STFU #03 — Lake Wobegon — The perfect place for your startup?

In the state of Minnesota (US), there is a place Lake Wobegon in central Minnesota, near Stearns County — a unique place that is known to have the best of the best in the world. You won’t find it on Google Maps, as it was omitted from the map due to the incompetence of the surveyors, but in the business world, it is touted to be the Boston of the west.

Children in the city are all above-average students. Most of them move out to various cities outside and are highly successful in whichever field they pursue. All the men in the city are the most good-looking men in the country, and all the women there are strong enough to fight even the strongest of enemies. They say that it just might be possible that there is something about the water or air there that might be attributed to this kind of genetics. The city has one of the richest histories in the world.

A perfect place to settle down and get everything you ever wanted in life.

Except..it’s not!

Except that it was a fictional place for a radio show in the 80s by a US Writer. There is no real place called Lake Wobegon!

Poof!

Just like Lake Wobegon, however, most of us believe our own ecosystem, and especially us, belong to a perfect place in heaven, where we, and probably few people around us, are ‘above average’ — a more statistical way of saying ‘I am better than most of you’ — this illusion is called the Lake Wobegon Effect.

When I quit P&G and started Healthy world, a pre-school version of True Elements, I believed in this ‘above average’ complex — Since I was handling a category that was close to 1000cr, I believed I ‘had it in me’ to start and scale a venture very quickly — doing 1–2cr a month was nothing — come on! I know how to do it. Most of the excel ‘models I made extrapolated Year-1 sales to a salivating number. While it is great to be optimistic, what I did was to ramp up expenses too in line with that salivation — I hired senior people, and took a big warehouse, anticipating a ‘quick surge’ of the business.

Month 1 Projection: 7 lakhs. Month 1 Actuals: 17,000/- in sales, forget the margins.

That’s when I started reading Psychology!

Similar cognitive biases in Psychology are called the ‘illusion of confidence’ ‘Dunning-Kruger Effect’, or ‘Illusory Superiority complex’ — (in case someone used it on you some time!).

To keep it simple, what this means is that people with low expertise/experience tend to overestimate their ability/knowledge, compared to others around them!

2 of the biggest victims of this psychological paradox in a startup are the founders themselves and the senior hiring they do.

Founder — God Syndrome

In the startup world, humble entrepreneurs transform into masters of the universe, as they raise more funds, or get more celebrities. With this, they get more fame further massaging their frail egos, but in this quest, they end up believing that they ‘now’ know it all!

This “God Syndrome” in ‘senior’ startups leads a lot of budding entrepreneurs to emulate their dress code or attitude (ignoring the struggles that preceded that attitude). As a result, they become victims of survivorship bias — when we only can see the few successes that cloud us from the thousands of failures or struggles that keep going around us.

Senior Hiring I am hilarious said no funny person ever.

When someone joins a startup from a larger organization, we believe we know much more than others — and will quickly add immense value to the startup immediately, almost like doing a favor to others in the team by being around — there is a hidden Brahm-dev sitting inside us!

The paradox we usually ignore is that the lower the skill level, the higher the self-confidence. Maybe they should have heard Charles Darwin when he said, “Ignorance more frequently begets confidence than does knowledge”. In theory, confidence and competence go hand in hand. In practice, they often diverge.

But sometimes, we continue to live in denial.

Seneca, a famous Roman philosopher, wrote about a woman who became blind — but denied her illness. She argued about room darkness, constantly asking attendants to change her quarters. (too many syndromes, so not naming this one).

Metaphorically speaking, we all are blind to things we can’t see, but end up attributing it to the darkness around us. That’s why we all need to be aware of our own ‘blind spots’.

Is there a way to resolve this paradox? Intellectual humility they say — The more we know, the more we yearn to know and believe that there is more to know (more on this in the next story). As we learn, we also begin to recognize our own blind spots.

To conclude, most of us have biases and blindspots we are unaware of, but if we are humble enough to know that we don’t know — we won’t aspire to settle down in Lake Wobegon!

Stfu!

References: Lake Wobegon Days, Superman Photo by Yulia Matvienko on Unsplash, Anton Syndrome

Originally published at https://www.linkedin.com.