful business idea. But it almost has the opposite effect, sometimes removing the pragmatic approach to idea generation in these backstories makes it seem like everything is simply the result of chance (and perhaps it simply is in a lot of cases).
For every Jim, there are likely thousands whose story follow like this:
*Jim raced home and did his preliminary research, turns out there are roughly 1,508 businesses already manufacturing Widget and the fact that it took a short amount of work to discover this fact speaks to the overall success of such businesses and how crowded this space is.*
Now some may protest that Jim simply needs to do more research and discover why these businesses don’t appear to be serving their market as well they should and capitalize on their shortcomings; and maybe he should and maybe that would work. But Jim isn’t no dummy and he fully understands that these businesses likely have entire multi-person teams dedicated to the same questions: So Good Luck.
Still, one may argue that this situation is a win-win for Jim, he found the information to discourage further wasted action on pursuing his idea and yet also found a solution to the problem that he was experiencing. And if the solution doesn’t resolve his problem completely, he found a potential opportunity.
This isn’t to discount the work involved in many of these success stories; nor the lessons and takeaways that can be gathered independent of situational circumstances; but sometimes when I read books and I begin to take note of the important points and lessons, I start to think, “If there’s a best selling book written about it, it’s simply too late for this to be applicable.”.
This is a zero-sum way of thinking about life and business.
Sometimes I reflect on my cynicism toward survivor-ship bias and think, “So which would be better? Surrender to your personal defeatism and make no significant moves? Or make significant moves even if it ultimately results in failure and find refuge and moral victory in your lack of regret of inaction.”
But I think this is a false dichotomy. I don’t want to complacently resolve myself to simply accepting that things only happen to other more lucky and fortunate people. Nor do I want to waste my time rolling a boulder up some endless slope with the fear of regret combating my ever increasing exhaustion and futility. Rather, I identify the odds are not great and because of that, I should be continuously multiplying my efforts.
I should take the venture capitalist firm approach to business idea management. Continuously build a pool of possible ideas, work them through small incremental stages of development, filtering out those who do not pass the requirements of each stage, feed my focus on those that show the most potential, and further down the line as these ideas develop into actual businesses: their respective profit values will serve as the heuristic that determines their fate. My efforts would go to feed those ideas and businesses that generate the most value.
This seems like common sense. Largely because it is. It is a strategy to avoid dependence on one path and pragmatically pursue several, eventually filtering down to a few and possibly only one. We all have a limited amount of time and willpower; this is why it will be required that I would need to strictly filter out the candidates that simply do not meet the requirements as other candidates increase their share of this limited resource.
Does this mean that the candidates are wasted? Well, in the case of ideas, it would only be those that lack the attributes to progress that would be dropped.
For actual businesses, it would depend on the value of the business.
Is the business simply not generating any value?
Then it may be best to simply close shop and re-orient those efforts toward the other businesses that do generate value.
Does the business generate value but your attention and effort would be better served elsewhere?
Then maybe you can look into some way to work that business into your other business(s) in some capacity or you could potentially sell that business. Better yet, if there is a way that you can simply outsource and automate the operations of the business then that would be better (this should ultimately be the goal).
How would this look practically?
I’m still working on these details myself.
It would have to be organized into stages.
Stage 1 - The Idea Stage
Stage 2 - The Demand Stage
Stage 3 - The Execution Stage
Stage 4 - The Sell/Automate Stage
As candidates are filtered out through the pipeline and other candidates take on more focus and effort, I would still like to continuously introduce new candidates into the top of the funnel. Some may stress that this process could be stretching your own abilities too thin and leave all ideas neglected in some capacity. They may be correct and this process will be something that will need to be finely tuned through time, execution, and iterations.
If survivor-ship bias is a problem of probability then simply multiply to increase the probability.
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