If successful startups are just lucky, I have some questions:
- What's the expected monetary return for someone wishing to enter the startup game? In particular, is it positive or negative? For example, the usual platitude "you miss 100% of the shots you don't take" also applies to the lottery, where the expected return is negative. Could it be the case that rational people just shouldn't do startups?
- What's the expected return after adjusting for diminishing marginal utility of money? For example, a person with 2 million dollars is not 2x happier than a person with 1 million. This increases the impact of the previous point: even if the decision to a startup gives you positive expected money, it could still lead to negative expected change in happiness. Most of the monetary wins go to a lucky few, which doesn't raise their happiness enough to compensate for the unhappiness of the unlucky many.
- What's the expected return if you take the previous two points into account, and also compare against the next best thing you could've done instead of a startup? For example, is there anyone on Earth who's deciding whether to do a startup and who wouldn't get higher expected money, happiness... everything, just by getting hired at Google?
- Given the above points, is it ever morally okay to advise someone to do a startup? What advice would you give people if you were truly, honestly immune to survivorship bias?
It's not random in the sense that "anybody who tries has an equal chance at success." The prior you're missing is a person's ability, current mind, and biological mental capacity. Some people are just waaaaaaaaay smarter than other people. "All people are created equal" is a fantasy when you reach extremes (sport abilities, mental abilities, creative abilities).
Now, once you have a baseline genius startup mind, no success is guaranteed anyway. Twitter would be nothing without an Internet-famous founder and techcrunch hyping it up constantly its first few years of existence.
That's not saying you can't be rich. Anybody can always get dumb success (especially these days) with things like advertising or affiliates or ebooks.
The money doesn't enable your happiness — the freedom money provides enables your happiness. You can substitute being rich with having a job/life you don't hate plus a good salary.
"That's not saying you can't be rich. Anybody can always get dumb success (especially these days) with things like advertising or affiliates or ebooks."
People that are doing this should speakup but I don't believe "anybody" can do the above. Your statement is general to a certain extent and could apply to many areas but I don't think successful people in these areas are any less smart, hardworking, determined than startup founders.
I know people who write really low quality populist fiction on the Amazon Kindle store and bring in over $3k/month. Over time, the old books still sell, so you have recurring revenue that gets compounded as time goes on.
There are other examples, but that's the easiest to understand.
- What's the expected monetary return for someone wishing to enter the startup game? In particular, is it positive or negative? For example, the usual platitude "you miss 100% of the shots you don't take" also applies to the lottery, where the expected return is negative. Could it be the case that rational people just shouldn't do startups?
- What's the expected return after adjusting for diminishing marginal utility of money? For example, a person with 2 million dollars is not 2x happier than a person with 1 million. This increases the impact of the previous point: even if the decision to a startup gives you positive expected money, it could still lead to negative expected change in happiness. Most of the monetary wins go to a lucky few, which doesn't raise their happiness enough to compensate for the unhappiness of the unlucky many.
- What's the expected return if you take the previous two points into account, and also compare against the next best thing you could've done instead of a startup? For example, is there anyone on Earth who's deciding whether to do a startup and who wouldn't get higher expected money, happiness... everything, just by getting hired at Google?
- Given the above points, is it ever morally okay to advise someone to do a startup? What advice would you give people if you were truly, honestly immune to survivorship bias?