Whether you learn more from Failure or Success

I think the real answer is that it depends. It seems to be the obvious answer and in most cases the simplest solution is right (a-la Occam’s Razor).

But this feels like a cop-out. So, in the spirit (and irrational human tendency) of wanting generalizable rules, I want to sit and see "what is better?" Does one learn more from success or failure?

I would say the popular school of thought focuses on the value of failures. Just the sheer ton of people who say they learn from mistakes makes it seem almost scripted. It’s almost the PC thing to do.

Like saying “oh well I want to start by saying I’m really lucky.” There are movements like the “fail fast” culture for startups and many entrepreneurs and leaders have emphasized the value of learning from failure.

One argument against studying success is survivorship bias. It’s true…. we, once again, want answers to why something succeeded. Though the flaw is in believing there "must" be an answer (or a handful of answers) that explain a phenomenon like success.

For example, some might say a company like Apple succeeded because of Steve Jobs’ vision as a founder. But some might say it also succeeded despite Jobs’ ruthlessness. Then, someone may say it’s that ruthlessness that pushed away the ‘wrong’ people for the company and allowed for the vision to manifest etc….

Many people fill 20-30 pages of their books about Apple’s success but 99% of them never spoke with Jobs so what do they know. It’s like a morality philosopher trying to talk about death in front of a surgeon. It’s hard enough for the people in it to really know why they succeed…..or really fail.

We just can’t definitively say why something succeeded.

But some say we can definitively know why things fail. Quite possibly by looking at everything through the lens of “inverse” failure seems easier to understand. As Munger has said, he would like to know where he would die so he would know not to go there.

When it comes to business, it fails when it runs out of money or when the founders choose to not push on.

For investing, putting all of one’s money in one stock could lead to massive outperformance (practically like an entrepreneur) or blow up spectacularly. Irresponsible use of leverage is also another way to fantastically blow up…..most financial crises can be attributed to such use of debt.

In some sense, a part of us knows not to do these things. It’s like when Stan Druckenmiller bought a ton of tech stocks at the peak of the ’99 bubble and subsequently lost billions for Soros’ Quantum Fund. When he eluded to the mistake he said he learned nothing. He already knew he wasn’t supposed to do it but he just couldn’t help himself emotionally. So he went in, did what he knew he shouldn’t have done, blew up, and learned nothing new.

I like to take on the attitude of always “succeeding or learning” because that seems like the prudent thing to do. Not to waste a good mistake and learn from it. But do we actually learn from it or did we just do something we knew we shouldn’t and got burned for it?

Because I think most of us know what would lead us to failure. But we do it, despite knowing that.

A child knows not to put his hand in the fire. But he might do it anyway, get burned, and not do it again. I’ve met a number of entrepreneurs who’ve said they are slow learners and just like the child, they learn by getting burned.

If my life has told me anything, it’s that I’m a slow learner like them as well. But that might be much of humanity. We all know we shouldn’t do XYZ but we just can’t help ourselves and incur the mistake anyway.

So maybe failure merely reinforces something we had already known. Rather, maybe it creates a biased reinforcement of a risk we took and stops us from taking that again.

Like someone who quits a job to try something new but they fail and they learn not to do that again. Therein lies the attitude differential. One may have the attitude they learned about all sorts of things about the self and world from the experience. The act of failing didn’t teach much. But surviving it and experiencing something new might’ve taught the entrepreneur something.

So is it that failure isn’t much of a learning tool but our natural attitude towards results?

Let’s say I put all my money in one stock and it paid off spectacularly. As Vinod Khosla and Peter Thiel point out, no one remembers your failures….putting the emphasis on the successful result. Is there much to be learned from this ’success’?

Possibly. Though I did risk ruin, I may have had a decent process for selecting the right investment. It’ll be hard to pinpoint why that worked. This same example could be made for the entrepreneur who made it big on a startup that IPO’d.

But, if I can repeat it again, would it not mean that my process (empirically speaking) works? For much of life should be examined empirically rather than an obsession with finding out ‘why’.

For example, if I use a certain training protocol over time and it produces the greatest strength gains for my deadlift and squats…then that is the protocol I’ll continue to use until it doesn’t. Yes, I’d like to know ‘why’ but the answer I find may not be true. For there probably won’t be a single answer of ‘cause and effect’ to a success.

Rather, doesn’t it make sense to repeat the process that resulted in the first outcome of success? If one repeats and can consistently produce a successful outcome then….empirically speaking….that process may be worth doing.

You don’t know why you succeeded but you do learn this process helped you get there. Maybe that’s the best we can hope for. And this process will probably be very difficult for anyone else to repeat.

No one will have the same environment, team, and personality you do. So empirically…this is a process only you can repeatedly do.

I mean look at Buffett and Munger in investing, the PayPal mafia, and Rich Barton in entrepreneurship. They aren’t one-hit wonders. People dedicate lives to try and figure out the secret sauce but there isn’t just one..or even ten things to copy for the same result.

So maybe one cannot do anything but to try all kinds of processes until they produce the result one desires. Then, to repeat that process until it no longer works and then finds a new one. A constantly iterative process.

All the while, focusing on not blowing up. For, to have any kind of success, one needs to survive.

In the concept of failure…there’re probably two kinds. The one you can’t recover from and the one you can. Most are ones you can recover from. Even if you lose a ton of money, you can recover.

However, it’s hard to recover so you want to avoid failure as much as possible. But it’ll inevitably happen to you the more you try different…and especially difficult…..things.

But, just as you don’t exactly know why the process you used resulted in success…you won’t exactly know why the process you used resulted in failure either. You might’ve taken on too much debt. You might’ve made mad gambles. You knew you shouldn’t have done them and you did em anyway because it could’ve worked you think. When it doesn’t…you can’t truly know if that was the sole reason.

Then, the only thing that matters is to just keep going. Maybe you stick with it until you can’t anymore and switch. Maybe that’s the natural attrition cycle you need to deploy.

At the very least, I would say you learn more from success than failure. Because if you’ve succeeded, you have an outcome you can hope to repeat. Failure will just be one of many others in the trash can.

But ultimately, it seems neither matter compared to the perseverance needed to just chug on.

Possibly the best way forward is this Winston Churchill quote:

"Success is not final, failure is not fatal: it is the courage to continue that counts."

And as Churchill ended many phone calls: “Keep Buggering On"