This is the fourth and final post about the survivorship bias. Be sure to check out the first, second and third, too (“The Concept,” “Why It Matters,” and “Application to Our Situation”).
As you may remember, the survivorship bias is the skewing of conclusions about gathered data toward the input acquired from surviving sources without adequate consideration for the data on what could have been learned about what did not work from those who are no longer around.
We have explored why we should care and a little about the fact that it is directly applicable to real estate investing or entrepreneurship. We talked about luck being where preparation meets opportunity, and how that is only half the story. Interestingly, the other half of the luck story is a key ingredient in the secret sauce of success.
It turns out that luck is a misnomer. Chance is a significant factor in all our lives. If you had been one car farther back, the guy that ran the red light would have hit someone else’s car. If you had skipped the event where you met your significant other, you might never have met him or her. If you had not taken that route home, you would not have noticed that distressed property that became a profitable rehab for you. It turns out that some people are better than others at interacting with chance. They manage their probabilities better. The thing about probabilities is that it is a numbers game. The more coins you flip, the more “heads” you will see.
Here is what David McRaney said in his blog on this topic:
It might seem disheartening, the fact that successful people probably owe more to luck than anything else, but only if you see luck as some sort of magic. Take off those superstitious goggles for a moment, and consider this: the latest psychological research indicates that luck is a long mislabeled phenomenon. It isn’t a force, or grace from the gods, or an enchantment from fairy folk, but the measurable output of a group of predictable behaviors. Randomness, chance, and the noisy chaos of reality may be mostly impossible to predict or tame, but luck is something else. According to psychologist Richard Wiseman, luck – bad or good – is just what you call the results of a human beings consciously interacting with chance, and some people are better at interacting with chance than others.
Notice that he said “consciously interacting.” That means they acknowledge chance and apply thought and strategy to how they deal with it. McRaney continues,
Wiseman speculated that what we call luck is actually a pattern of behaviors that coincide with a style of understanding and interacting with the events and people you encounter throughout life. Unlucky people are narrowly focused, he observed. They crave security and tend to be more anxious, and instead of wading into the sea of random chance open to what may come, they remain fixated on controlling the situation, on seeking a specific goal. As a result, they miss out on the thousands of opportunities that may float by. Lucky people tend to constantly change routines and seek out new experiences. Wiseman saw that the people who considered themselves lucky, and who then did actually demonstrate luck was on their side over the course of a decade, tended to place themselves into situations where anything could happen more often and thus exposed themselves to more random chance than did unlucky people. The lucky try more things, and fail more often, but when they fail they shrug it off and try something else. Occasionally, things work out. 
Phil Plait, an astronomer and leading voice in the skeptical movement, stated, “The only way you can spot [survivorship bias] is to always ask: What am I missing? Is what I’m seeing all there is? What am I not seeing? Those are incredibly difficult questions to answer, and not always answerable. But if you don’t ask them, then by definition you can’t answer them.”
So, avoiding survivorship bias in order to see more of the big picture is part of the secret sauce…because it involves liberal applications of curiosity. A ferocious curiosity is something you can learn. How about luck? That involves curiosity, too. Lucky people seek out new things to try, situations rich in unpredictable opportunities, and the unscripted but positive side of randomness. They know it’s a numbers game so they make their numbers bigger in all the important ways. You, too, can achieve bigger numbers. It will not require magic for you to begin casting a wider net, identifying more sources for leads, sticking with something that is working, abandoning unproductive paths, and making better use of leads you already have with better follow up. Don’t buy another book first or attend another seminar first. Start developing that ferocious curiosity and start leveraging chance. Get out of your rut and start looking for what you don’t know you don’t know. Be open to opportunities you were not expecting or seeking, Open your mind. Constantly ask, “What am I missing?” Intentionally avoid the survivorship bias and learn as much as you can learn from non-survivors, too.
Stop being the person looking for a 2-inch, gold-plated needle in a haystack. Start being the person digging into a haystack for anything that might be useful. After all…
… despite how it may seem, success boils down to serially avoiding catastrophic failure while routinely absorbing manageable damage.
If we focus too much on keeping things nice and neat, tidy and controlled, and only go where we know how things will turn out, we are limiting our “luck.” The luckiest—the “survivors”—go where they cannot predict the outcome, they put themselves out there more frequently, they explore new avenues voraciously, and they exhibit ferocious curiosity. Learn from non-survivors about what does not work. And go out there and massively increase your own “luck!”