Statistics & Average Market Predictions are Garbage

Sep 16th

So my brother came out to live with me for a couple months to hopefully straighten out a bit, but tomorrow he is flying back to California. At dinner today he stated that the odds of him doing well out there were not high. I proceeded to tell him statistics are bullshit, and that you don't do well by figuring that you are going to do whatever statistics say (I think relying too heavily on statistics is a way to push blame and/or plan for failure). You have the potential to do far better if you can defy statistics. If you can create new markets, or invest in ideas, markets, and opportunities the market doesn't see you can create value that statistics don't predict. You can't create many types of value by only following statistics.

What moves the price of a stock: when the company does what is predicted, or when they do not?

Statistics do not matter if you really want to do something. If you are an entrepreneur and view what you are doing as being average and your math is reliant on average then you are probably going to fail. Why? Because stats lag the market, and any market worth being in probably is not stagnant.

Less than four years ago I got kicked out of the military, the economy was in the hurt locker, I was suicidally depressed, I knew nobody in business, all my friends were on deployment, and I knew nothing about the web. The odds of me doing well at anything were quite low, but I think I am doing above what the statistics would predict for me.

Social and business hierarchies are designed such that many people work for few and few have the ability to rise through social or economic classes. If you want to be average or just assume statistics are all you need, it makes sense to work for someone else, or just give into becoming a statistic ahead of time (there is no point pretending you will escape them if you trust them well enough to predict your own life). If you work for yourself and/or are trying to change the way you behave throw stats in the garbage or use them as motivation to defy them.

Published: September 16, 2006

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Comments

October 4, 2006 - 5:36pm

Beautiful, Aaron. (and good for you for beating the "stats".) When I studied at University of Waterloo (home of RIM/ blackberry, and Gates' fave Canadian univ), I took a great math bird course called "The Uses and Abuses of Statistics." As a result, I'm always wary of surveys of a few thousand people supposedly representing a nation of 250+M people, or even of 40M people. It's usually bullshit.

I'm a stats geek, with a minor degree in stats (and son of a retired math prof), but I try to be careful about believing or using questionable stats, except as an indicator or low-watermark. Especially on the Internet, when the Long Tail turns some stats into just some numbers that MAY mean something to someone.

September 16, 2006 - 8:52am

If we were limited by stats, that would be the end of innovation. Stats can only describe existing stuff: how it's performed so far, how it's likely to perform in the future. They can't tell us much about how entirely new approaches to problems might work.

A truth in life and marketing.

September 17, 2006 - 3:35pm

Nicely put! If you follow the pack like sheep you may be safe or you may be heading off to the meat processing plant. It is hard to go off in a different direction because it takes a lot of “Gut Checking” and commitment and that is admired but rarely supported in our society. Thank you for writing this piece – it was inspiring on a Sunday morning.

Cheers

Eric

Gus Farrah
September 18, 2006 - 4:25pm

Aaron, it is really good to read you, your writing gives a different perspective of the SEO World, it is inspiring and motivating.

Of course, we have to try out different paths, that is how we can stand out of the crowd... Thanks

Brunon
September 19, 2006 - 1:29am

Sometimes you just need to move your ... I see many people do nothing or very little and complain they are getting nowhere.

I've already done better then my "stats", friends and family would predict. So my plan is to keep on going.

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