Svwang1 from Silicon Valley#
@Svwang1
Aug 3, 2022
via: blue thread
via: Twitter
When communicating with friends, I summarized some subtle and difficult-to-correct mistakes in investment and entrepreneurship. Many people are easily deceived by the surface glamour and bubbles. For example, the film industry, which looks glamorous and glamorous when various stars attend various parties, is easy to confuse. But in fact, for technical entrepreneurs, there are not many opportunities to make money, and the market is relatively small. 1/
Even in the most successful cases, such as Pixar, when they were working on a project, because of an employee's mistake, they accidentally deleted all the files using the rm -rf command, losing several months of work. Fortunately, another employee had a backup at home for some accidental reason, otherwise the company could have collapsed. 2/
People instinctively want to imitate the successful cases they hear about, but everyone has different expertise. What others can achieve may be very difficult for you. Even for the same person, if they succeeded last time, they may not be able to do similar things next time due to changes in the environment. A certain VC fund, because it caught the bull market and invested in a company, had several times the return in this round; but in the next round, due to more competitors and higher valuations, the actual long-term return may be dismal. 3/
But because everyone loves to boast about their successful cases at a certain stage, and this kind of thing will be exaggerated and spread, even after more than a decade, some outdated exceptions are still being spread. So imitators will have a deep sense of frustration like "why is everyone else successful, but I have been imitating for so many years and still can't succeed". 4/
Because of the human nature of "the grass is greener on the other side, and someone else's wife is better", when there is no objective and public data verification, people tend to overestimate the returns of others and underestimate their own existing achievements/overestimate their difficulties, and hastily abandon their current advantages, and pursue the bubble they imagine at all costs. 5/
Many successful cases on the surface that are being spread have subtle risks and huge mental pressure and physical consumption behind them, which cannot be deeply understood by those who have not experienced them. And some fatal risks may not be exposed until several years later. For example, since January 2022, six named Russian oil and gas oligarchs have died unexpectedly, and several others are on the way. 6/
An interesting phenomenon is that many of these cognitive biases and behavioral habits are extremely stubborn. Ten years later, twenty years later, it will be found that some people are still repeating the same kind of mistakes. One reason seems to be that many people base their decisions on the "local experience" of the surrounding friends circle, lacking nuance and a global perspective, and lacking a deep understanding of the real underlying mechanisms. Their behavior pattern is basically "carving a boat to find a sword". 7/
Many people overestimate the value of face-to-face interviews and greatly underestimate the value of calm writing and thinking. When communicating orally, many background information, data, and assumptions are easily overlooked, and it is easy to draw a certain conclusion rashly. The more people there are, the easier it is to be misled by the emotional atmosphere. But when you write out your thoughts, repeatedly verify various data and assumptions, calmly deduce, you often come to conclusions that are completely different from your intuition and make you "take a breath of cold air". 8/
No matter what you do, it is best to continuously and quickly obtain various feedback during the process, so that you can adjust your strategy quickly. And because of the accumulation of various small positive feedback, you can maintain a greater internal drive in the long term. Don't blindly believe in a narrative fabricated by others. After seven or eight years of painful patience, you will find that it is completely a scam and time has already been wasted. 9/
Try to make what you do "reversible" or the cost of "irreversibility" small enough to bear. Before entering the "irreversible" zone, write out the risks and ensure that you can bear them. Otherwise, with a hot head, investing a lot at once, making irreversible mistakes within a few days, it will take years to correct them, and such painful lessons are everywhere. 10/
Try to understand the underlying mechanisms of things from a global perspective and look for repeatable patterns. Truly repeatable patterns are huge gold mines. Without a global perspective, it is inevitable to summarize wrong correlations based on one's own local experience and false information input, misleading oneself for decades and unable to break out of the vicious circle. 11/
Most intuitions only apply to limited industries, periods, and regions. Applying one's own experience of various intuitions without thinking to other industries/periods/regions is the root cause of various stubborn decision-making errors.
FIN