Hot take: the outside view is overrated.
(“Outside view” = e.g. asking “what % of startups succeed?” and assuming that’s ~= your chance of success.)
In theory it seems obviously useful. In practice, it makes people underrate themselves and prematurely give up their ambition.
(“Outside view” = e.g. asking “what % of startups succeed?” and assuming that’s ~= your chance of success.)
In theory it seems obviously useful. In practice, it makes people underrate themselves and prematurely give up their ambition.
One problem is that finding the right comparison group is hard.
For instance, in one commonly-cited statistic that “90% of startups fail,” (national.biz/2019-small-bus…) “startup” meant all newly-started small businesses including eg groceries. Failure rates vary wildly by industry!
For instance, in one commonly-cited statistic that “90% of startups fail,” (national.biz/2019-small-bus…) “startup” meant all newly-started small businesses including eg groceries. Failure rates vary wildly by industry!
But it’s worse than that. Even if you knew the failure rate specifically of venture-funded tech startups, that leaves out a ton of important info. Consumer startups probably fail at a higher rate than B2B startups. Single-founder startups probably fail more than 2-founder ones.
OK, so what you really need to do is look at the failure rate of 2-founder B2B startups, right?
The problem is that *nearly all the relevant information* about whether your startup is going to succeed *isn’t* encoded in your membership in some legible subgroup like that.
The problem is that *nearly all the relevant information* about whether your startup is going to succeed *isn’t* encoded in your membership in some legible subgroup like that.
Instead, it’s encoded in things like: How likely are you to break up with your cofounder? How good will you be at hiring? How determined are you to never ever give up?
Outside view fans anchor far too strongly on the base rate, and don’t update enough on inside views like these.
Outside view fans anchor far too strongly on the base rate, and don’t update enough on inside views like these.
“If only 10% of startups succeed, how could I claim a 50% chance? That’d imply I’ve observed evidence with a 5:1 odds ratio! How presumptuous!”
Actually, evidence *way* stronger than 5:1 is everywhere: markxu.com/strong-evidence
(It’s rarer for startups than for names, but still.)
Actually, evidence *way* stronger than 5:1 is everywhere: markxu.com/strong-evidence
(It’s rarer for startups than for names, but still.)
The outside view works best when you don’t have access to that kind of inside-view info. That’s why it’s so useful in e.g. forecasting tournaments, where you’re predicting the outcome of public events you’re not involved in. Legible group memberships are all you have to go on.
But if you’re, say, planning your career—then overusing the outside view will just make you ignore all the ways you’re non-average.
I’ve seen a depressing # of exceptional people look at the outside view, assume they’ll do an average job at something, and give up without trying.
I’ve seen a depressing # of exceptional people look at the outside view, assume they’ll do an average job at something, and give up without trying.
If you’re making a decision where you have a lot of illegible information, you need a different toolset:
1. Build gears-level models (lesswrong.com/posts/B7P97C27…)
2. Try things to gain information, and update quickly on the results
3. Think real hard (benkuhn.net/thinkrealhard/)
1. Build gears-level models (lesswrong.com/posts/B7P97C27…)
2. Try things to gain information, and update quickly on the results
3. Think real hard (benkuhn.net/thinkrealhard/)
Related reading:
1. Applied Divinity Studies argues that rationalists are less successful than you might expect because they put lots of weight on outside views: applieddivinitystudies.com/wilbin-rationa…
(I think ADS isn't convinced this is a mistake, but I am)
1. Applied Divinity Studies argues that rationalists are less successful than you might expect because they put lots of weight on outside views: applieddivinitystudies.com/wilbin-rationa…
(I think ADS isn't convinced this is a mistake, but I am)
2. Me elaborating on this in an interview with @alexeyguzey:
• video:
• transcript: guzey.com/interviews/ben…
• video:
• transcript: guzey.com/interviews/ben…
3. @ESYudkowsky explains why/when he doesn't take outside views seriously, by example of Harry Potter and the Methods of Rationality: lesswrong.com/posts/dhj9dhiw…
This is a great point!
https://twitter.com/The_Lagrangian/status/1377066355040509952
Similar energy:
https://twitter.com/robertwiblin/status/1377248398085079042
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