Latest Entrepreneurship

Survivor Bias is a Bitch

January 20, 2015

objects

 

Winston Churchill famously said “history is written by the victors” and nowhere is this more true than in startupville.

Despite the recent surge of “how I screwed up” stories one finds on HackerNews, the vast majority of startup advice is still dispensed almost exclusively by successful entrepreneurs, with the size of their success directly correlated to how breathlessly their musings seem to be absorbed.  Although they (we?) all have the best of intentions in trying to help others enjoy the same success we’ve seen, the path to these intentions is all to often paved with survivor bias, and survivor bias is a bitch.

Of course your agreement with that statement will probably depend upon which side of the survivor chasm you find yourself on.  For those of us who are the survivors, the stories of successful tactics, near-death recoveries, and “eventually it’s all worth it” moralizing are very valid descriptions of the things we all went through prior to making it.

But of course that’s not the case most of the time.  The vast majority of the time, those tactics that worked so brilliantly for the successful startup may not be enough to rescue a flawed concept or a troubled team.  Although those particular tactics may have been part of one company’s success, there is absolutely no way of knowing just how much of a part they played.  Or in fact, if they had any influence at all.  Or even worse, if they were actually bad tactics, whose effect was covered up by some other great tactic which went unsung or unrecognized.

Although survivor bias stories are meant to provide encouragement, I fear that they often have the opposite effect.  By making success seem more common than it really is, it can’t help but cause an early stage entrepreneur to wonder why it hasn’t yet happened to him?  The cheek-by-jowl nature of incubators and coworking space makes this even worse.

I just returned from a week of mentoring aspiring entrepreneurs and I found myself  struggling to find the right balance.  On one hand, I don’t want them to be afraid to start and so I’ll encourage them that it IS possible for anyone to be successful, and that you’ll never know just how good an idea is unless you try it.  But on the other hand, I don’t want them to be discouraged when it starts getting hard – especially when they see (and hear!) just how easy it seems to be for others.   So should I share with them just how brutally hard it is?  How many years it may actually take, and in fact, just how likely it is that their idea will never actually get off the ground?

Survivor bias is even worse when it’s constantly rubbed in your face.  When every other startup in your co-working space has gotten their A round.  When every one invited to speak to your incubator class has apparently succeeded so effortlessly.  When every email you get from Crunchbase or Angellist is celebrating someone’s successful raise, rather than revealing how many companies have now completed 47 pitches without a nibble.

We’re not going to fix this problem.  After all, advice from the successful is still valid.  We just need to be clear to point our – and our listeners to recognize — that in almost every case, objects in the forward view mirror are further away than they appear.

View More Posts >

Leave a Comment

Your email address will not be published. Required fields are marked *