Not long ago, a businessman proudly told me his entrepreneurial stories over some beer. As a classic risk taker, he would jump at an opportunity with 50% visibility with the hope that things will just fall into place. He called that a calculated risk even though the calculation only happened after he took the plunge. That resonates very well with a lot of the exciting success stories I’ve read and I’m pretty sure it’s the same for many others. Consciously or subconsciously, we have been shaped to believe that to achieve success, we need to go all-in by taking heart-stopping risks. It just sounds so sexy and sensational, something to brag about when you plunge into a cauldron of fire like a dying chick and rise up from the rubble having transformed into a phoenix.

There is one major blind spot here. For every lucky bastard that jumps off a cliff and has managed to build a plane on the way down, there are probably another hundred of the same breed who just died a foolish death. People often mistake luck as capability and then start to behave recklessly. Those unlucky ones simply didn’t manage to survive to tell their version of the stories. How often you come across books or articles talking about failed entrepreneurs or folded businesses?

Here comes the problem of survivor bias. When we are assessing the risk or probability of certain scenarios, the conclusion can often be skewed by the success stories what we are accustomed to and I’m guilty of this too. Very often when we perform feasibility studies, we focus so much on the potential upside that we start looking at the downside like a stepchild – important but not the priority. The worse is after we succumb to the upside seduction and take the plunge, we then start creating justifications for the risks. Boom, survivor bias has mutated itself into confirmation bias. Like it or not, because we have already decided to do it, we choose focus our attention on the positive thesis. All the red flags identified earlier look more like light pink after rubbing our eyes a few more times.

My previous misadventure in fish farming has a lot to do with survivor bias and my decision making was also tainted by confirmation bias. I’ve tried to avoid this topic before this because every time I talk about the mistakes, the dark shadow of the past will haunt me and remind me of the pain I’ve endured. Then I realised that the best solution is to face it, dissect it just like a post-mortem and be brutally honest with myself. I can’t go back in time and change anything, but at least I can carve a big fat lesson onto my bone as a reminder. If I can’t get rid of the past shadow, I might as well embrace it as part of myself.

I’ve made a resolution that I shall rise up again from the ashes and I believe my chances will be greatly enhanced as long as I don’t get fucked by the same mistakes again. Invert, always invert: turn the focus on the downside and get the maximum protection. Like Charlie Munger said, “All I want to know is where I’m going to die, so I’ll never go there.”