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We are bad at dealing with ambiguity and its known to get worse when there's money on the table. Typically we can take better risks by using a pencil, not our gut, to weigh what a chance is worth. More times than none we over estimate our ability to get it right,worse 4 startups
Perceptive value is a powerful construct, easy to understand, but excruciatingly difficult to use in our daily lives. So it's the value of an outcome X the likely hood it will happen. Seems simple enough, but is it?
Let's look at the low & high. If the fine for littering is 100 & u have a 1/10 chance of being caught as u throw your wrapper outside, right after ur purchase. The expected cost of breaking the law is 10. Do it enough times & eventually get caught that's what it'll cost u.
Reversed if there's a one in five chance you will close your round for a million dollars, the expected value of the pursuit is $200,000. U continue to run after bad pursuits based on ur perception of outcomes. They are no longer hunches if the odds are described properly.
And yet we peg our risks, often overestimating just how much the value of a fine really ends up being.
And we peg our possible gains, usually overestimating how much that opportunity is worth.
In matters of data look at the small details. Small data matters vs gut feel.
And we peg our possible gains, usually overestimating how much that opportunity is worth.
In matters of data look at the small details. Small data matters vs gut feel.
Founders are blindsided by optimism and the pursuit of winning, most of it is needed to get ahead in the dog eat dog world. But it's unforgivable to have a reality distortion field that over indexes on hustle vs outcomes. People who fuel off outcomes go further faster
Those who are award winners & over index for hustle/pr & don't sit down to compute their risk reward outcomes continue to train their brain to lie to them on the value of the outcome. Most use favorable odds for things beyond their control & under estimate odds for 1s in control
Rare breed that can balance the scale achieve success 1ce execution is matched with their ability to distill through this.The best way to understand why we do what we do is to take a look at Ellsberg's paradox. It may guide u to look at the why & avoid it. It's not a given though
We respond to what we keep track of. Too bad we're not keeping track of daily failures, bad hiring decisions, refusing first money in, our ability to predict bugs. You can only fix what u measure and can measure what u track. Due to our biased approach on outcomes we track wrong
We need to train our selves to track better. Lotteries of all sorts grab our attention and change our agenda. Don't give in to lottery thinking for things u can't control. You have better odds of being hit by lightening on most days. Track, measure, value re calibrate till u win.
In matters of startups no sense arguing over the design of your flag when u haven't focused on deciding what it stands for first. Flag is noise in a world where ur driving principles or vision/mission is the signal. Focus on signaling vs noise. Signals can be debated noise can't.
We are a species that can willingly change things.Opinions, looks, decisions & attitudes. But only when we want to. Hardest part is wanting the change. Train your want cycles and you will win more frequently and on a much grander scale.U must want for eg to fix ur estimation bias
You can also want to look the other way when confronted with choices needing hard decisions not aligned with where u need to be going. Take them & fail fast vs being a failurepreneur. @rebootdude @jehan_ara @FaizaYousuf @CodeGirlsKhi @TheNestiO @SaadGH @YusufJan @Ash_Kalim
