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Business advice plagued by survivor bias (2009)
- Clubber 3y agoI've built quite a few apps and web pages that ultimately failed primarily due to not having a client. To take a lesson from my failures, always make sure you have a client.
- pizzafeelsright 3y agoA successful business is where you get enough money out to make the investment worthwhile. Given X clients paying Y with the total expenses by Z as long as X * Y > Z the business can remain solvent. Profitability, return on investment, scale, and whatever other metric you add changes this formula.
- Rainymood 3y agoA shower thought I had recently is that we should start referring to "Business cases" as "Survival cases" and "Business books" as "Survival books" and that makes the inherent bias so much clearer.
- lencastre 3y agoWell,… my fave post grad course was Bankruptcy. It was insolvency after insolvency after insolvency and in a way also survivorship bias, but I digress — like Poor Charlie (RIP) used to say: find out where you are going to die and make sure never to go there.
- hef19898 3y agoAnd if you happen to end up there any way, make sure you die properly and in grace. Aka, manage your bankruptcy properly, without any shenenigans and refusal to accept the inevitable.
- gustavus 3y agoThis seems overly reductive. Why would you want to take business advice from people who weren't able to build a sustainable business. I get that starting a business is fraught with risk and there are factors outside your control that can impact, but the reasoning on this seems to basically boil down to. "There is nothing you can do to be successful and everything is at the arbitrary whims of fate." Or to put it about another aspect "Career advice plagued by survivorship bias." That souns equally stupid.
- jongjong 3y agoIf you're successful then you can benefit from advice of other successful people because you live on an easier monetary playing field where just about any piece of advice you are given becomes self-fulfilling because of the amounts of capital involved. Also, if some rich person gives you advice and you follow it, they (and their friends) will be more likely to invest in your company because they agree and believe in their own advice and they don't want to see your startup fail because of them. There is ego at play. If you're not successful (which is almost everyone) then you should not listen to advice from successful people because it doesn't actually work in your situation. Instead, you should listen to people who failed and understand why they failed. They'll tell you useful things like "find a niche where you can sell your product 100% word of mouth" because they understand how search engines and social media works against you when you don't have capital or influential social connections. And these failed entrepreneurs probably know one person who was able to launch a small lifestyle business like that. This is realistic and achievable and minimizes the role of luck.
- remram 3y agoAfter 80% of the article explains survivor bias, we finally get to the subject (business advice), and this is the gripe: > It turns out Jim started by combing through 1435 companies looking for good candidates for the book, and picked eleven. This to not survivor bias! Call it selection bias if you want, but it's plain old data manipulation!
- borlanco 3y agoWe can learn from failures if we really want. For example, see https://www.failory.com https://www.failory.com
- takinola 3y agoEhh, you should always take general business advice for what it is. It is usually not a great idea to treat them as gospel given that for every best-practice, there is an exception. Instead, realize that some things are (probably) necessary but not sufficient for success. Also, try to understand why the recommended approaches succeeded. That way, you can examine for yourself if that particular bromide applies to your situation.
- dang 3y agoRelated: Business Advice Plagued by Survivor Bias - https://news.ycombinator.com/item?id=4314107 https://news.ycombinator.com/item?id=4314107 - July 2012 (1 comment) Business Advice Plagued by Survivor Bias - https://news.ycombinator.com/item?id=768297 https://news.ycombinator.com/item?id=768297 - Aug 2009 (36 comments)
- throwawaaarrgh 3y agoGood advice doesn't stop being good just because people stop following it. Ultimately success is a matter of effort.
- turnsout 3y agoIf that were true, people who work harder at their small business would make more, but that is not the case.
- Sohcahtoa82 3y ago> Ultimately success is a matter of effort It's so sad that people still believe this lie. It creates a victim-blaming mentality of assuming that anybody that failed simply didn't try hard enough. Sometimes, the success of a business comes down to just being at the right place at the right time. Sometimes, it's just a matter of having rich parents that gave you enough seed money that you could actually dedicate time to your business rather than having to work 40 hours/week just to pay the bills before being able to spend any time on your business.
- sedansesame 3y agoI took "Ultimately success is a matter of effort" to mean only that. Even if you were handed opportunities on a silver platter (ie. rich parents), you still had to put in your own effort somewhere along the chain to get the ball rolling. If you never start, no matter how lucky or good your circumstances are, you will still be at 0%. Therefore, there's no success without effort.
- karaterobot 3y agoYou hear about failure case studies too. I think it's more of a selection bias, or a narrative bias: they pick case studies that prove a point, the same way you look for and cite statistics and articles to support the point you were already going to make in an internet fight, rather than trying to represent the entire complexity of the domain you're squabbling in.
- giantg2 3y agoMost advice has bias. Of course the people giving business advice want to talk about their successes. Just like the people on social media post how perfect their lives are. It's especially interesting to hear advice from people who lack empathy. Maybe high performers giving advice to someone with a disability. Or someone who got lucky that credits their hard work and denies luck had anything to do with it. I'm tired of it. I'll look at some advice just for curiosity, but I'm done trying. What happens, happens. No point in repeatedly wasting effort.
- WalterBright 3y agoFailure to learn from one's failures will induce inevitable further failure.
- jfengel 3y agoThis bias is particularly dangerous, in that so much business advice comes down to "work hard and persevere". In the case of a business that's just not going to happen, this is pessimal advice that makes a bad situation worse.
- bruce511 3y agoI think a fair amount of "common advice" is wrong. Things like "work hard", "you can be whatever you want", "persevere" . There are truths in there; success does take hard work, but hard work does not lead to success. Success takes perseverance, but perseverance does not lead to success. Baking bread requires time, but having time does not lead to bread. You can do all the work, you can have most of the ingredients, but without yeast you don't get bread. It doesn't matter how much time, perseverance, work or dreams you put in. Finding the right advice is hard because unless someone can see what you are doing right, it's hard to know what is missing. Yes, sometimes the yeast is luck. But even knowing that is helpful. Luck (aka chance) can often be improved. I was lucky to land in the job I did, but I am least put myself in the right place at the right time. The worst advice is something you are already doing (hard work perseverence) without success. It's the equivalent of "what you are doing is not working, but keep doing it anyway" which is terrible.
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- waprin 3y agoIt’s good to be aware of survivor bias but the discussion around it has been overdone and leads to pointless defeatism. The airplane example is the canonical example but also ironic because it’s an example where there was a ton to learn from survivors. Their first takeaway was logically inconsistent but eventually they realized that places without bullet holes were the most important to armor. Because planes shot in other places survived. If no planes survived they’d learn nothing but instead they learned something useful from the survivors. It doesn’t change that a WW2 fighter pilot would need some luck to survive but if he took the right lessons from survivors and armored his plane in the correct places he’d improve his probability of surviving. One of my favorite pieces of business advice is since 90% of businesses fail, start 10 businesses and you’ll probably succeed. Of course that oversimplifies things but so does the original statistic . It’s also useful advice that helps you re-frame “luck” as stochastic risk that you can manage. And learning ways to lower probability of failure is a great way to manage risk even if there’s always some element of randomness at play.
- t8sr 3y agoIf 90% of businesses fail and you start 10 businesses, you still have about 35% chance of failing at all 10 of them.
- deleted 3y ago[deleted]
- xvedejas 3y agoThis is assuming uncorrelated results too. As you observe more and more of your businesses failing, you would want to update your estimate of your own rate of failure. Each new failure in a string of only failures is slight evidence that your own rate of failure may be >90%, even if it's 90% on average for everyone.
- lisper 3y agoYes this is crucial. If you can’t improve your odds after nine tries then you are doing something very wrong. That does not change the fact that the best thing you can do to tilt the odds in your favor is to choose your parents carefully.
- gnicholas 3y agoWhen I first found Jason's blog, I was surprised not to see it posted here more frequently. Many of his old posts ring just as true today as a decade ago, and his writings about the personal aspects of startup life are unlike most of what you find written by successful founders.
- lnwlebjel 3y agoSecond this, it's a great blog. I discovered it about 2 months ago and have been reading through the old posts ever since.
- mkl 3y agoWell, it is posted pretty frequently, including old posts: https://news.ycombinator.com/from?site=asmartbear.com https://news.ycombinator.com/from?site=asmartbear.com
- gnicholas 3y agoDoesn’t ever make it to the front page? I’ve been here a decade and don’t ever remember seeing it there.
- mkl 3y agoI've seen it on the front page quite a few times.
- mkl 3y agoOkay, I checked the front page history, and found 65 occurrences (almost all unique, amazingly), most between 2009 and 2013. In fact, since 2013, the only front page occurrences are 2014-07-08, 2017-12-30, 2023-01-09, 2023-10-01, and this post.
- WalterBright 3y agoIf you want to be a pop star, is it better to get advice from Taylor Swift, or your local garage band getting high school gigs?
- XorNot 3y ago...I'm not sure what you think the answer to this is?
- Sohcahtoa82 3y agoFor the most part, it's a rhetorical question. But there's a massive trend of people born wealthy to attribute their success to hard work, rather than giving any credit to the fact that they had a massive safety net if they failed at their ventures. Every billionaire was born a millionaire. Taylor Swift had a huge amount of support, both financial and emotional, from her parents. Her parents weren't millionaires, but they were decently well off, enough that they could move her to Nashville just to help put her career on a launch pad. She's extremely talented, but talent alone is extremely unlikely to be enough. You have to be able to meet the right people at the right time in the right place. All that together takes money and flexibility, which aren't things you earn by just working super hard.
- WalterBright 3y ago> Every billionaire was born a millionaire. Not Musk. Not Jobs. Not Gates. Not Bezos. Not Oprah. Not Paul McCartney. And so on. > Her parents weren't millionaires Not Taylor Swift, either. > She's extremely talented I've heard her songs. Her talent seems mediocre to me. > which aren't things you earn by just working super hard You have to work smart. Working hard at the wrong things leads to nowhere.
- hirvi74 3y agoHonestly, I think it'd be better to get advice from both. Following either advice will unlikely yield the same results, but that doesn't mean either option is without something beneficial to offer.
- myhf 3y agoWhy didn't the RAF just preemptively shoot holes in the locations of those red dots to make their planes more likely to survive?
- deleted 3y ago[deleted]
- throwup238 3y agoIt was cheaper to have the enemy do the work and waste the ammo.