A Mathematical Model For Failure
How you should think about failure, and when should you avoid it?
In your work life, as you do things, you’ll fail from time to time. How much will you hurt? A simple formula would be:
Hurt = number of attempts
✕ chance of failure
This says that a certain percentage of attempts will fail.
Now the question is: how do you think of failure in your mind? Some people think failure is a bad thing, like a house burning down, from which nothing good can possibly come:
Maybe they feel this way because they remember a time in school when they failed a test and they were looked down upon by the class. Or their parents were disappointed. Or because they just picked up this vague feeling from society without knowing how they came to believe it. Whatever the origin, many people think failure = bad and success = good.
So they want to reduce failure. But since a certain percentage of our attempts fail, to reduce failure, you’ll reduce the number of attempts, which reduces the number of successes, too. Federer hits the net more than me, because he plays much more tennis than I do. That’s good for him!
Another factor in the hurt formula is how ambitious your attempts are. If they are, you’ll fail more often:
Hurt = number of attempts
✕ chance of failure
✕ ambitiousness of attempts
Again, if you tell yourself, “I should fail less often”, you might end up taking on unambitious tasks, avoiding hurt, but also learning less in the process, thus dooming yourself to stagnation over your career.
Another aspect is understanding the worst-case scenario: if you’re considering taking on a risk, and you don’t know what the worst case is, it would be foolish to take it on.
Or if the risk is higher than you can afford, don’t take it on. A friend of mine gave a personal guarantee to get an investment in his startup. The startup failed, resulting in him being personally liable for 2 crores, which is way more than he has! And the bank is pursuing him for repayment. So understand the worst case and say no if it’s worse than you can afford or are comfortable with.
This is why starting a startup is not the right option for everyone — there are people who can afford losing all the time and money they invested and the opportunity cost of what they’d have earned working in a job, and people who can’t. So you need to think about whether you can afford the worst case.
If you’re gambling, and you have 100 rupees, you should place only bets where you lose 100 rupees at most. Otherwise, you’ll lose your shirt.
Or 50 rupees, considering you need money for other purposes. When I was running my startup, my financial advisor wisely advised me to set a certain amount of money aside as my personal money, designating the rest as my startup money. When the startup money ran out, he told me to shut down the startup.
Nassim Nicholas Taleb says that you should take a lot of small risks, not one big risk. He gives the example of falling 100 feet, which will kill you. But 1000 impacts of 0.1 feet each, such as when playing sports, actually strengthen your body. Because the body is designed to not just absorb but actually benefit from small shocks.
Similarly, you should constantly keep taking small risks. For example, as a consultant, I used to price my services by the hour, because I was concerned about the risk of quoting a fixed fee for a project that takes much longer than estimated, resulting in a loss for me. But I recently found a way to overcome this concern, and proposed a fixed fee for a project. If it doesn’t work out, I know that I’ll lose the fee just for one project, which I can afford. This expands my repertoire and lets me earn more and work with people who insist on this mode of payment.
Let’s capture this in our formula:
Hurt = number of attempts
✕ chance of failure
✕ ambitiousness of attempts
✕ worst-case outcome of each attempt
You don’t want to make the same mistake each time, because the failure won’t be offset by the learning, which is the reason you want to fail in the first place. So:
Hurt = number of attempts
✕ chance of failure
✕ ambitiousness of attempts
✕ worst-case possibility of each attempt
✕ tendency to make the same mistake repeatedly
When climbing a mountain, some people climb with a safety system like a rope, so when they fall, they fall only a little till the support catches them. Others climb without, so when they fall, they fall all the way down.
A safety system in the tech context is a plan B for what else you could be doing. I ran my startup for three years, and after I dealt with one failure after another, in the last few quarters, I started thinking about consulting, which I was curious about for years. When I finally pulled the plug on my product startup, we seamlessly transitioned into a consultancy because I had it planned out. So, think about what you’d do if your job came to an end. Keep planting seeds that will grow in your mind by the time you need the fruits.
Taking this into account in our formula:
Hurt = number of attempts
✕ chance of failure
✕ ambitiousness of attempts
✕worst-case possibility of each attempt
✕ tendency to make the same mistake repeatedly
✕ lack of a plan B
This formula tells you all the factors that cause hurt, so that you can optimise them to hurt the right amount.