1. Webit, Istanbul, 10 October 2012
14 Primary Lessons
for Black Swans
(Decision Theory for Startups)
Jochen Wegner . jochen@wegner.io . http://wegner.io . 10/2012
2. About Jochen
Business Complexity
Coder Physicist
Journalist Researcher
Consultant ‣publishers
‣industry
& Angel - see http://wegner.io
‣startups Science
Editor
Startup Managing Science
Editor-in-Chief
Entrepreneur Director Writer
3. Influencers
Karl Popper Nassim Taleb, Rolf Dobelli Daniel Kahneman
Jochen Wegner . jochen@wegner.io . http://wegner.io . 10/2012
5. >6 million businesses
are created every year in the
United States alone*
* Kauffman Foundation, US Census Bureau
6. 1 out of 1.000-10.000
will be big.*
* >500 employees after 10 years,
estimate based on Kauffman Index, US Census Bureau
7. What if big success was random?
What if it would be impossible to predict
if you will be the next Black Swan?
8. What if big success was random?
What if it would be impossible to predict
if you will be the next Black Swan?
9. What if big success was random?
Some reliable sources suggest exactly that:
suggest exactly that:
„The majority of funds — 62 out of 100 —
failed to exceed returns available from the
public markets, after fees and carry were
paid.“
(Kauffman Foundation)
13. There are 156 cognitive biases.*
Let us pick 12 of them.
* assembled by Wikipedia
14. Your startup will almost certainly
be a White Swan (and no big hit)...
15. Lesson 3
Your startup will almost certainly be a White Swan...
...even if everyone else around
you is so successful.*
* Selection Bias / Survivorship Bias / Representativeness /
„Law of small numbers“
17. Lesson 5
Your startup will almost certainly be a White Swan...
...even if you got funded by a
very successful investor.*
* Selection Bias, „Swimmer‘s Body Illusion“
18. Lesson 6
Your startup will almost certainly be a White Swan...
...even if you were successful
before.*
* Randomness, Selection Bias, Overconfidence
20. Lesson 7
Your startup will almost certainly be a White Swan...
...even if you find a lot of
evidence that your model will
work.*
* Confirmation Bias
21. Lesson 8
Please follow your idea - even if
it seems not big enough for big
investors.*
* They are solely in the Black Swan Farming Business -
see Paul Graham
22. Lesson 9
Please follow your idea - even if
it seems a little insane (but
could be really big).*
* „If a good idea were obviously good, someone else would already have done it. So the most successful founders tend to
work on ideas that few beside them realize are good. Which is not that far from a description of insanity, till you reach
the point where you see results.“ (Paul Graham)
23. Lesson 10
It may be rational not to take
money from big investors.
24. Lesson 11
It may be rational not to take
money from small investors.*
* Reciprocity
25. Lesson 12
Please follow your idea - but
not because you worked so
hard on it in the past.* Only
because of future prospects.
* Sunk Cost Fallacy
28. Lesson 14
Be very careful if you take
advice from successful
entrepreneurs.*
* Overconfidence, Hindsight, Illusion of Control
29. Resources
Books
Judgement under Uncertainty: Heuristics and Biases
Fooled By Randomness
The Black Swan
Articles / Blogs
Why Angel Investors don‘t make money
Black Swan Farming
We have met the enemy - and he is us (PDF, Kauffman)
Cognitive biases, risk perception, and venture formation: How individuals decide to start companies
Resources on Entrepreneurship
US Census Bureau
Kauffman Foundation
Wikipedia: List of Cognitive Biases
