It's reasonable to assume that becoming successful in business requires you to make more than 20 correct decisions, and depending on the level of success, probably closer to 30-50 good decisions, and a population of billions and trillions just to find one successful person.
Conclusion: real life is not just coin flips. If it were, noone would be successful.
In the context of predicting success it does not make sense to put talent - or other non-changeable initial endowments like country of birth, parental wealth, attractiveness - into the "luck" bucket. While you can't do anything about these factors, an accurate assessment of them will tell you a lot about your chances of success in a given domain.
I.e.: you might need all three of exceptional talent, hard work and luck to succeed in an endeavour - and while luck might be random, and "hard work" can be influenced by yourself, the talent factor can be gauged but cannot be influenced so it can be a hard limit that should guide you in the path you take.
I.e. you don't dedicate your life to being a supermodel if you were born butt-ugly, or to be an NBA player if you are 5 feet tall. You might succeed, but your chances are microscopic.
Two people could have equal ability to make decisions - some good, some bad. In some fields of endeavor, they might succeed about equally.
But in startupland, it's easy for one wrong decision to kill the business, so they are removed from ever trying again. Or one right decision could cause them to experience accelerating returns – which compensates for all the other dumb mistakes, and eventually kills off their competitors.
So, paradoxically, the more cutthroat the environment, and the more exponential the possible returns, the less we can use survivorship as evidence of superior skill.
Note that I'm not saying a successful businessperson is unskilled. It's just that it's not conclusive evidence of superior skills.
This isn't about inequality or privilege, this is about survivorship bias. The entire point is to completely remove all those issues in a way that makes it obvious to everybody that the only possible explanation in this made-up example is blind luck.
In the real world, it isn't all blind luck, but sometimes there are cases where the luck signal does in fact overwhelm everything else, lotteries being a great example.
Also typing/pronouncing/using 'LED lights' makes for a great tautology. ("Light emitting diode" lights)
English is weird, sometimes.
Alternatively, you can view it as a game that is repeated until one person is left. So the chance of success is 1/n where n is the number of people involved - independent of the random method chosen for selection (coin flip, rolling dices, or whatever).
Survivorship bias is "Zuck did X, Y and Z, if I do the same then I'll be a multi-billionaire too!"
Following the playbook of those that made it into the top 0.001% is foolish and does not properly account for the large part luck played in their success.
There's no survivorship bias in going to med school, becoming a specialist and then earning 400k/yr.
Not compared with the loads of stories of people who worked hard, improved themselves, and still don't earn anywhere near $1M/yr. Otherwise thinking that those successes have some meaningful advice to offer wouldn't be survivorship bias, it'd actually be correct.
> Following the playbook of those that made it into the top 0.001% is foolish and does not properly account for the large part luck played in their success.
Exactly. As some guy once said, Taylor Swift telling you to put everything into your dreams of becoming a pop star is like a lotto winner telling you to spend your life savings on lotto tickets (a la the original comic).
The vast majority of single digit millionaires are doctors, lawyers, construction company owners. I've even personally met a factory worker who retired with > $1mm in savings due to prudent money management (no lottery wins, just basic financial management for 30+ years).
I live in a completely unremarkable town and there are loads of millionaires around. I bumped into one recently when I accidentally stumbled onto his property while hiking. Judging by the sprawling estate he's at least in $5mm+ net worth range. What does he do for a living? He owns an earth moving company. That's right, at the ripe age of about 45, he made tons of money moving dirt from one spot to another. Lovely guy too.
My friend from high school is also in the millionaire club. We're both from a public school background. Unremarkable back stories in just about every way possible. Now he runs a very successful web agency. He's super smart, hard working and I'm sure that accounts for the majority of his success.
My point is that there are loads of millionaires around, even in my little backwater. Far, far more than there are lottery winners. Seems to imply that luck plays a far smaller role in the success of millionaire next door types than simple hard work.
Edit: Link for convenience: https://www.amazon.com/Millionaire-Next-Door-Surprising-Amer...
A total net worth (including real estate etc.) of more than a million dollars doesn't imply that someone's particularly wealthy the way it once did.
"a HNWI defined as having more than US$1 million in investable assets, excluding their primary residence, collectibles and consumables"
What about the factory workers who also practiced prudent money management and did not end up millionaires?
What about the many other dirt movers who worked just as hard but did not end up being the one owning the company?
What about the other smart web professionals who worked just as hard as your high school friend yet do not currently run the show?
Then he at least ended up better off than he would have if he had not practiced prudent money management. Anything else would require stretching the definition of "prudent" beyond anything that fits.
It is a fallacy to believe all of life's outcomes are purely due to skill, one that will harm anyone who acts on it. But it is also a fallacy to believe that all of life's outcomes are purely based on luck and privilege, and of the two, this one is far more harmful to anyone who acts on it than the first one.
It is also a fallacy to believe that all possibly skill improvements are equal, a fallacy that helps people over-attribute things to luck when they see "Well, these two people both worked on skills and look at their divergent outcomes!" But if one guy was carefully tuning the skills to things that the market wanted and would lead to success, and the other guy followed, say, a socially-approved educational outcome that produced a very shiny credential, even perhaps in the same field, but did not provide real things that anybody else wanted, you will get divergent outcomes. But that will be less due to luck than someone who assumes that the skills obtained by both were the same would think.
We do not know the amount of luck based causality versus non luck based. What we do know is the probability of ending up a millionaire vs not.
So say it's 10% millionaire. I'm pulling this out of my ars. Now the question becomes what non luck based actions were performed by the 10% of millionaire and not by the 90% of non millionaire that caused them to become the ones to end up millionaires.
That's not a trivial thing to answer. First, it's possible there exist no non luck based actions. Maybe all actions had an element of luck. Second, it's possible no single action had a majority role. So it becomes a sum of small actions.
Now, even if we assume the best case scenario. That is, there exist a single action which is 100% responsible and has no luck involved. Well, how did the 10% knew to do that and the 90% didn't? That's also luck,or a just as complicated question to answer.
Now say the survivors, aka, the 10% came and said the secret guaranteed to work action is X. It does not mean it is repeatable once there is already 10% millionaires. What if the 90% now all do that magic action, there is not enough money for 100% millionaire. So you can see that this action would not anymore suffice and therefore starts to have an element of luck again.
This bounds luck's contributions to less than 100%. Mathematically that's a pretty weak bound, but it's not hard to see that it must be substantially less than that in the real world for the observed results to make sense, though. How substantially is hard to even put numbers on, so I'm not going to try, because the real point I'm trying to make here is that it is dreadfully dangerous to sell the idea that success is entirely luck based. It is far more dangerous to both individuals and the society they live in than to sell the idea that success is based on skill and effort. As I am a rather old fashioned person who still believes that truth is better than falsehood, the fact that telling people that success is based on skill and work works better than telling people that success is pure unadulterated luck suggests to me that the "skill and work" explanation, while still not Aristotelian truth, is likely closer to the truth than the "pure luck" explanation. (I'm skipping over some connecting justification there because this is an HN comment and not a philosophy essay; if you agree truth is better than falsehood you can probably fill it in yourself, and if you do not, then why are you arguing anyhow since no argument will produce anything better than what you already have.)
So ya, I think the danger part you're also generalizing a little. There are some people who telling them that luck isn't a factor is doing them a disservice. Like people who have been unlucky. There are a lot of people who try and fail. Why is that? It is not enough to work hard and spend a lot of time chasing success, that's why. That's the essence of survivorship bias. You must also be talented, smart, strong, tall, healthy, handsome, connected, etc. These things I argue you have or don't pretty much based out of luck. Out of everyone who tries, those who succeed will have either because of pure luck, like imagine everyone trying did 100% exactly the same actions, and it still ends up that only a fraction of those succeed, that would be pure luck. Or, it is the luck of what has caused you to beat the others, to think of better actions, and execute them better, to end up being one of the successful ones.
I personally think if our society acknowledged this, maybe we'd start thinking about society differently. Maybe we'd be more inclined to accept social programs. Instead of seeing everyone who is not a millionaire as lazy, and like it is entirely their fault. Maybe we'd have to come up with an organisation structure where maybe we don't have a winner takes most model. Or we'd need to recognize people's individual strengths, and make sure we find a way to make them helpful in those ways.
I see your point, and I actually mostly agree. I think it just depends who the audience is. If you talk to youths, obviously you should try to motivate them and ingrain into them a sense of having to work for success, and try to give them the smarts to do so. Also have them believe the effort is not wasted, and will make a difference in their life. But if you talk to people struggling to succeed, even after putting in the effort, I think you should also recognize that they can't be blamed entirely, a big part of success is luck. In the end, our society must find the right balance between the two.
Yes of course that's the definition of survivorship bias. For the most part that doesn't apply to most rich (>$1mm net worth for argument's sake) people. The vast majority of millionaires achieved their success in a perfectly repeatable fashion. This is self evident. How many people globally are at the Zuckerberg tier of success? A dozen maybe. Globally, how many people have a > $1mm net worth by
- choosing a safe, boring, white collar job
- running a local service business
- saving aggressively over decades
It's absurd to think that so many people could become (relatively speaking) rich, using means where there was little or no "causal relationship between the people's actions and their success".
For every $1mm net worth person who chose a safe boring white collar job, ran a local service business, or saved aggressively over decades, I'll show you ten people who who attempted a safe boring white collar job, tried to run a local service business, or planned to save aggressively over decade, but did not achieve $1mm net worth.
For the purpose of this discussion that's irrelevant.
As you yourself stated
> [Survivorship bias is] about falsely attributing a causal relationship between the people's actions and their success
Given that within a 50km radius of wherever you currently are in the world there are almost certainly 1000s of people with >$1mm net worth it would be absurd to think that they achieved this outcome through actions which had little or no causal relationship to their success.
The numbers speak for themselves. In Australia where I'm from there are approx 234,000 high net worth individuals (HNWI) (defined as having more than US$1 million ($1.35 million) in investable assets, excluding their primary residence, collectibles and consumables). We have 8 capital cities. Using a simple naive, even, distribution gives approx 30,000 people per capital city that fit this definition.
This means that being "rich" is relatively common. If it's common, then it's silly to think that all these people got rich through actions that have little or no
>causal relationship between the people's actions and their success
The uncomfortable conclusion which follows from this is that if you're not rich by this definition you're not trying hard enough.
and just to put those numbers into further context, In AU there are approx 70,000 flu cases in 2015. In the same year approx 9,000 new HNWI joined the ranks. Becoming "rich" is almost as common as getting the flu!
Actually, no, that's precisely the discussion we're having.
> In Australia where I'm from there are approx 234,000 high net worth individuals (HNWI) (defined as having more than US$1 million ($1.35 million) in investable assets, excluding their primary residence, collectibles and consumables).
Which is where, precisely?
> We have 8 capital cities. Using a simple naive, even, distribution...
Have you actually been to Australia? Our population distribution, let alone wealth distribution, is anything but even.
Cancer is common, too--much more common than becoming a millionaire. Is a cancer diagnosis attributable to someone's actions or is it just chance? Sometimes it is, sometimes it is not.
1 in 100 Australians are in the millionaire club. By contrast winning the Powerball Lottery has odds of
To win Powerball you need "only" to match 7 numbers from a pool of 40 possible choices.
By contrast to become a millionaire you had to make 1000s of individual decisions along the way and yet every year approx 10,000 new millionaires join the ranks. How many Powerball winners are there per year? 1 maybe?
It may be comforting to think that luck plays a large part in people becoming rich, but logic dictates otherwise.
Ignore the powerball and look at scratch off lottery winners. There are thousands of people who 'win' at it every day but that doesn't mean it's not luck.
You're mixing frequency with luck. Something can occur frequently and still be heavily influenced by luck.
In most cases, discounting unexpected health disasters or other such life events that befall a person. Most people's definition of 'savings' is very different. And that leads to very different ends.
But you will be hard pressed to find people who did the right stuff over the years and didn't come out better.
Frugality is pretty much a gradient and not a flat plain recipe. Based on how far you can squeeze and invest, that much mileage comes out. Everybody is different, based on how much you can endure YMMV.
Because I have a strong suspicion this is the former. It only works until everybody starts believing and following it. The American dream, for example. Which stopped working, it is said... because it just doesn't work for everyone?
My point is, what if what you say already happened and didn't pan out, what if too many people tried for it to work? So what we have now is not that everybody is lazy, but that too many people realized the system doesn't work for everyone, only for some. Who those "some" are does not matter, it's not a feudal system where titles are inherited so we have more flexibility and who is on top changes. It's just that there can't be too many. Not because it's completely impossible, but just the way everything is set up currently, which seems to promote a flow to the top instead of "trickle down". I certainly don't provide here a complete model to understand what happens, not even close, I just want to give a nudge, a hint of something else there than "laziness". We are way down the path of an endless feedback cycle.
Why are you sure? Social mobility in america is depressingly low right now. Our meritocracy is a meritocracy no more, if it ever was one.
Welfare benefits are structured (presumably unintentionally) to discourage working: earning about $12/hr plus welfare equals about $36/hr without welfare ... but in between, welfare benefits plummet so fast that trying to work your way up from $12/hr to $36/hr amounts to a huge pay cut. As such many can't or won't make the bridging effort.
The proliferation of debt is the other major problem. With social norms & pressures to buy more house & goods than one can actually afford, one becomes self-trapped in preserving an existing paycheck and fulfilling debt maintenance rather than really saving money and taking risks that may temporarily disrupt income.
The smart & hard working ones realize up front that climbing a mountain may involve traversing a valley first, and that poor-looking social presence is necessary to accumulate wealth (to be flaunted later). The rest get stalled trying to make credit card interest payments.
Methinks welfare, as currently implemented, serves the "something must be done!" industry. Many would work themselves out of a job if "poverty" were eliminated as their goal states, so they keep redefining "poverty" and solving it in ways that generate more of it. The operative philosophy indicated simultaneously addresses manifestations of poverty (via income supplements, rent controls, food subsidies, free services), and aggravates the causes (prohibition of low income, strict zoning laws, costly food regulations with diminishing/marginal benefits, undermining low-cost services).
Admittedly, a bipartisan system which simultaneously treats government as the solution to, and the cause of, poverty is really going to screw things up.
 - I find "minimum wage" the modern equivalent of "debtor's prison": if you can't produce enough value, you're prohibited from producing any value at all.
Also, I find the direction of the article in your link interesting. That is, given this:
> Under TANF, states can spend welfare money on virtually any program aimed at one of four broad purposes: (1) assistance to needy families with children; (2) promoting job preparation and work; (3) preventing out-of-wedlock pregnancies; and (4) encouraging the formation of two-parent families.
I'm a little surprised to see this a couple paragraphs down:
> In 1998, nearly 60 percent of welfare spending was on cash benefits, categorized as “basic assistance.” By 2014, it was only about one-quarter of TANF spending. That shift has happened despite a burgeoning economics literature suggesting that direct cash transfers are in many cases the most efficient tool to fight poverty.
I don't see "fighting poverty" on the list of four things, so I'm not surprised that it got disincentivized.
I'm sure that you know people who have high incomes/lots of wealth and who are smart & hardworking. Do you know any older "poor" people (yearly income bottom quintile <$21,000, second quintile < $41,000) who are the same?
Myself being near a half-century, I've watched the development of minimum wage, wage-limited welfare, and easy credit. As such, I have to observe that older people (of whatever income) have mostly lived their earlier low-wage years without those two institutionalized traps, managing to work up their income past that $12-36/hr (inflation adjusted) gap before it appeared, and acquired most of what they're going to acquire (non-consumables) with cash or have long paid off major debts. As such, they had more natural socioeconomic mobility, and regardless of income most retired into a scenario where income can be very low while maintaining a quite comfortable existence - ergo pegging them as bottom/second quintile can be quite misleading, as contrasted with the otherwise presumed "growing family" that does desperately need income & mobility.
To wit: those elderly I know who likely have such low incomes likely own their homes etc outright, know how to live well on a frugal income, avoided/eliminated debt, and are in a position to choose to cut their own income to maximize net revenue (extreme ex.: the "millionaire on food stamps" cases, rich but currently no earned income).
Except for the fact that you could spend millions of dollars on lotto tickets and have absolutely zero to show for it besides the loss of money.
However, if you put in the hard work to learn to be a musician, perform in front of others, go through the fire of creating your own music and sound, market yourself, etc. ... Even if you don't achieve Taylor Swift success, you've still got a lot of skills and knowledge and maybe even a decent career to show for it.
Both made varying levels of careers out of their talents and hard work. Both were popular at parties.
It is entirely possible to be a professional musician and not make ends meet, it is entirely easy to be a shitty programmer and comfortably support a family with 3 kids.
Some fields just pay better. Doctors, Lawyers, Construction Managers, Programmers... will be better risks Singers, Painters, Professional Bowlers...
after all, just because it worked for you uncle and mother doesn't really mean that it works for anybody else.
In the absence of a lot of data, I make due with what I have and in general find the notion credible that working on being a successful musician has other benefits even if you don't achieve Taylor Swift levels of success.
In case anyone's curious, it was Bo Burnham in a Conan interview: https://www.youtube.com/watch?v=q-JgG0ECp2U
Not earn. I think the point is most people can save up that kind of money until retirement.
Most of these people would have made great sacrifices over the years.
Its not easy to control your urges to purchase and enjoy a million things a capitalistic society tempts you with especially if your peers are doing it all the time.
Basically start early, invest and keep a strong financial discipline. $1M at retirement is doable.
And in a different decade, who knows, Taylor Swift herself may have never been anything particularly famous or well-known.
The idea was to selectively add armor to the areas most likely to get hit.
But by analyzing returning planes, their sample excluded the planes that were lost.
So the better strategy was to add armor to the areas with the least damage instead.
Now I see survivorship bias everywhere.
Retail chains improve their comparable store sales metrics not by actually increasing sales, but by closing stores with declining sales.
Money managers and traders with the highest performance often have no special talent, they're just ones who survived.
There is, just not as pronounced as in the lottery example. You ignore all the students who failed or dropped out of med school, didn't make the cut to become a specialist, or had to take a job that didn't make 400k/yr.
Once you have a class of medical students, it's not a lottery system on who succeeds. Short of those who, through no fault of their own, run out of money or have some unfortunate circumstance that takes them out of the program - the ones who succeed seem very likely to have made it on merit of some combination of hard work and intelligence.
A close friend of mine is now a cardiologist. As far as I can tell his residency was a three-year hazing ritual / sleep-dep experiment. To top it off, when he was finally done and out in San Francisco visiting us, he got the call to take some final test. The test had to be done the next day and had to be done in person at one of six cities in the country, the closest one being in LA. We scrambled to get him a plane ticket and some sleep.
He passed, but excuse me what the actual fuck? That's not character-building. That's straight up institutionalized caprice.
But I have several members of my family who are/were doctors. Residency is hard, pure and simple. It's hard for everyone and takes tremendous perseverance. But perseverance is the opposite of luck.
(obviously the training and education received is both of those things; I'm talking about the method)
I do know in my personal life that the "trial by fire" method of education makes a huge impression and can be very successful. The military uses this method as well to great historical success.
But what's hard enough? Can we quantify by any means other than the outcome?
We can point to people who have never worked on their business for more than 40 hours a week and their business has succeeded. We can point to people who have put more than 120 hours a week into their business who have failed. Who really worked harder?
NTS is typically applicable when someone expresses a goal like "being a good Christian" and then continues to redefine what that means, never admitting that some are good Christians because of endless redefinitions of the metrics.
As with the xkcd comic, it seems silly to base your success model on the lottery type system that is the rarity rather than on what works most generally.
Besides, it's not always about the amount of time being worked.
Merit is a combination of hours put in, intelligence, the value of decisions made, etc.
I'm not arguing for strictly the number of hours worked. I'm arguing for merit based upon a number of factors vs the idea that all success is determined by luck.
And in generally many people actually believe this. That is the "self made man" story. Many people believe that the starting point doesn't matter. That outside help doesn't matter. That ash to riches is possible and happens often but the reality is this exceedingly not true at all.
> Survivorship bias is "Zuck did X, Y and Z, if I do the same then I'll be a multi-billionaire too!"
> There's no survivorship bias in going to med school, becoming a specialist and then earning 400k/yr.
And if you ask a great majority of these people they will actually believe that hard work was a majority of their success but I firmly believe it is more analogous to as they say in real estate "location location location". Right parents , timing and money probably made the mass difference.
Consequently the survivorship bias is even worse because everyones success story is going to have to be fairly different because the vast majority of us come from a wide array of backgrounds and starting points.
This is a combination of egocentric bias and post-hoc rationalization 
You're looking for two things:
(On the med school survivorship bias comment: I don't know about the US medical system, but every other high-earning profession I'm aware of has a significant failure rate. Don't go to law school in the UK assuming that you'll make partner at a major firm, for example - or indeed that you'll automatically manage to land a job as a practicing lawyer.)
My wife is a fairly successful lawyer and she was adamant that she wouldn't encourage our kids to go into law - too brutal and the probability of success too low to make it worth it. The other nasty secret is that a lot of people who are partners at smaller firms actually have a terrible income - but the are desperate for "partner" status that they will do anything.
Edit: Even the old requirements of being very posh and/or stinking rich aren't enough to make it to partner these days...
Becoming a top-tier, MM lawyer is hard, but there is an instruction set that guarantees you'll be able to do it if you follow that instruction set. The more "random" aspect of it is if you actually have the predisposition to actually be capable of following that instruction set.
I notice one thing that most success dont have, them just sitting on couch doing nothing.
But I believe that's the whole point that the comic is trying to make.
Successful stories are those that are shared and those that we choose to have as validation that if we do the same we will be successful.
Stories of those that had the same conviction, but failed, are those that few like to share or even acknowledge.
Of course, there is plenty of variation on what we consider "success".
Going to college, work hard studying a marketable subject is a much lower risk/reward proposition than "funding a startup and creating the next Google".
The point is that, due to survivorship bias, it is hard for us to know whether working hard and improving yourself is actually a better path to success than any of the alternative things you could be doing.
... And let's not forget that HN is not an accurate representation of society as a whole (HN itself 'suffers' from survivor bias).
It's less amusing when you realize these same arguments are used against minorities/the disadvantaged to keep them down.
This is also called "cargo cult behavior." https://en.wikipedia.org/wiki/Cargo_cult#Metaphorical_uses_o...
Not everyone who goes to med school ends up as a high earner, not even all those who graduate. Sure, their success rate is much higher than those who decided to play the lottery instead, but there's always going to be some degree of survivorship bias when the failures are less visible than the successes.
>Survivorship bias doesn't relate to people who worked hard, improved themselves and now earn 1-10MM/yr.
It absolutely does! Luck and upbringing (which I really consider a subset of luck) are such huge factors in how much money you will make in your life.
Even that is not quite true. You need to have relatively well off parents to pay for your 10 years or so of university.
One might be tempted to argue that if you're really smart, you can get a scholarship... But even then, can you really get high enough grades to qualify for that scholarship if you have to keep up a 20 hours per week side job to pay for your rent?
All those people earning 1-10MM/yr?
How many of them were born on third base and go around explaining to everyone how they too can hit a triple?
I don't have the actual numbers (does anyone?), but my guess would be that universally given <10% of startup success rate includes those people. In other words, you have 90%+ chance of failure, and <10% of chance of ending up with income better than in a job (including very small chance of becoming a multimillionare).
For example, there are millions of apps on App Store. Most of those are/were somebody's startup...
As mentioned elsewhere on this thread, small business survival rates are surprisingly high these days - around 60% depending on whose figures you believe.
(I think that's too high, and suspect it doesn't include digital businesses to the extent it should. But 40% wouldn't surprise me, across all sectors and industries.)
Wannabe-unicorn success rates at getting to unicorn status are, OTOH, very low indeed. But the rewards are arguably commensurate with that.
In my case, I'm just lucky that the art I love to make, code, is also a highly paid job. Nothing felt hard to get here, I did it because of the passion I have for it, and I have this passion out of luck.
That's cargo cult.
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 business. It is not that hard to become a millionaire, way easier than being a salaried person, tens of thousands of times easier than winning a lottery.
On the lottery you have absolutely no control about the outcome, on real life you can "cheat" and control anything.
For example, one of the great discoveries in my life is that in business if you don't know how to do something you can just hire the person to teach you or your team or just do it for you.
That felt like cheating because I had been trained all my years on school and job that you have to do all your job yourself, regardless you being good at it or not.
That control makes it extremely easy to do things. For example you could work with the people you want to work with, that makes your life way easier and enjoyable than if you are externally forced to work with people you don't want to work with.
In the startup world some people want to be billionaires, and that is probably akin to winning the lottery. But I know some billionaires and do not envy them. Traveling everywhere with armed escort because someone could kidnap your children, so you live in a bunker isolated from everyone. Everywhere you go someone wants something from you, a loan , to invest in them. Banks harassing you all the time. Not knowing if people is around you just for your money.
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 more people with the exact traits you'd describe as being what's needed for success have failed than succeeded.
It's not that far from victim blaming, even if not intentional.
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 traits. If you're a self-starter with a fair amount of willpower and the ability to effectively learn, lifestyle businesses (as distinct from unicorns) are not massively tricky to grow. They're not easy, and there's definitely a learning curve, but it's on the "doable" end of the scale.
(Background: I've built a few, and I teach other people to build them.)
Addendum: we should probably also start by defining "failed" here. If you mean "way more people's first businesses fail than succeed", I'd agree with you, absolutely. If you mean "way more people have started more than 8 businesses following best practice and have had zero successes than have had any success", I'm much more skeptical. It's an axiom - even in the talks by famous successful people mentioned in the comic - that you generally need a few attempts to get the hang of launching and running anything.
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.
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.
Most people can not afford a failed business. If you are looking at repeated tries, you are taking a huge amount of survivorship bias already.
For example, infoproducts (or any kind of digital product) are very cheap to start up. They take time, but not necessarily a lot of money.
I have met several very smart people who have done great things but have not been fortunate enough to succeed financially because (for example) some well-funded, well-connected silicon valley competitor came out of nowhere and took all the market share through the sheer force of advertising. Many things can go wrong.
I have known people start companies who do everything right. Have studied all literature, hired great people. Still failed.
I have known who do have the first clue about running business, fumbled their way around. Tried do everything themselves. Yet Succeeded.
To the last guy, entrepreneurship is easy and everyone can do it. To the first guy it is hardest thing ever.
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. Don't tell the rest they can win too, that's insulting. You won because someone lost.
I also have found that many people are OK to do some jobs for me that I find really really unpleasant. You need to find the right person for the right "unpleasant" though. This is the beauty of capitalism.
And I am now a millionaire. And when I describe what I do, people yawn and don't want to do it. Even if I find it quite darn interesting.
Beware survivorship bias: I strongly believe it is much easier, and way most likely, to become a millionaire if you set your mind to become a millionaire, and not a billionaire. Many more ways and options. No need for a wild unproven new idea.
Did you find it interesting to begin with? Or did you just think the sector would be a good investment and then later, after you were successful, it became interesting?
But after working on this for many many years, improving little things here and there, then a few bigger things, it became more and more interesting, with a sense of pride that comes with competence and achievement, regardless of the sector.
I got lucky with finding that opportunity that really met my skills. But I actually had been looking for one for a while, so it's half lucky. And nobody gave me money. I forced it then, and ever since, because nothing comes easy.
But I am lucky also because I don't have a very strong competition. But maybe because I am in a niche, so not fully lucky?
Sorry for being not very specific in all this...
It may work for anyone, but not for everyone. I love that in English those words sound so similar. I might be tempted to consider that's part of the problem (as part of the larger "how does language influence thought" topic, where the answer currently seems to be "generally not too much, but it depends"), but in my (non-English speaking) country the same kind of thinking isn't exactly unknown either.
But if you decide to start a plumbing company in the US, and if you have the brains, put the hard work, talent and discipline to run it very very well even just in a local area, I would not be surprised that you can reasonably become a millionaire over time. Because it's always hard to find a good plumber and electrician. But many people yawn at plumbing, and you'll never be a billionaire. And it will take more than 3 years, and it won't be flip and repeat.
> lots of businesses fit it pretty well.
Keyword: "businesses". If everybody follows that path, who is going to work at those businesses?
You completely failed to grasp my point. You keep looking at a niche and miss the big picture: I only works for a few!
Not to mention what it would mean if everybody could become a millionaire, never even mind how.
This is false, and frankly a bit insulting.
If capitalism was just a competition, we'd still be fighting over castles and wheat and Trojan women. Cars, computers, and indoor plumbing wouldn't exist.
> There is WAY more wealth around on earth in 2017 than there was in 1917, 1017, or 117
Agreed. Also inequality is higher than ever.
> Most of the wealthiest folks get rich by inventing/creating new wealth, not by stealing from others.
False. They get rich by extracting surplus out of the new wealth created by someone's labor. Whether we call that stealing or not I don't care.
> If capitalism was just a competition, we'd still be fighting over castles and wheat and Trojan women. Cars, computers, and indoor plumbing wouldn't exist.
As I said, wealth is not a zero sum game.
But for someone to be rich, someone has to be poor. By definition. For someone to extract surplus, someone has to create value--i.e. work. By definition.
Now, you could argue that in a society with a lot of wealth, one can be "poor by definition" or a salaried worker, and still live a life in dignity. I concede that this could be a theoretical possibility. It could make for an interesting science fiction novel.
In most parts of the real world (including the USA), being poor is miserable and doing salaried work is alienating and most often exploitative.
So 1) not everyone can be wealthy and 2) for a single person to become more wealthy someone else gets poorer.
Clearly relative wealth is a zero sum game. By definition - relative wealth is defined by your difference from the mean, so any change in society's overall wealth is subtracted off.
Absolute wealth is empirically not zero sum. Any disagreement about whether "wealth is zero sum" is either disputing that empirical result, or arguing that the relative wealth definition is more important somehow. So if you're going to argue that you should provide some reasoning.
I think the truth is somewhere in the middle, and that maximising something like median wealth is what's optimal for human flourishing.
So almost all acknowledge that luck can play a factor, how much can sometimes be up for debate. So if you are lucky do you deserve all that comes your way? or should you play nice and share? And if someone else's luck was even partly the cause of your misfortune how would you feel?
I don't have the answers but I think the subject is worth thinking about; especially as it seems difficult to square the circle.
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.")
Business failure = not serious. Got it.
>But I know some billionaires and do not envy them.
So you know multiple billionaires and think your situation is normal?
Are you sure this is the right thing to learn considering how many businesses ran out of money because of hiring too soon? In fact, prevalent advice is to not push the hiring pedal until it becomes unmanageable.
Taking a (for example) safe route into early retirement is not "doing nothing". Most of the startup founders will still be working (because X years invested into a failed startup has set them back) when I'll be retired sipping drinks on the beach.
I think it helps to consider which things done by successful people were necessary. Don't worry so much about whether they were sufficient, because that's going to involve a whole bunch of luck as well. But you can't win if you don't play.
By far, the best explanation I've ever seen !
One thing is pretty certain, though. Doing nothing at all leads nothing at all. If you don't get up out of bed, eat, do something - you die rather quickly.
If you barely get out of bed to eat, but don't take care of yourself, you limp along through life and probably die early from lack of proper nutrition, exercise, and mental stimulation.
Somewhere along the spectrum from doing absolutely nothing to killing yourself with work is a sweet spot for achieving success. My observation is that the people who succeed spend more time on the side of that spectrum toward working their tails off than on the side of doing nothing.
So yeah, it's a funny comic. It makes a point to remember, but it's definitely not the final word on the value of hard work.
My observation is those people are miserable, unhealthy and have poor relationships.
Relationships are hit and miss, in my experience. Some hard workers work hard at their relationships too.
I've spent enough time in running a business to know that what works for one person may or may not work for another. I too hate the hero worship that surrounds the ultra successful, the whole "follow XYZ steps and you can be a billionaire!" type stuff. You can extrapolate a lot of general guidelines to help you increase your "luck", but nothing is guaranteed. I've seen friends with good plans fail because they couldn't execute, due to things out of their control or things I perceived as in their control. We've weathered some storms through sheer luck and I'm thankful for that.
However, If you're already looking for excuses then you will most likely fail. Every ambition or goal has a cost. If X% of startups or Y% of people who pursue this succeed, there's obviously a luck component to it. But I bet that the vast majority of that subset worked hard anyway and knew what they were getting into. Failure was always a potential outcome.
I get frustrated by everyone who points to anyone who is finding success in something as handwaving away their hard work and pointing to luck and survivorship bias, as if they see through some illusion that nobody else is aware of. That's bullshit. So you know what survivorship bias is? Good for you, now what? Does this affect your life goals in any way? People just play the hand they are dealt and come out better or worse. Nothing more, nothing less.
Both media are making the same joke, but I don't think anyone would feel a need to defend effort if they had seen the talk instead of the comic. The talk's beat-for-beat parody of the just-so success story paints a very clear and recognizable target.
If anyone doesn't want to watch the entire video then just watch the last 39 seconds, it ties in nicely with the comic as Darius argues that talking about "how to buy more lottery tickets" is useful whereas "how to win the lottery" is not.
But if you put too much emphasis on survivorship bias then you would think that everything is completely random and use "survivorship bias" argument as an excuse to do nothing.
I'm highly recommend to listen Peter Thiel's speech "You are not a lottery ticket":
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.
Well said. I think I'll add this to my .sig .
Do those poor people have time enough to go to those seminars as audience?
A VC is about as far from a neutral voice on this topic as it's possible to get.
Biases and fallacies (up to a point) are not end-all.
Gambler's fallacy makes sense if you're throwing dice, not if you're improving yourself, trying different things and walking the distance
Here's the thing with survivorship bias, they might not answer with something that's a guarantee of success (because nothing is), but they won't answer with something that's catastrophic.
No, what you would do is you would try to figure out how to get more information on those who didn't "survive" so you can make fair comparisons.
People would argue striving to be like a TED speaker or Kim Kardashian or (INSERT_CELEB_NAME_HERE) is superficial, dumb and shallow. Yet those people are better positioned to survive given our society doesn't change.
I would be interested to see if their was some sort of Event that drastically changed our world, would we worship hunter-gatherer style traits again?
I think yes.
In your example, I'm taking "celebrities" as leaders; Kim Kardashian for instance being "Relationship Oriented" and perhaps reflecting the desire of her followers for maintaining stability and comfort.
The rougher, more "Hunter Gatherer" style traits, perhaps channelled by modern political personalities perhaps reflect followers who are in more uncertain circumstances and who are looking for economic growth and an stabilisation of their situation.
I have had a lot of exposure to people 'in property'. People in property are people who had access to capital at the right time. Even worse are those who get to hear about government sell offs or developments which will increase values in an area before the rest of the populace. Then of course there are the money launderers. So I will add flexible morality to my list of traits that make a millionaire.
The details in between are important in the discourse of luck. Growing up poor, I engaged in a lot of unethical behavior to acquire money. By some miracle, I got admitted into college (albeit a state school), and realizing this miracle, I dedicated my 4 years to pure studying with the belief that good grades -> good job. At the end of junior year, I questioned this logic- I had a 4.0 GPA, yet after 20 interviews, wasn't able to land an internship (which falsely led me to believe I was relegated out of the realm of "success"). Then, I digressed to my former self, and got in trouble with the law. During senior year, after 20 more interviews, couldn't land a full-time offer. Again, by luck, I somehow ended up landing a "prestigious" job. Years later, it was revealed to me that the hiring committee all but unanimously disagreed on my qualifications. One member read my senior thesis in full and, for some inexplicable reason, fought for me, and I ended up receiving 1/40 slots reserved for Ivy League grads.
Whereas the first paragraph suggests hard work pays off, the second paragraph screams "luck." Sometimes, the details are too long, where the key events suffice when giving a description of someone's path. I don't think people are trying to dupe listeners and self inflate their hard work when they make statements like the first paragraph- people just spare the details because it's really not directly relevant to the narrative.
Since my first job, I've interviewed for 70 different roles without success. While I get dejected at times, I understand the role of luck. I don't owe the details- I've earned my right to say I worked hard, but people can, and always do, aid in my luck. Without the awareness of this, I would've given up by now, but I just keep chopping. That's all there is to it when it comes to discussing luck.
Sure, sometimes an opportunity appears through some random chance which later on we might feel is lucky; if you were able to actually do that job, or deliver on whatever chance appeared then luck did little more than open the door.
If you're good enough, or hard working enough, a chance will usually appear. Don't dismiss an achievement as just being "luck" -- it was earned (I sure did)..
You're lucky if you pick a winning lottery ticket. You do well on a job or a opportunity? That's because you worked to be able to exploit the chance, not because you got lucky to get offered it.
Everyone? How about people who have no talents whatsoever -
they are at best average (or a bit above average) at everything that could be useful? Most people are like that.
Why do you assume this?
Sometimes a change can be terrible and good. Whole family dead, house gone? Terrible. Being free to move to a new area, perhaps find new opportunity - could be (in a different sense) good.
Only a crazy person would want such a disaster, but sometimes surviving something like that if one is able to shamble on through life - will in hindsight be the point were life changed, in some ways, for the better.
There is an issue of magnitude of those breaks, though
Good personal philosophy but clearly false in a meaningful way.
Yes there's survivorship bias, you try to adjust for that, and draw inspiration from the positive parts of the better and more realistic examples.
Just because the system is rigged against you, doesn't mean you shouldn't try to achieve things. Not trying to achieve things is decidedly worse.
In many ways, this train of thought is also abused by those who have already made it. Help the poor? Why, they're not working hard enough! Thus, helping everyone be aware of this could conceivably help us make better social policies.
Acknowledge when luck was the major reason for your success. Don't stand in front of a room of people and tell them if they weren't so damn lazy, they could have hundreds of millions of dollars as well.
In other words, if luck played any major part in your success, you really have no justification in lecturing people on how to be good at something.
No, theres no silver bullet, especially not in small/easy/silly lifestyle variations (meditation, eating granola, not having furniture etc), but then that's far from what most inspirational business stories are about.
Once you take on the mindset that all success is luck, what's the motivation for trying at all?
Consider Bill Gates: by all accounts, he was a good programmer and willing to work long hours. Over the years I've heard a lot of people talk about that without also acknowledging things like the starting advantage of coming from a wealthy family and making his first big sale when his mother was on IBM's board, and the luck of starting a business just as the industry was making a huge change which upset a lot of established players.
That doesn't mean you need to hate him or say his success was undeserved – ignoring the later anti-trust actions – but it does say that for most of us the more realistic model would be, say, Gary Kildall. That also says that e.g. many people might reasonably conclude that a career at a large corporation which gives them some interesting technical work and leaves them with time to spend on their family, personal health, open-source projects or other hobbies, etc. is actually a better deal than a stressful attempt at something which might pay somewhat but not game-changingly more but also has a number of likely outcomes which aren't as good.
Not instead, but in parallel: check cases of those who failed in the same area and lost it all / went to jail / broke their life, among with less stressful outcomes. Bad thing is, losers rarely write success stories, so there is always a big risk in "being like Gates or Jobs".
A single lucky person is a small sample, so statistically insignificant.
What would be better is to be able to see what all people did, the ones who failed, and the ones who succeeded, and then try to draw conclusions from there.
Unrealistic for sure, but that's what I'd prefer doing instead.
The belief that success is completely luck-based is useless, unless there's a uniform distribution of 'success' over all types of people and their strategies. That is, even if I leave my job now without any verified product, I have the same chances to establish a profitable business, then a guy who already has paying customers.
Is this because people prefer discussion threads over collaborating in a wiki, or is this because ExplainXKCD is not as widely known as it should be?
It seems like -ship is related to the German -schaft. e.g. Gemeinschaft <-> fellowship, Gesellschaft <-> companionship, Freundschaft <-> friendship ...
Thanks for letting me search for it. Now I learned something on a slow friday.
Gemeinschaft -> gemeenschap
Freundschaft -> vriendschap
Gesellschaft -> gezelschap
But in the case of "survivorship", the German equivalent doesn't include "-schaft". It sounds awkward. Probably in Dutch as well.