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Comment by ryandrake | Hacker News Reader

Almost every business book and online article about how $BUSINESS or $ENTREPRENEUR became successful does this. It's infuriating. "Let's wait to see which of the 7 billion people on the planet become billionaires, and then look back and see what they did, ignoring all those who did similar things and did not become billionaires." Totally flawed, yet the public eats it up like candy.

Go read Good To Great and prepare to barf. Business schools adore this book. Look at the description on Jim Collins's web site [1]: "Start with 1,435 good companies. Examine their performance over 40 years. Find the 11 companies that became great. Now here's how you can do it too." That's literally Survivorship Bias.

1: http://www.jimcollins.com/article_topics/articles/good-to-gr...

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A great book on this is "The Halo Effect". It specifically calls out "Good to Great" as an example of really poorly done research that does nothing but call out coincidences.

The one part I loved about the book is when it provides tips on how to identify these "empty" claims. Things like "we spent 3 years putting this analysis together!", which does nothing to support their claims, but just creates the impression that "wow! this must be true!".

https://www.amazon.com/Halo-Effect-Business-Delusions-Manage...

I wish identifying crap was a more widespread skill. I think if I ever became a millionaire (doubtless by reading business self-help books), I'd "give back" by volunteering at a High School to teach kids skepticism and bullshit detection.

No sir, you must give back today, every day, whenever you get a chance. A tree does not dream about a time when it is a certain size, at which point it will bear fruit. It simply bears whatever fruit it has, when it has it.

That is a great quote! Thanks for sharing.

I like this enough to re-use it... Are you quoting something I can cite, or did that spawn from your own gray matter?

Best as I can determine, this is original writing. I like it very much.

gray matter... and the spaces in between :)

Are you suggesting that high-school students wouldn't take an unknown lecturer seriously if they aren't a millionaire ? And that being a millionaire somehow implies you are authoritative on topics of logic and reason ?

Or are you saying that without a million dollars you can't afford to "give back" an occasional one-hour lecture on skepticism ? That seems ironic.

Edits: rant

Read that as, "When I can afford to not work..."

If you're serious about teaching I can highly recommend trying to do it even if you're busy with work. I've been actively (or as actively as possible) coaching people who wanted to go into web development and it's played a big role in making me a happier person. One of them recently got a job as a developer and knowing I played a role in that made me happy in a way that few things do. I can highly recommend it!

>I wish identifying crap was a more widespread skill. I think if I ever became a millionaire (doubtless by >>selling<< business self-help books), I'd "give back" by volunteering at a High School to teach kids skepticism and bullshit detection.

It's called a History degree.

And yet Carly Fiorina has an MA in History, and look at what she did to Hewlett Packard.

Since when do degrees imply knowledge? Most degrees are only tangentially related to actual education.

Judging by her campaign and how she ran HP, I don't see a sign she's critically open in the way you need to learn from history.

Personally, I'd say knowledge of history is a very, very thin bullshit detector. It simply allows you to see more patterns; not how to evaluate them when they compose.

Reminds me of a simple stock scam:

1. Send e-mails to a bunch of people claiming to have a great stock pick. Tell half of them to buy and half to sell short.

2. Wait a week. If the stock went up, do the same thing but send your new pick only to the half that got your buy recommendation, and if it went down, send it to the other half. Anyone who saw your incorrect prediction never hears from you again.

3. Repeat a couple more times.

4. Now ask the people on your list to pay you to continue getting your stock picks -- after all, at least as far as they've seen, you've been 100% right on every pick you made.

Yes, this scam is live and well in the sports betting world. There is even a CNBC reality TV show called "Money Talks" that documents and encourages this; as documented by the show: https://www.youtube.com/watch?v=0xiiv-s-DRs http://www.vipsportslasvegas.com/

The recipe is:

1. Cold call people on a lead sheet for people indicate interest on placing bets on sports games.

2. Sell interested folks with a "two week package" for $250; seems pricey, but the name of the game is to filter out the minnows catch gullible whales. You want folks who are "vested" on this and prove they have the cash to be scammed. Double-side your bets or smarter yet, side your bets by the probability implied by the Vegas oddsmakers (50% Team One Wins, 50% Team Two Wins or 70% Team One Wins, 30% Team two if spread is that way).

3. After a couple of weeks pass, call up the people who have won 4 or 5 games in a row, inevitable happenstance by sheer probability. Upsell them on a "weekend Vegas package" where they can gamble on higher stakes preferably $50K-$75K; because you're seem now as a infallible genius by the marks, you charge them a 35%-50% commission on their wins.

4. Doesn't matter if your client wins or lose. Take home the 50% commission on their churn and move onto the next one. Rinse and repeat.

The show is highly entertaining and enlightening not because of the extreme doucheness of the head scammer and his salesmen, but the marks who delude themselves as they lose game after game and gets scammed - all followed by the camera-men of CNBC and the spin-motivational commentary of the scammers.

Fascinating that this scam was exposed on the Simpsons in 2005 and people still fall for it.

http://simpsons.wikia.com/wiki/Professor_Pigskin

Derren Brown made an entertaining episode on this scam: http://www.imdb.com/title/tt1173484/

But how did the final bet work?!

It didn't, the final participant lost in the final bet.

Everyone wants to be successful, and no one wants to believe that it's not something they could control if they just knew the "secret". Add that to the fact that no one ever sold a self-help book entitled, "Getting Lucky", and it starts to make sense how we've arrived at this point.

Great link by the way.

I think there are plenty of books available on getting lucky. :)

We've all done that exercise in school where the professor tells everyone ahead of time to bring a coin to class. Then he has everyone stand up and flip a coin. Everyone who flips tails sits down. Those remaining standing flip it again, those flipping tails sit down, repeat until there is one person standing.

Then interview that last person and ask her what her technique was, how could she possibly flip heads 6 times in a row? What hard work and practice did she do ahead of time to make her such a good coin flipper? What daily habits produced this proficiency? This is essentially what we do when we try to be successful simply by asking successful people what they did.

>We've all done that exercise in school

Ha! I have not, but that's a great exercise. I'd be interested in hearing the "winner's" responses to the questions.

Of course the person who chose to not flip their coin at all...didn't end up being the person to flip the most heads in a row.

So the truth lies somewhere between "it's entirely chance" and "it's entirely hard work/intelligence/participation".

The problem is that no one is reading Steve Jobs' memoirs to find out that the secret to winning, is that you have to play... they want some secret to win the game.

Or, in my case in that school exercise: "I cheated." And so did the other finalist. But he was a known scoundrel, and I was the 'nice kid.' The last coin flip was the only one that was monitored. I won, and it was hailed and a just result. So, it's not all luck.

If we had all done that exercise in school, more people would be better at managing their money. This analogy only works if "success" or whatever is a random walk (like I believe picking stocks is).

Yea, totally relevant exercise when you want to explain to students the phenomenon of the "superstar mutual fund manager".

Haven't seen that but wish I had, that's an awesome exercise.

I was the winner of that in my class. They asked me how I won, and I said, "eh, it's nothing." 13 years ago, with no brain, head, arms, or legs, I beat out several million peers to fertilize The Egg. This is just the afterglow of that awesomeness.

A lot of those millions of peers actually play support roles so that the speedsters like you can make it to the egg (especially before any rival mates sperm makes it there).

Just thought I'd point that out given how there are some parallels to how many people play support roles within society while only a few make it to the pinnacle. Yet we still say that those at the pinnacle 'beat' all their peers.

Yep. Logically speaking, what is the probability of billionaire regaining his wealth if he's stripped off his fortune and contacts? 0.000000001 (almost like the rest of us).

Well, not for nothing but it's a GREAT title for a self-help book :> Getting Lucky - Embracing the randomness of luck for a definite success.

Many self help books try to make you think about luck as setting yourself up to take advantage of opportunities that show up frequently around you, but you might not normally notice them, or be prepared to act on them.

I can't think of any specific citations, since it's such a general observation.

Richard Wiseman of 59 Seconds face actually has a book called "The Luck Factor".

One case study is a woman who wins lots of newspaper contests - the point being that she wins lots because she puts in for lots.

Another point is perspective. You fall and break your arm. You can either perceive it as bad luck, you broke your arm, or as good luck since it could have been your neck.

That's not necessarily survivorship bias. Survivorship bias would be "Here's 10 successful companies, do what they do". If you analyze a pool of random companies and then consider what the successful companies do differently then that would be decent scientific method (though you should form hypotheses first, really).

For example, if "risk-takers" both sometimes do very well and also often fail then you expect to capture the failed risk-takers in your initial sample, so you're not just biased by the successful risk-takers (said survivorship bias).

I'm not familiar with the book, but the snippet you reference describes something much closer to proper scientific method than most of the examples of this phenomena.

No, you can't just analyze the 11 successful companies. You need to consider multiple variables, then see if they correlate with success over the entire population.

It's perfectly possible some traits of all 11 successful companies are also shared by most of the unsuccessful ones, too.

You have to identify something specific and then look at that specific factor across the entire population of companies.

If you survey all CEO's of the Fortune 500 you might find that they are all workaholics. Do you conclude that being a workaholic will make you a CEO? Of course not. Did you look at how many workaholics there are that don't become CEO? That is survivorship bias.

You also need to look at cause and effect. Is it that you must be a workaholic to become CEO? Or is it that as you climb the ladder you end up working hard and harder because that is a requirement of each position. Maybe being a workaholic is an effect of climbing high.

I always the ask the questions why doesn't the writer become a billionaire if he knows how to? Why doesn't the psychic win the lottery?

well, I have to admit, most people who tell you online about how to become rich, are, in fact, rich.

But they still fail to find out about what made them rich in the first place.

For example, there is a German real estate millionair, who does online courses to tell people how he got so rich.

He talks hours of hours about how he learned the right trade and how he invested his money in flats he bought and improved etc.

In his first lessen he talks a bit about his past and says "The only thing you got to do is to buy a flat and get someone to rent it! I did it like this, I simply put in 50k€ of insurance money I got from an accident."

The whole thing is done with this. I mean he literally told the audience "You simply need 50k to get rich!"

Most people who tell you online how to get rich got rich by scamming people into buying their "Insider tips on how to get rich for the life you deserve" content.

For someone with a talent for online marketing, it's almost the easiest money there is.

Buying real estate and renting it out might actually be the most reliable way to build wealth. You need to be in a market with steady growth, which is true of many desirable cities. You need some starting capital, which most people could earn through a few years of steady work and frugal living (probably have to hold off on having a family unless you have high income).

It's not a "get rich quick" scheme by any means, though, and managing properties is still work. I know more than one retiree who has built up 8-figure wealth this way. Of course, it took them a lifetime.

Right - and the wider context is that he started doing this at a time when banks flooded the world with credit and lots of other factors saw huge land price inflation.

You get this in the UK all the time, property shows where people "do up" a dilapidated property over 6 months, then relist it. And guess what? It's gone up! It's gone up by labour cost + materials + background land price inflation. But they see it as a wise "investment".

> guess what? It's gone up! It's gone up by labour cost + materials + background land price inflation. But they see it as a wise "investment".

If you put your own capital and work into something, and its value increases... that's what an investment is.

No they are adding zero value, they are riding off the corrupt system and taking labour from others.

Also in most casts they are not putting capital in, they are borrowing from a bank who create the debt. They are little more than outsourced debt collectors.

You specifically state that they are adding value. Going up by labor and materials means value has been added.

Yes but my main point is that the primary gain was on the land due to govt policy. These people are typically amateurs who basically paint a wall. Unskilled labour plus a few $K in materials == not much. Yet the gains are significant.

While I agree with the sentiment, part of me wonders if this isn't this the same as asking why the top NFL coach doesn't make all the touchdowns himself?

Often they used to, or at least, played the game at a high level. In other cases the answer is that they lacked the physical ability. There is no such barrier to making money.

Well you could say there's an intelligence (Social/emotional/IQ) barrier to making lots of money. Those with the growth mindset will say that there's nothing innate about intelligence and it's pure effort, but I'm not completely sold on that.

Devil's advocate: if you find a trait common to all the survivors, which those who died did not have, then you have found something that might be necessary to survive that far (though it may not be sufficient). Some organisms possess immunity to certain pathogens.

Of course you can't just expect to follow Pixar's bets (or Apple's, or Google's, or ...) and expect to win big. But understanding the way they played is important, if you're playing the game too.

(As you touch on too, tempering the natural tendency to give credit for success rather than chalking it up to chance is also important. But I can't believe that Jobs' success is survivorship bias alone.)

Sure, if you find a trait common to survivors that those who died did not have--but to do that, you have to look at those who died, too.

Agree.

This is similar to $BIGCOMPANY passed on $BIGIDEA see how they sucked and passed up a great opportunity!

Without knowing the thousands of other ideas that they passed on that never made it anywhere.

A small example is perhaps HP not taking Wozniak seriously. (Also assumes the presentation and pitch was done right and all of that...)

This SMBC comic makes the same point on survivorship bias. http://www.smbc-comics.com/comic/path-of-a-hero

That isn't a very good synopsis. In all his books, he compares a "great" company to its closest, best competitor and look at what they do differently across many industries. That is pretty interesting and can give clues on what makes a company successful. I don't remember ever reading "do these specific things and your company will become successful guaranteed" in his books. I agree most business books are like that, but Jim Collins books are not.