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Why You Need To Understand Survivorship Bias

“They don’t make them like they used to.” We’ve heard the phrase so much that it’s become a cliche, but it’s a classic example of survivorship bias. Someone will point to the can opener they’ve had since the 80s as compared to today’s cheap plastic can openers that will be lucky if they survive the year.

The problem is, we only have the 30-year-old can opener because it survived. For every sturdy steel can opener that stood the test of time, there might have been a thousand others that broke before the 90s arrived, but we don’t have them to compare to.

Examples of survivorship bias — focusing on successes while ignoring failures — are rampant. Once you understand the concept, you’ll start seeing it everywhere and you’ll be better prepared to take what you hear with a grain of salt.

Some Examples Of Survivorship Bias

Bullets In Airplanes

This one doesn’t relate directly to business, but it’s considered to be the birth of the concept of survivorship bias. In World War II, Allies wanted to add armor to their planes to keep them from being shot down. But armor was heavy and expensive — they couldn’t armor the whole plane, so they had to be judicious.

The planes that came back with bullet holes in them tended to have bullet holes in the wings and flight surfaces, but not the engine bay or cockpit. It stood to reason, then, that they should armor the wings and flight surfaces, but not the engine bay or cockpit.

The problem? Allied engineers were only looking at planes that made it back to base in the first place. Planes that get shot in the cockpit and engine bay don’t make it home at all, so their sample was skewed. Mathematician Abraham Wald pointed this out, and suggested instead that Allies armor the parts of the planes that didn’t have bullet holes.

College Dropouts

Michael Dell, Steve Jobs, Bill Gates, Mark Zuckerberg, Larry Ellison — what do they have in common? They dropped out of college and went on to become tech millionaires and billionaires. That means that if I drop out, I’ll be ultra-successful too, right?

Not so fast. While it’s true that plenty of people have dropped out of school and gone on to great success, it’s also true that thousands more people have dropped out of school and gone on to achieve nowhere near that level of achievement.

Jobs, Gates, and Zuckerberg got lucky — they came up with their great ideas while they were young, and left to pursue them. But most people aren’t so lucky. Most people need time, education, and resources to come up with their great idea — that’s why 94% of the country’s most successful business people have college degrees.

These stories also deliberately ignore the examples that don’t fit their narrative. Jeff Bezos had graduated six years ago and was on his third job out of school when he founded Amazon. Elon Musk didn’t found SpaceX until 2001, nearly a decade after obtaining two bachelor’s degrees. And Warren Buffett didn’t take over Berkshire Hathaway for 20 years after his education had ended.

Cherry Picking Successful Habits

“The One Thing Successful People Do When They Wake Up.” “What All Millionaires Have In Common.” “The One Trick Bill Gates Credits With His Success.” These headlines are made up, but we have no doubt you’ve seen similar ones on the web. Do you read them? We sure do.

The problem is that these stories aren’t giving us the whole picture. Maybe every millionaire in the world drinks a cup of coffee as soon as they wake up. Does that mean that drinking coffee will make you a millionaire? Probably not — there are hundreds of millions of other coffee drinkers in the world who aren’t millionaires, but we’re not hearing from them.

You hear the same thing when someone turns 100 years old and a reporter inevitably asks them, “what’s your secret?” Some say the answer is three bottles of Miller High Life a day. Some say to avoid men. And Paul Marcus says, “Try not to eat anything that’s healthy. It’s true. I eat whatever I want. The secret to longevity is ice cream.”

Parroting Success

The Uber of women’s haircuts. The Uber of food delivery. The Uber of laundry. How many times have you heard a new startup describe themselves as the Uber of something or the Netflix of something else? Constantly.

But just because a certain business model worked once doesn’t mean it’ll work again. That’s why a third of new businesses fail within two years, and two-thirds within ten. Shoehorning your business idea into the mold of a successful business ignores the parts that aren’t compatible. Take inspiration from successful businesses, but keep your eye on what makes yours unique.

How To Avoid Being Blinded By Survivorship Bias

Now that we’ve talked a bit about what survivorship bias is and how it can throw you off course, let’s talk about how to avoid that.

Who Are You Missing?

When you see an article about “the one thing that millionaires do,” your mind should immediately go to two questions. First, is that “one thing” the reason for their success? Is it even a contributing factor? Is there any evidence in the article or elsewhere online to show that that one thing is helping them thrive in business? Jeff Bezos could sweeten his coffee with cream cheese frosting — we have no idea — but that’s probably not why Amazon is doing so well.

The second question is: who else does this? There are lots of habits and practices that are shared by thousands or millions of people, but most of those people aren’t millionaires. Drinking coffee black. Going to the gym in the morning. Getting plenty of sleep. Things like this are bandied about like secrets to success, but in reality it’d be more surprising if a few dozen people living in the same country didn’t share some habits in common.

This doesn’t mean you should ignore the most successful people in the world. Obviously, they did something right. But was that something you can emulate or incorporate into your own business? Or were they simply in the right place at the right time?

More importantly, don’t take advice or try to emulate habits just because someone successful does them. Maybe they’ll help you, maybe they won’t. Temper your expectations based on your own business model.


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