Could there be a confirmation bias to this observation?
You distinctly remember the times you had an outlier belief which you ignored to your detriment, but tend to forget all the foolish-seeming ideas you had which were indeed very much foolish when taking stock of the past.
I think the opposite advice might be even more useful for many, many people: be more scared of overconfidence, because you know less than you think. Research on cognitive biases and the underperformance of "experts" in many fields tends to support this view.
Outliers happen all the time. The sort of "overconfidence" described in this article is really about outlier detection and being willing to take a risk on something being an outlier. I have some thoughts on outlier detection.
* Avoid groupthink. If everyone thinks it's an outlier then it probably isn't. I won't touch anything more than two people tell me to look at.
* Sometimes you do know something the market doesn't. Sometimes you can maintain a position longer than the market can remain irrational. This is something that happens every day.
* Ask why it's different. Outliers have distinguishing characteristics from their peers.
* Look as the population the potential outlier belongs to (businesses, athletes, commodity futures, etc). Understand key statistics such as variance, confidence intervals, range, mean, and mode. This helps answer basic questions like "To be successful will this need to be in the top 20% or top 0.002%", "If this fails completely, what will it cost me" and "What is the range of the 95% most likely outcomes." A lot of people will avoid something that feels more risky than it actually is.
Reasoning based on fear has taken over far too great a mindshare. We continually convince ourselves of our rightness righteousness and betterness by down-putting the hopeful, the ambitious, the would-tries. There's a new church of doubt in our fellow man & willing against the try. This post sets a nice positive message I long to hear, about trying, trying hard, about swinging for great.
Nicely said. While I do think being realistic about things is overall good, I'm not a fan of the pessimism / cynicism that I see in startup culture. Anytime somebody says, "Here is how I did X", it's immediately flooded with "survivorship bias", "born rich", and all the other tired responses. While those may be true, pointing them out on their own is boring. Like Paul Graham has said in the past: Is this the most interesting takeaway? I find the "survivorship bias" and related responses to be a cover for admitting you don't want to take a risk, do the work, put yourself out there. Which is fine, but just say that upfront alongside the survivorship silliness. We are all aware that startups have low success rates. /rant
From what I've read, usually the criticism boils down to, "you had an unfair advantage which I don't have". Which makes a lot of sense since that is what startups are built on.
However, it also means that saying things like "take a risk, do the work, put yourself out there" does not make sense for most people because they lack an unfair advantage.
"Here is how I did X" stories are almost always useless for 99% of people because they gloss over unfair advantages like e.g. went to Stanford/Harvard/other, have VC connections, worked at X company, etc. Most people cannot replicate the initial state of these startup stories, let alone the end result.
I totally agree, but this is less true for people who are already on this forum, who are presumably interested in startups (since this is a forum owned by Y Combinator of all organizations). If this was being posted routinely on the NYTimes Food and Recipes page, I would agree with you wholeheartedly. But that sort of content is, I assume, what people visit this website for. Imagine going to a weightlifting forum and decrying people for sharing their fitness routines, saying that not all people can afford gym memberships, have limbs to lift with, etc. It would be silly.
The difference is that the unfair advantages a lot of people who start successful startups have are not easily attainable.
There is no comparison here with a gym membership or having limbs. Both of those are many orders of magnitudes easier than say, getting accepted into Harvard or passing an interview loop at Facebook.
I read very few startup stories that I can actually relate to.
To add to this, even in a level playing field where founders lacked rich parents or Harvard, they'd still stand on the shoulders of those who previously developed tech that can now be exploited for profit. e:g dot-com boom was made possible by development of the internet itself with public money. Not to mention individuals' mental ability at certain types of problem solving, which isn't equally distributed. And large element of luck, being in the right place at the right time. So, while hard work and entrepreneurship, so long as done ethically, should be celebrated and rewarded, at the same time people who are "average" should not in any way denigrate themselves. Also, some big successes in startups come at the expense of everyone else. AirBnB being a classic example where some people have benefitted massively but at the expense of neighbourhoods, community, ability of locals to afford housing etc.
Survivorship bias card is worth holding up
when people try to teach the secrets of success and are potentially misleading with general statements interpolated from an N=1 sample.
Same goes for working at Google as your only
job then writing a definitive book about how SWE is done, without further research on what else is out there.
Maybe for the general public, but the posts that are written here are USUALLY written in good faith, not snake oil marketing. I just personally find it tired and played out, similar to how on Reddit I frequently see people adding things like, "in my / your opinion, <insert statement that is obviously an opinion." Yes, yes, we get it. If I say The Last of Us is the best game of the past 10 years, it is obvious that that is my opinion. We don't have to be so dull with our language. The corollary here is that if a founder writes about how he or she found their first 100 users, it should be obvious to anybody on HN to apply some discretion instead of assuming this is now a universal truth applicable to all startups until the end of time.
Why teach otherwise? It is a strong signal to click the [-] next to that comment thread. Strong ignore signal is as good as strong read signal. It's only weak signal that is problematic.
It's sort of like all those Amazon reviews that used to say "In exchange for an honest and unbiased review, I received the product". Before Amazon auto-removed them, they were a strong negative quality signal.
I would prefer if we preserve high comment SNR by encouraging people to use standard comms patterns so that my automatic comment bucketing will allow me to skip non-useful comments, e.g. correlation is not causation, survivorship bias, etc.
Meh. Maybe not so many people should be trying to be outliers. Maybe society would be better off if we stepped back from the always-on, up-or-out culture and accepted that most people are average and (rightly!) value consistency more than upside. (Is it unfair to immediately wonder if the article was written by someone with an upper-class upbringing, who's always had access to a safety net that most people don't?)
I hope this doesn't come off as hostile, but you're on a forum that is hosted by the most renowned startup incubator. This is basically a bastion for the "always-on, up-or-out culture" you're weary of. It's completely acceptable to be weary of it, but I find this comment as odd as going to an NBA forum and expressing exasperation over NBA talk.
'This is basically a bastion for the "always-on, up-or-out culture" you're weary of'. True, but HN also is frequented by people simply interested in tech, and interested to see comments from silicon valley and elsewhere they're building "disruptive" tech right now. And some from academia. Some people may feel addicted to challenging Elon-Musk-school-of-work-ethic type comments. Personally I feel drawn to respond to people that seem unhappy with their lot, often from comparing themselves to the always on up-or-out crowd. Getting a friendly response from people that "don't buy into that s**" might hopefully help them.
> Maybe society would be better off if we stepped back from the always-on, up-or-out culture and accepted that most people are average and (rightly!) value consistency more than upside
Based on how I'm interpreting this you have it backwards. I don't think outlier results with high upside generally benefit from being "always-on" or "up-or-out culture" because that is too far on the exploit side of things to ever find outliers!
My belief is that more slack and time to explore are more likely to produce outliers.
Put another way, don't extrapolate based on unspecific information. Context matters a lot, and the average case is rarely useful for making a decision.
Ben mentions his writing on outliers [1] and how "low-info heuristics tell you that outliers can’t exist", which is completely true but I want to add another perspective to that.
As mentioned in the outliers piece, you want to rule things in not out. The average case is good for ruling things out, but terrible for ruling things in. Specifics to your scenario will always be the reason to rule in on things that look bad in the average case.
To distill: popularity of an idea != quality of thought. Just because many people believe something, doesn't mean it's likely to happen. In fact, it doesn't even mean the people believe their idea is very probable (e.g. VCs betting on startups knowing that most of them will fail).
In turn, it can be useful to adjust the very one-sided public estimates based your own nuanced reasoning. This could change the status-quo probability from 99% to, say, 60%.
VC firms expect the vast majority of their portfolio companies to fail. Being skeptical of a startup’s prospects does not in any way represent a break from the VC’s expert opinions. They are playing the whole field. You’re going all in on one company, a completely different thing.
Classic case of "just read a new idea and I'll apply it everywhere".
In addition of everything else wrong with this post: No, you can't reach reliable conclusions about startups by reaching to efficient market hypothesis.
Could there be a confirmation bias to this observation?
You distinctly remember the times you had an outlier belief which you ignored to your detriment, but tend to forget all the foolish-seeming ideas you had which were indeed very much foolish when taking stock of the past.
I think the opposite advice might be even more useful for many, many people: be more scared of overconfidence, because you know less than you think. Research on cognitive biases and the underperformance of "experts" in many fields tends to support this view.
Plus hindsight bias and survivorship bias
Outliers happen all the time. The sort of "overconfidence" described in this article is really about outlier detection and being willing to take a risk on something being an outlier. I have some thoughts on outlier detection.
* Avoid groupthink. If everyone thinks it's an outlier then it probably isn't. I won't touch anything more than two people tell me to look at.
* Sometimes you do know something the market doesn't. Sometimes you can maintain a position longer than the market can remain irrational. This is something that happens every day.
* Ask why it's different. Outliers have distinguishing characteristics from their peers.
* Look as the population the potential outlier belongs to (businesses, athletes, commodity futures, etc). Understand key statistics such as variance, confidence intervals, range, mean, and mode. This helps answer basic questions like "To be successful will this need to be in the top 20% or top 0.002%", "If this fails completely, what will it cost me" and "What is the range of the 95% most likely outcomes." A lot of people will avoid something that feels more risky than it actually is.
Reasoning based on fear has taken over far too great a mindshare. We continually convince ourselves of our rightness righteousness and betterness by down-putting the hopeful, the ambitious, the would-tries. There's a new church of doubt in our fellow man & willing against the try. This post sets a nice positive message I long to hear, about trying, trying hard, about swinging for great.
Nicely said. While I do think being realistic about things is overall good, I'm not a fan of the pessimism / cynicism that I see in startup culture. Anytime somebody says, "Here is how I did X", it's immediately flooded with "survivorship bias", "born rich", and all the other tired responses. While those may be true, pointing them out on their own is boring. Like Paul Graham has said in the past: Is this the most interesting takeaway? I find the "survivorship bias" and related responses to be a cover for admitting you don't want to take a risk, do the work, put yourself out there. Which is fine, but just say that upfront alongside the survivorship silliness. We are all aware that startups have low success rates. /rant
From what I've read, usually the criticism boils down to, "you had an unfair advantage which I don't have". Which makes a lot of sense since that is what startups are built on.
However, it also means that saying things like "take a risk, do the work, put yourself out there" does not make sense for most people because they lack an unfair advantage.
"Here is how I did X" stories are almost always useless for 99% of people because they gloss over unfair advantages like e.g. went to Stanford/Harvard/other, have VC connections, worked at X company, etc. Most people cannot replicate the initial state of these startup stories, let alone the end result.
I totally agree, but this is less true for people who are already on this forum, who are presumably interested in startups (since this is a forum owned by Y Combinator of all organizations). If this was being posted routinely on the NYTimes Food and Recipes page, I would agree with you wholeheartedly. But that sort of content is, I assume, what people visit this website for. Imagine going to a weightlifting forum and decrying people for sharing their fitness routines, saying that not all people can afford gym memberships, have limbs to lift with, etc. It would be silly.
The difference is that the unfair advantages a lot of people who start successful startups have are not easily attainable.
There is no comparison here with a gym membership or having limbs. Both of those are many orders of magnitudes easier than say, getting accepted into Harvard or passing an interview loop at Facebook.
I read very few startup stories that I can actually relate to.
To add to this, even in a level playing field where founders lacked rich parents or Harvard, they'd still stand on the shoulders of those who previously developed tech that can now be exploited for profit. e:g dot-com boom was made possible by development of the internet itself with public money. Not to mention individuals' mental ability at certain types of problem solving, which isn't equally distributed. And large element of luck, being in the right place at the right time. So, while hard work and entrepreneurship, so long as done ethically, should be celebrated and rewarded, at the same time people who are "average" should not in any way denigrate themselves. Also, some big successes in startups come at the expense of everyone else. AirBnB being a classic example where some people have benefitted massively but at the expense of neighbourhoods, community, ability of locals to afford housing etc.
That's fair--I appreciate that. I was being a little flippant with my examples, you're correct.
Survivorship bias card is worth holding up when people try to teach the secrets of success and are potentially misleading with general statements interpolated from an N=1 sample.
Same goes for working at Google as your only job then writing a definitive book about how SWE is done, without further research on what else is out there.
Maybe for the general public, but the posts that are written here are USUALLY written in good faith, not snake oil marketing. I just personally find it tired and played out, similar to how on Reddit I frequently see people adding things like, "in my / your opinion, <insert statement that is obviously an opinion." Yes, yes, we get it. If I say The Last of Us is the best game of the past 10 years, it is obvious that that is my opinion. We don't have to be so dull with our language. The corollary here is that if a founder writes about how he or she found their first 100 users, it should be obvious to anybody on HN to apply some discretion instead of assuming this is now a universal truth applicable to all startups until the end of time.
Why teach otherwise? It is a strong signal to click the [-] next to that comment thread. Strong ignore signal is as good as strong read signal. It's only weak signal that is problematic.
It's sort of like all those Amazon reviews that used to say "In exchange for an honest and unbiased review, I received the product". Before Amazon auto-removed them, they were a strong negative quality signal.
I would prefer if we preserve high comment SNR by encouraging people to use standard comms patterns so that my automatic comment bucketing will allow me to skip non-useful comments, e.g. correlation is not causation, survivorship bias, etc.
Haha good point--the "correlation is not causation" is another one that annoys me.
I think the opposite, reasoning based on delusions seems pretty prominent recently. You know, like ftx and all...
Meh. Maybe not so many people should be trying to be outliers. Maybe society would be better off if we stepped back from the always-on, up-or-out culture and accepted that most people are average and (rightly!) value consistency more than upside. (Is it unfair to immediately wonder if the article was written by someone with an upper-class upbringing, who's always had access to a safety net that most people don't?)
I hope this doesn't come off as hostile, but you're on a forum that is hosted by the most renowned startup incubator. This is basically a bastion for the "always-on, up-or-out culture" you're weary of. It's completely acceptable to be weary of it, but I find this comment as odd as going to an NBA forum and expressing exasperation over NBA talk.
'This is basically a bastion for the "always-on, up-or-out culture" you're weary of'. True, but HN also is frequented by people simply interested in tech, and interested to see comments from silicon valley and elsewhere they're building "disruptive" tech right now. And some from academia. Some people may feel addicted to challenging Elon-Musk-school-of-work-ethic type comments. Personally I feel drawn to respond to people that seem unhappy with their lot, often from comparing themselves to the always on up-or-out crowd. Getting a friendly response from people that "don't buy into that s**" might hopefully help them.
Yeah, fair enough. That is a good point. Well said.
This is written about career/job, but it applies to a whole bunch of different things like relationships, friendships, where you live, etc.
I highly recommend Ben's post dedicated to outliers where he explores this a bit more: https://www.benkuhn.net/outliers/.
> Maybe society would be better off if we stepped back from the always-on, up-or-out culture and accepted that most people are average and (rightly!) value consistency more than upside
Based on how I'm interpreting this you have it backwards. I don't think outlier results with high upside generally benefit from being "always-on" or "up-or-out culture" because that is too far on the exploit side of things to ever find outliers!
My belief is that more slack and time to explore are more likely to produce outliers.
Related: "Heuristics That Almost Always Work": https://astralcodexten.substack.com/p/heuristics-that-almost...
Put another way, don't extrapolate based on unspecific information. Context matters a lot, and the average case is rarely useful for making a decision.
Ben mentions his writing on outliers [1] and how "low-info heuristics tell you that outliers can’t exist", which is completely true but I want to add another perspective to that.
As mentioned in the outliers piece, you want to rule things in not out. The average case is good for ruling things out, but terrible for ruling things in. Specifics to your scenario will always be the reason to rule in on things that look bad in the average case.
[1] https://www.benkuhn.net/outliers/
To distill: popularity of an idea != quality of thought. Just because many people believe something, doesn't mean it's likely to happen. In fact, it doesn't even mean the people believe their idea is very probable (e.g. VCs betting on startups knowing that most of them will fail).
In turn, it can be useful to adjust the very one-sided public estimates based your own nuanced reasoning. This could change the status-quo probability from 99% to, say, 60%.
VC firms expect the vast majority of their portfolio companies to fail. Being skeptical of a startup’s prospects does not in any way represent a break from the VC’s expert opinions. They are playing the whole field. You’re going all in on one company, a completely different thing.
> The founders of Wave seem much smarter, more relentlessly resourceful, and more trustworthy.
I appreciate the casual trashing of Theorem's trustworthiness as someone who has been on the receiving end of the lack of it.
> (...) early-stage startups (...)
> (...) efficient market hypothesis (...)
Classic case of "just read a new idea and I'll apply it everywhere".
In addition of everything else wrong with this post: No, you can't reach reliable conclusions about startups by reaching to efficient market hypothesis.
Scared overconfidence = oxymoron