For a long time it was believed that all swans are white, at least in the western world. This, of course, was disproved with the discovery of the black swan (an ugly duckling, if there ever was one) in Australia.
Years later, Nassim Nicholas Taleb wrote the book by the same name, where he coined the metaphor of The Black Swan . A metaphor for unpredictable events. In his book, Taleb takes us through a series of anecdotes and examples of how our minds fail us (over and over again).
Seeking Positive Reassurance
One of the most common problems I have encountered is the search for positive reassurance and confirmation. We’re all lonely when we look in the mirror. We all have doubts and fears, because our future is unknown to us. Entrepreneurs, more than other people, have a tendency towards bigger risks and rewards. We lead our life expecting a black swan event (the IPO, the exit, big money and respect).
Most of us will fail. Some of us will fail multiple times. Only a small portion of us will ever make it. I’ve heard many statistics (1 in10,000 start-ups success, 1 in 10 funded start-ups succeed, etc.), but I don’t have any sources for these rumors (help welcomed). With such abysmal odds, there’s no wonder we seek confirmation. The problem, Taleb explains, is that we are, by nature, terrible at statistics and generalizations of extreme odds.
When filling a lottery ticket, most people can’t evaluate the difference between 1 in a 1000 chance of winning to one in a million. For the average Joe, they both seem just as likely. After all, we’ve all heard of lottery winners, right? So it must be possible to win, and the average Joe spends more on tickets than he’ll ever gain.
I do the same thing. I read blogs about start-ups, by Venture Capitals and Founders, successful people that share their wisdom. It was only when I’ve read The Black Swan that I realized I’m only looking at the visible history of entrepreneurship.
The History Unseen
The Unseen History is the story of failed start-ups and entrepreneurs. For reasons that should by now be obvious, these stories get much less attention than the successes. It is the same as you would never hear on the news the story of a guy who drove to work without having an accident. This is why I’m sharing my experiences in near real-time, because it’s rare to understand how things seem as they go along.
I’ll give you an example. Imagine you are going to MIT Bootcamp, where you will hear many (many!) success stories of young entrepreneurs who got magnificent deals from Sequoia and now have millions of users waiting in line to pay them large sums of money. Almost everyone on stage will try to stress how much hard work and effort is required, and how much doubt and frustration they have felt, while working on the product. They will all fail.
What the audience sees is two slides:
Programming in underwear
Huge piles of money
The audience can’t feel the frustration or see the passage of time. There are only two slides, and not enough story between them. In a twenty minute talk, the only take away seems to be:
- If I work very hard, then
- Huge piles of money
Just as a year ago:
- Real estate prices keep going up for a long time, so
- It’s a good idea to buy a house
The First Time Is Always Painful
While our new startup keeps making progress (prototype is working! first paying customer! a seasoned no-bullshit guy for our advisory board!), there are still many things on the roadmap. We’re talking with many potential customers. We are looking for a strategic investor to help us raise the seed capital we require. We plan to add employees #3 and beyond. Problem is, I don’t know how well (or ill) I’m doing. There is no scale, no measure, and no score card.
The average VC sees about a thousand entrepreneurs a year, but closes on ten deals. I have only one startup. I know I’m not #1 yet. I’m desperate to know if I’m #11 or #50 or #500 or last. Have I moved a few steps up this week? Am I closer to great success? I’m probably not supposed to think about it in these terms, but I can’t help myself.
- People compare themselves all the time, so
- Everything is a competition
So now I’m programming in my underwear, and on my way to huge piles of money. If you, like me, need someone to compare yourself to, you can compare yourself to me. In real time.