What is hidden evidence?
And why should you care?
Are you interested in starting a company? Do you worry about the certain financial risk you will undertake? I am, and I do. At Harvard Business School we are taught that an entrepreneur should send a “signal” to investors that s/he believes in the idea by acting as if the chance of failure were zero.
This is crazy!
This, and similar myths, are propagated because of the hidden evidence problem. People are cognitively impaired when it comes to randomness. We look at successful businesses and people and assume that they did something right. Investors want to think they can pick these successful businesses and people, and this signal of insanity is something they value.
But we know that failure is a high probability outcome for any entrepreneur or startup. Indeed venture capital portfolios are littered with dead and failed companies. And yet these same investors continue to require that the entrepreneur signal they are not worried about failure.
I want to change this attitude.
I want to create value as an entrepreneur while protecting against probable failure outcomes. I want it to be OK for entrepreneurs not to bet their house in risky ventures. I want investors to recognize that these are not bad signals, they are rational signals. I want Harvard Business School to teach more cases on failure outcomes.
I am starting this using this blog. See the about page for more details - but long story short I intend to write cases on businesses that did everything right but failed due to random outcomes. I will participate in the discussion on failure and entrepreneurship with this blog. If successful, I intend to write the book on hidden evidence, and help inject more reality back into business school classrooms as well as investor’s expectations.
And I’m hoping you’ll join me and enjoy the ride. Thanks for reading - stay tuned for more!
Abraham Murray | entrepreneur | info@hiddenevidence.com