Survivorship Bias, Entrepreneurship and The Myth Of Becoming Successful

Success is something all of us aspire to. In one of the motivational websites, it is written, “Success isn’t complicated. It is possible. It is available for everyone to grab, at this moment. The principles to get there is hard but not complicated. It will not just happen overnight. It’ll take hard work, perseverance, and time. To become successful, one has to mirror the typical practices of individuals who already are successful and follow their footsteps”.

Follow the footsteps of successful individuals? mmmm…..

Successful individuals? We turn around and see a lot of hugely successful individuals -Steve Jobs, Jeff Bezos, Jack Ma, Sachin Tendulkar, Rajinikanth, Bill Gates, Edwin Moses, and so on.

Let’s start with Steve Jobs.

How to be the next Steve Jobs? How to become successful like him? What secrets of success we can take from him?

When I queried the above, a lot of famous websites popped up with the following content -

• Follow what you love, Follow your intuition and heart, Don’t do it for the money, Be Passionate, Build around customers, Network, Say no to 1000 things, Prioritize, Sell dreams, Demand great work from people around you, Never stop innovating, Believe in yourself, Perseverance and so on.

Do you think, by following and executing the above suggestions would ensure wild success? Motivated by Steve Jobs’ life, will we make it big?

I thought of digging deeper into his childhood life and the place where he grew up. Let’s see what else helped Steve Job’s success -

• From his childhood, Steve Jobs’ parents had implanted the idea that he was a special kid and destined for greatness. They encouraged him to be self-reliant and independent. The research shows that a child who feels independent would develop a belief he or she could compete at any level.
• While working, Paul Jobs(Steve’s father) kept Steve near him and explained everything. He encouraged Steve to work on whatever he liked, alongside him. He was an automobile mechanic and he gave the first exposure on electronics to Steve Jobs by introducing automobile electronics. He trained him to appreciate the car’s aesthetics. He also taught him the importance of clean design and the importance of hiding screw heads while crafting wooden cabinets.
• The houses in Jobs’ neighbourhood were built by Joseph Eichler who was famous for simple, elegant, beautiful, functional and unique design at an affordable cost. Eichler continues to inspire many to this date. Steve Jobs had a deep appreciation for him.
• Jobs’ childhood house was in Silicon Valley -The people there inhaled and exhaled electronics. The place is a hotbed of startups and innovation. A lot of electronic engineers, video game designers stayed there. A good number of electronics firms, microchip manufacturers, and computer companies were located there. It was a wonderful place to grow up. NASA Ames Research Centre was not far from where Jobs lived. Steve saw his first independent computer at this Ames research centre at the age of 10–11.
• One of Steve’s childhood neighbours ‘Larry Lange’ was a hardcore electronics engineer, working in HP company. He taught Steve a lot about electronics and helped him to build electronic kits which gave jobs much-needed self-confidence to build products. Larry helped Steve to become a member of HP explorers club, where HP research engineers taught the recent development in electronics and also mentored the kids in that area to do electronic projects. Steve eventually, did an internship at HP at the age of 12. He had exposure to advanced computers at HP R&D centre and spent a considerable amount of time in learning and writing programs for those machines.
• Steve’s friend Wozniak was almost five years older than him. He had additional years of experience and knowledge in electronics than Jobs. Wozniak’s father was a rocket scientist and he created an environment to help his son learn electronics. Wozniak spent hours reading his father’s electronic journals. By 4th grade, Wozniak was one of ‘especially talented electronic whiz kids’. Francis Wozniak gave Wozniak exposure to computers at an early age. He encouraged his son to build products using sophisticated, modern electronic components of that time.
• Atari’s founder Nolan Bushnell hired Steve because of his friendship with Wozniak. He considered that Wozniak was a better electronics engineer than Steve Jobs. He gave the challenge of reducing the chips in his game console circuitry board knowing that Steve would take the help of Wozniak. What would have happened if Steve didn’t meet Wozniak? Atari’s games were famous for simple design and user-friendliness which became the hallmark of Apple’s products.
• During that time, the ‘Silicon Valley’ had a famous magazine called ‘Whole Earth catalogue’ which was a collection of useful information related to computers and was crowdsourced, contributed by readers, hackers, programmers. An offline google of that time. This catalogue inspired many programmers, computer scientists, electronic engineers. Steve Jobs was a fan of the Whole Earth Catalogue. The last page of the final issue of the magazine read “Stay Hungry, Stay Foolish”.
• Silicon Valley also had a famous club called ‘The Homebrew Computer Club’, an informal group of electronic enthusiasts and technically minded hobbyists. The club bought computers(Expensive and not affordable for many members) so that its members can study and work on them. It supported its members to build computers. Wozniak got the idea of Apple I at the meetings of this club. When Wozniak built the Apple I computer, Steve sold fifty of those units to Paul Terrell who was also a member of this club.

The above mentioned were just a small number of influences Steve had in his childhood and also near his home(Influences at School and College?). Do you think without those influences, Steve would have become the influential and the iconic ‘Steve Jobs’?

In the late 1970s and early 1980s, thousands of individuals started their own computer-related company in Silicon Valley and other parts of the world but ended up in failures. They never got opportunities which Steve Jobs had access to.

In the early 1960s, hundreds of small discounting stores popped up along with Sam Walton’s Wal-mart in the United States. But two decades later, only Wal-mart survived.

None of the journalists was interested in publishing about failures and we never hear about them.

Before and after Amazon, thousands of individuals built websites to grab the online retail market. Only Amazon survived and grew. Do you think Amazon’s success was due to Jeff Bezos? There’s something special about Bezos?

So, Can we succeed if we follow the footsteps of Jeff Bezos? I looked at what Bezos says about becoming successful -He advises us -Find out the gift or talent you have, Work hard to leverage your gift, Surround yourself with the best possible people, Think Big, Stand Firm, Think Long Term, Stay Hungry, Be bold and Embrace failure, Don’t follow the fashion.

Will you become successful if you follow what Bezos says? Will you become rich if you follow Bezos’ methodology? Would ‘being passionate, ‘loving your work’ and ‘taking a risk’ be enough?

Let’s look at Bezo’s career. He tasted wild success through Amazon.com. If his methodology is so good, he should have tasted more success than failures. Am I right? Let’s check.

• In 1998, Bezos bought Social Networking Service ‘PlanetAll’. While buying the service, Bezos said, “PlanetAll is the most innovative use of the Internet I’ve seen. It’s simply a breakthrough in doing something as fundamental and important as staying in touch. The reason PlanetAll has over 1.5 million members — and is growing even faster than the Internet — is simple: it creates extraordinary value for its users. I believe PlanetAll will prove to be one of the most important online applications." By 2000, Amazon had shut down Planetall.com.
• Bezos invested a lot of money in drugstore.com and actively promoted the site through Amazon network. Unfortunately, selling drugs online proved to be far more challenging than Jeff Bezos expected, and ended up in another failure.
• In 1999, Amazon invested in Pets.com and also helped actively in its marketing and promotion but the company went out of business in 2002.
• Jeff Bezos invested approximately $60 million in Kozmo.com that promised free one-hour delivery of “videos, games, DVDs, music, mags, books, food, basics & more", but the online retailer had to close down its business by 2001.
• In 1998, Bezos made a major acquisition -Junglee.com, a comparison shopping website and integrated into the Amazon website. Soon, Amazon executives saw that the customers were leaving the site to make the purchases elsewhere. Junglee was closed down after a few months.
• 1999, Bezos wanted to enter the Toy category and spent $120 million to stock every possible toy before the holiday rush. The company had stumbled and wrote off $39 million in unsold toys.
• Jeff Bezos started an online jewellery business through Amazon. He boldly went against the conventional wisdom of online retailing and pricing. He was confident that he would disrupt the market. He personally spent a lot of time with designers in designing elegant wooden jewellery boxes. He used celebrities to promote the online concept. He signed contracts with established fashion houses for exclusive selling. He also introduced a feature ‘Diamond Search’ that let customers look for individual stones based on carat, shape and colour. But customers still preferred to go to the stores to pick their jewels. After a few months of trying, Bezos closed down the jewellery business after losing a substantial amount of investment.
• To counter the threat of eBay, Jeff Bezos started ‘Amazon Auctions’ and it ended up as a non-starter. He also bought Livbid.com which did not add value.
• He bought a payment firm Accept.com for 101.7 million dollars to exchange money between buyers and sellers in a seamless way but closed down after a few months.
• Bezos signed a deal with the famous auction house Sotheby’s to focus on high-end products auctioning but the effort ended up in failure.
• Jeff started zShops — a platform for sellers to operate their own fixed-price shops on Amazon.com but was closed down soon due to the lack of customers.
• In 2009, Amazon web-pay -a desktop based online payment service was launched and was closed down in 2014.
• In 2007, Amazon introduced Askville.com, an information-sharing site similar to Quora, but ended up as a failure and was closed down in 2013.
• In 2011, Amazon launched fashion flash sale site MyHabit, but the site was closed down in 2016.
• Bezos bought altavista.com but that failed to offer any value to Amazon.com. He invested heavily to build a search engine to compete Google.com and then finally, after years of investment and burning so much money, he dropped the idea.
• Similar to Google’s ‘Streetview’ Amazon tried ‘Blockview’, street-level photographs of stores and restaurants but became another failed experiment.
• In early 2000, Jeff Bezos personally invested in a company ‘Cambrian Ventures’ -The company wanted to build a software and harness the internet to coordinate groups of people around the world to work on problems that computers weren’t good at solving. By 2003, the company was shut down as they did not know how to make money.
• By 2003, Amazon was fairly successful in selling music over the web. During that time, Jobs offered him a partnership opportunity but he refused it. Bezos dismissed iTunes, noting that selling single-tracks for ninety-nine cents each wasn’t profitable and that Apple’s goal was only to increase sales of the iPod. Amazon slowly lost its music business.
• On seeing the success of Zappos, Bezos decided to build an entirely separate website for shoes and handbags. He spent $30 million and launched the site ‘Endless.com’ in December 2006. The site offered free overnight shipping and free returns as a launch offer. But there was almost no traffic or sales for many months. Amazon had to close down the website after facing losses.
• Seeing the success of Netflix, Bezos opened DVD rental services in the United Kingdom and Germany with the idea that it would learn the rental business and establish its brand in markets where Netflix had not yet entered. But the company failed.
• Amazon’s acquisitions of OurHouse.com, Joyo.com, BookSurge, Tool Crib of the North, Back to Basics Toys, also ended up in failures.
• Bezos also invested in Gear.com, Wineshopper.com, Greenlight.com, Home-Grocer.com, Ashford.com, Greg Manning Auctions, Inc, Eziba.com, Daksh.com and ended up in failures.
• Launched in April 2015, Amazon Destinations was a short-lived travel reservation service focused on short, local getaways. The company stopped selling reservations six months later.
• Amazon Local Register, Amazon Fire Phone are some of the other costly failures.

A successful business leader is supposed to have more successes than failures?

How come Amazon succeeded among so many failures? Luck? Was Bezos’ Amazon launched at the right time in the right place? Jack Ma started ‘China pages’ in 1995 but he struggled to get customers. The reason was that the internet penetration and ‘internet’ awareness were very low in China at that time. The small business owners could not understand the ‘Internet’ as they had not seen it. The computers, telecom installation were still expensive and not affordable. Jack had a hard time to get customers. He realised that the problem was that he had launched his venture too soon. He closed down ‘Chinapages.com’. In the USA, the situation was entirely opposite of what Jack Ma faced.

The world around us advertises triumph more than failures. We talk about the success of iPod, iPhone, Mac, but never discuss Steve Jobs’ failures. We gladly share stories about Jeff Bezos’ success of Amazon but never dig to find out his innumerable failures. Due to this, we overestimate our chances of success which is called ‘Survivorship Bias’.

If you look at Jeff Bezo’s success and failures from outside, you knew that the probability of success is very minuscule.

For every successful person, there are thousands or lakhs of unheard stories. Behind every popular author, there are 1000 other writers whose books will never sell. We hear of only the successful people. The same goes for photographers, musicians, singers, artists, athletes, designers, cricketers, actors and so on.

Carmen Herrera, an abstract, minimalist visual artist became famous only at the age of 89. For her, success eluded for decades. She tried everything from an early age. Carmen is lucky that she lived long enough to see her success though she was unlucky that it came too late. Some good artists did not live long enough to see their success and many never succeeded even after their death though they were as skilled and creative as other painters of their era in that category. It shows that environmental factors play a role in a person’s success.

When Bezos or Steve Jobs became successful, though it might be coincidental, some people discovered similarities with other successful people and marked them as success factors. If we ever study those failed individuals or companies, we will realise that they had also possessed the same attributes and had grit, determination and perseverance like Bezos or Steve Jobs or Gates.

Let’s turn to the history of Bill Gates. (From Malcolm Gladwell’s ‘Outliers’)

Gates father was a wealthy lawyer and his mother was well educated and from a rich family. His parents taught him subjects at home. He attended a private school ‘Lakeside’, meant for Elite families. When he was in Seventh grade, the school started a computer club and bought an expensive computer terminal(Time-sharing Terminal) at a time when most colleges didn’t have computers in the 1960s. Bill Gates got an early opportunity to learn to programme on this time-sharing system as an 8th grader.

Gates got smitten by the computer bug and spent hours in the computer room. He lived there. He taught himself how to use a computer. Being wealthy, Gates could afford to buy programming time on the mainframe computer to which the school computer was hooked on to. At the same time, a computer startup at the University of Washington was looking for people to test its software programs on the weekends in exchange for free programming time and one of its founder’s son was studying at Lakeside and she contacted the ‘Computer Club’. Gates grabbed the opportunity as his home was very near to the University. Gates could walk up to the University of Washington from his house.

Gates began to hang around the Computer Center at the University of Washington and learnt a lot. He got in touch with another company at Computer Center who let him have free computer time in exchange for working on a piece of software they were developing. Gates skipped everything and spent nights and weekends on programming. By age fifteen, Gates had already acquired thousands of hours of computer time.

One day, the company for which Gates worked, got a project from TRW, which needed programmers familiar with the software. In those earlier days of computer development, it was difficult to find experienced personnel. Again, Gates was in the right place with the right experience and he grabbed the opportunity. At TRW, he was under the experienced John Norton, who taught Gates a lot about programming and mentored him.

Bill Gates not only got extra time to practice but also got a lot of opportunities to learn new technology developments and understand the business aspects. Can somebody become successful by just following those attributes of Gates without all the opportunities he got?

CONCLUSION

By looking at successful people, we systematically overestimate the chances of success. Only when we dig deeper, we could understand how extraordinary opportunities which are hidden, play a critical role. Society, culture, people around the successful people, parents, teachers have influenced the success and shaped the world-view perception of that individual. Sometimes where and when we grew up makes a massive impact in an individual’s life.

References: Outliers by Malcolm Gladwell, ‘Steve Jobs’ by Walter Isaacson, Art of Thinking Clearly by Rolf Dobelli, ‘The Everything Store’ by Brad Stone, The 100 years show by Alison Klayman, Wikipedia, Article on Carmen Herrera in The Guardian by Simon Hattenstone, Alibaba by Duncan Clark.