Friday, August 12, 2022

Why you should stop taking advice from successful people

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Shreya Christinahttps://cafe-madrid.com
Shreya has been with cafe-madrid.com for 3 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider cafe-madrid.com team, Shreya seeks to understand an audience before creating memorable, persuasive copy.

When we seek advice on the success of a startup, we tend to turn to the winners. We buy books from business gurus and power through podcasts from major corporate players.

But why do we value their advice more than the inventors and innovators who didn’t make it? What if we could learn more from their failure than from the success of others?

Startup success stories are funny things.

Journalists who write them and the public who read them always want to know one thing: what is the secret to success?

Among the clichéd answers to this question, you’ll find sound bites like “pure determination,” “work your hard work,” “being a perfectionist,” and “never give up.”

UK Love Island Contestant and Millionaire Influencer Molly Mae caused explosive outrage in the UK with her comments about everyone having “the same 24 hours in the day as Beyonce”.

Actress and Goop founder Gwyneth Paltrow is another serial offender. And maybe she’s hardworking. But she was also born to a well-known film producer and an award-winning actress.

Gwyneth has the self-consciousness to note that some people find this mentality “annoying”. But it’s probably not for the reasons she thinks.

Due to the nature of what they do, anyone trying to “make it” whether in art or business is determined and hardworking. If they weren’t, they’d settle for a paid 9-5.

There’s an extremely high chance that the 90% of startup founders who failed were just as hardworking as their peers who didn’t. It’s all very well to “work hard” when you have constant access to funding, well-connected parents, a chance meeting with a life-changing investor, or when some random social media algorithm is making your product go viral.

It’s all very well to “never give up” when you don’t have to.

So if we ask the only successful founder out of 10 for their “secret” instead of the 9 founders who failed, we are left with serious blind spots. This is known as survival bias.

Failure is still a dirty word

failed does a great job of asking a slightly different question than “what’s your secret to success?”. In the glossary of business failure stories you won’t find in the mainstream media, the question is more like, “What’s the secret to your failure?”

And if we as entrepreneurs are told that we “fail fast and fail often”, is a question worth asking.

ToyGaroo founder Phil Smy speaks of the all-too-common pain point confronted with young companies that led to the demise of ToyGaroo: “Because of our new partners, we were closely watched and we were under a lot of pressure to “grow, grow, grow”.

ToyGaroo (the Netflix for toys) put a huge green check next to “does your product solve a problem?” box. Parents who were tired of spending hundreds of dollars on a toy to have their kids throw it away after a week could subscribe to rent a set number each month and return it when the kids get bored.

ToyGaroo appeared on SharkTank’s US franchise, securing investments from sharks Mark Cuban and Kevin O’Leary. But the postage costs were too great and unpredictable, there was disagreement about scrapping the free postage model, and the sharks refused to invest more money when bankruptcy loomed.

The point is: ToyGaroo is far from a cautionary tale.

There are so many good things to learn from his story. The idea was perfectly timed for the rental phenomenon. They had an excellent marketing team, were aware of consumer concerns (at one point they installed a cleaning service to combat hygiene problems), and were nationally known (through both SharkTank and before that even on Good Morning America).

So why aren’t these valuable, wisdom-rich stories about the founders making headlines? Do we feel that collapse is contagious? Or do we feel a reluctance to associate with them because “we can never be?”

Spotlighting winners, avoiding failures

The reason we put such a focus on successful startups isn’t really anyone’s fault. Our brains are built to seek reason. X passed, so they must have earned it. Y failed, so they must have done something wrong.

When we perceive success, we look for composite evidence to explain it. Likewise with failure. This is how we try to learn and grow. The problem is that we’re so good at looking for patterns to prove our theories that we often see them when they’re not there.

This phenomenon occurs even from the first person perspective. Once we make it, with every nostalgic trip down memory lane, we romanticize those 18-hour days and makeshift garages and muse that we knew exactly what we were doing, and that we were always destined for the big time.

Failed by association

There is another reason why certain people don’t like to associate with failures and failures.

Founders are pretty good at confessing their cock-ups. For some, a failed startup or two under their belt is a badge of honor. The world is getting better at rewarding effort just as much as success.

Investors: less.

Those who have large sums of money in their hands must present expertise at all costs. If you admit fallibility, you lose the customer’s trust.

A notable exception is Bessemer Venture Partners’ “Anti-Portfolio” – a collection of wildly successful startups that they not done invest in, and are not ashamed to admit. The corporate cosmos desperately needs more of this. More transparency, more humility and less toxic positivity.

Fear of missing out… or of missed opportunities

For many, FOMO can be paralyzing.

Ronald Wayne is forever “the man who sold his 10% Apple stake for $800” (which would have been worth it) USD $95 Billion Today). He is often referred to as the “forgotten third co-founder”. You’d probably be, well, richer than Ronald Wayne if you had a dollar for every time someone yelled “what an idiot!” upon hearing his story. But the truth is, he was not a fool.

Wayne made a rational business decision to exit the then struggling and debt-laden venture. Because Apple happened to become what it did, he is called a pariah, an object of pity. A walking manifestation of the investor’s worst nightmare.

Victoria’s Secret founder Roy Raymond is known for his suicide on the Golden Gate Bridge. He sold the nearly bankrupt lingerie company in 1982 for $1 million, and mass-market tycoon Leslie Wexner had turned it into a $1.9 billion brand by 1995.

Through the distorted lens of our ideas of success, we see the sale of a dying company for $1 million as a… failure. And tragically, so did Roy Raymond.

Through the lens of survival bias, the media reported on Raymond as a sad, sad figure who let billions slip through his fingers, despite being a Stanford MBA making half a million in his first year of business and revolutionized the way the world buys underwear.

Through that same lens, Wexner becomes a cunning and enterprising genius who changed the fate of Victoria’s Secret – not just a man in the right place, at the right time, with the right buying power.

How do we overcome our survival bias in startup culture?

Too many start-ups find themselves in huge debt saving a sinking ship. Why? Because they are terrified of the shameful rhetoric of survival bias – the “they didn’t work hard enough” and “I guess they didn’t want it that bad”.

Giving up doesn’t have to mean throwing a lit match into an oil-soaked office. It can be a reorientation to the point where your original concept is unrecognizable. You may be admitting to your partner that you are wrong and ready for a new direction. It could be a review of your product, price point, or brand positioning. It might sell.

What you may have thought of as a “failure” at first could be the thing that keeps you afloat.

More importantly, one of the most valuable things we can do as aspiring founders is look at the unpublished data. The promising failures. The almost made. The start up cemetery.

There are pearls of precious wisdom to be found from those who have done everything right, but missed that happiness. Learn not only from their failures, but also from their small victories that were forgotten or overshadowed by the negative.

Finally, we must remember that anecdotal evidence is not scientific evidence. And every startup story is an anecdote.

Star Wars, Lord of the Rings, Harry Potter and countless other epics all follow the “monomyth”: a repeatable formula for success on the silver screen (although let’s review our survival bias and remember the filmmakers who followed it and still failed). The hero goes through 17 fixed stages to achieve glory. The phases are always the same and are always overcome in the same way (usually through some form of courage).

But startup culture is not Hollywood, and there is no monomy to follow. Not only does imitating our colleagues bring in models that may not fit our unique operation, it also ignores any elusive luck or chance that has put them in their position of success.

In 2016, Conan O’Brien asked Bo Burnham for his advice for young people trying to “make it” in Hollywood. Bo responded with:

Just give up…. Your hard work and talent will not be rewarded. Don’t take advice from people like me who have been lucky…. Taylor Swift telling you to follow your dreams is like a lottery winner saying, ‘Liquidize your wealth. Buy powerball tickets. It functions.’

His last rule is survival bias in a nutshell.

As with most of Bo’s content, it’s an ironic comedy based on serious points. But he touches on something important: it’s okay to give up (and ideally, start over). Preferably before you burn your finances, your life and everything in it just to be able to say “I never gave up”.

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