On Bias...

One day, my son calls me from school and says: "Baba, I have an idea!"

I knew immediately he had something stupid on his mind.

He continued: "I have been talking to my friends... and we have decided to skip football practice today and instead walk to our house and play Fifa."

I did not have much time as I was in one of my workshop breaks... this is called bad timing.

I responded very firmly (maybe a bit too harsh): "Nima... cut the crap. You ARE GOING to football practice! We will speak in more detail once I get home and you are back. End of discussion!"

He was not happy about my answer, but he knew that there was no room for discussion now. We hung up and I continued with my workshop.

That evening after dinner, I asked him whether I could join him for a game of Fifa. He nodded and said: "You can always join me... I love playing with you."

We were both in a relaxed mood and I opened the conversation asking him why he and his friends had decided to skip football practice.

His response: "I was not in the mood... I wanted to play this new version of Fifa."

Then I asked him: "Didn't you tell me that you want to become a professional football player? Didn't you tell me that you want to be the next Kylian Mbappé or Mo Salah?"

His response: "Of course... I will be a professional football player. What does that have to do with our intention to skip training today?"

Now, that was a great opening for me to share some of my beliefs with him.

I shared stories of Christiano Ronaldo, Mo Salah, Michael Jordan, and Kobe Bryant and how hard they worked to become masters of their craft and some of the best athletes the world has ever seen.

I shared stories about a few very talented friends I had, who did not make it as they did not train hard enough and got distracted with too many other things such as girls, partying, etc.

I laid out a plan for him what it takes to even have a chance of becoming a professional player.

With the help of Alexa I calculated for him that roughly 0.01% of kids his age in Germany will become top professional football players. This is 1 out of 10,000 boys.

And finally, I highlighted that he might do everything right and due to an injury still not make it. This is why being good at school is essential for his future success.

I am sure many dads have had this kind of conversation with their sons at some point.

He paused the game, looked at me and said: "Baba, you are right. I cannot expect to become one of my idols, if I am not willing to put in the work they did. Thank you!"

I was happy and thought to myself... That was easy!

Now, at the same time I was involved in various conversations about the journey of great entrepreneurs... people like Steve Jobs, Jeff Bezos, and Elon Musk.

It's interesting how these three names trigger so many people to say completely irrational things.

Others and myself highlighted based on the example of these three and many other great entrepreneurs that focus, hard work, and deep domain (customer) knowledge are important factors in building great products, great business models, and ultimately great companies.

Then, a few others chimed in and mentioned that this is a classic case for survivorship bias which is defined as:

Survivorship bias or survival bias is the logical error of concentrating on entities that passed a selection process while overlooking those that did not. This can lead to incorrect conclusions because of incomplete data.

This is indeed something that exists. There are great examples e.g. planes that did not return from a mission or - in the case of businesses - mutual funds that do not exist any longer.

The fact that survivorship bias and many other biases are a thing does not mean that they apply to every situation.

With biases it is all about acknowledging that they exist and questioning one's own observations a bit harder and longer.

If we do that, we can still come to conclusions and identify patterns for success such as in startups or corporations.

The funny thing about people highlighting biases is that they also criticize that an n=3 (in the case of Jobs, Bezos, and Musk) is statistically irrelevant.

That is indeed correct... but n=3 beats an n=0 any day of the week ;-)

Also as Jeff Bezos puts it:

"The thing I have noticed is when the anecdotes and the data disagree, the anecdotes are usually right."

So even if one has data - which most people discrediting a pattern with survivorship bias do not have - there is usually some truth to the anecdotes and observations.

The reason I believe we should be critical about survivorship bias is that it can easily lead us to believe that characteristics like hard work, domain insight, and certain management techniques were not the drivers of success... but that instead, it was pure luck.

I see so many posts in which people believe Elon Musk or Steve Jobs are/were successful despite their attention to detail and determination. People actually believe that these two entrepreneurs got lucky.

I believe we should look at these outliers and look for patterns such as simplicity, focus, and being mission driven.

Yes, there is survivorship bias... but that should not be used to discredit patterns we have observed. It is rather helpful to keep us questioning our observations and look for other factors.

But if we see the same patterns over and over again... there probably is some truth to them.

Neither Tesla, nor SpaceX were destined to be clear successes... Actually, both of them were anything but that. Everyone believed Musk was crazy to pursuit these ideas and businesses.

It is due to his focus, engineering insights, and relentlessness that both of these companies survived and are thriving. Any other person would have given up multiple times... but not Musk.

The same applies to Apple... When Jobs rejoined the company, Apple was 90 days away from bankruptcy.

Only by significantly reducing its product portfolio, focusing the best people on one or at most a few products, and bringing back the "Think Different" mentality he could turn around the company which ultimately became the most valuable company on the planet.

Is the Musk, Jobs, or Bezos way the only way to succeed? No! Will one succeed if they 100% imitate either of them? Again, no!

But are many of the things these individuals have done probably essential for building successful companies? Yes.

Personally, I study as much as possible about Tesla and SpaceX... I study them as a customer using there products, I study them by talking to people who have worked in these companies, I study them by watching interviews with Musk and others, and I study them by reading articles and books about them.

I recognize a lot of the patterns that I have been teaching around agility, but also recognize a lot of the things that many people consider "anti-patterns" for success e.g. Elon Musk's leadership approach.

Observing these "anti-patterns", I become curious. Curious whether the company is succeeding despite the "anti-patterns" or because of them.

Coming back to the story of my son... There is no athlete - that I know of - that became world-class without putting in the training hours.

Michael Phelps, Serena Williams, Tiger Woods, Simone Biles, LeBron James, and even Lionel Messi (who has been blessed with the most talent one can imagine) all worked incredibly hard to get to where they are.

So instead of using survivorship bias as an excuse and believing in stuff with no proven patterns at all, I believe we can take a lot of inspiration not imitation from some of the best entrepreneurs in the world.

#FromNothingComesNothing