Replication of Success

A couple of days ago, I bumped into a rant by an anonymous guy who bantered something like this:

In 2015, I left my stable job and a six-figure salary, dropping down to less than a quarter of what I was on. I rented out my apartment, moved into a share-house and sold my BMW. I worked 16-hour days, 7 days a week for over a year. This was to follow a burning passion and it was the best decision I’ve ever made. >[…] I followed my dream to start my own company […] It has gone from strength to strength. If you feel a burning desire to create change, 100% I say take the risk. I did, and it’s been the best decision of my life.

I guess you have run into that sort of posts too. You might even have had the feeling that you are missing out on something really special, and the desire to quit your job is burning. Hell, he did succeed, and so can I!

But what if you bumped into a post like the following:

In 2015, I left my stable job and a six-figure salary, dropping down to less than a quarter of what I was on. And I used all that money on gambling. I relentlessly completed lots and lots of lottery tickets. I played in a casino 16-hour days, 7 days a week for over a year. I followed my >guts and fell into my greatest addiction. And one day, I made $20’000’000!! If you feel a burning desire to gamble, 100% I say take the risk. I did, and it’s been the best decision of my life.

Pretty much the same rant, with the obvious change of “build my own company” to “gamble furiously”. The idea that someone made a lot of money on the lottery doesn’t get you any closer to buy into it and start playing cards. That’s because you understand that making millions out of gambling is an anecdote, not a common outcome. In fact, it’s quite rare - that’s obviously the whole point.

But why on Earth would you pay attention to the first post?

Facing an uncertain situation and falling on your feet doesn’t make it less riskier. It’s only your perception of risk that has changed. And that makes all the difference, because a risky path has been rewarded, and thus it’s likely to be taken again, regardless of the actual chance of making it right again. That’s indeed what is so addictive about gambling: the unlikely reward, usually tied to a false sense of expertise or edge, like “dices are hot”, and “I’m in the zone”. Cities like Las Vegas have been built on top of those fools.

But here’s more: most people don’t even see it. It’s called the narrative fallacy: our minds build cause-and-effect links that simply aren’t there, in order to give life continuity and order.

History is the fiction we invent to persuade ourselves that events are knowable and that life has order and direction. That’s why events are always reinterpreted when values change. We need new versions of history to allow for our current prejudices.

Bil Watterson, ‘Calvin and Hobbes’

Life is risky, but it gets worse: knowledge is always deduced a priori. That’s the core idea behind Nassim Taleb’s work, which we covered in Skin in the Game: there are hidden risks that we need to be prudent about.