Jeff Bezos: Regret Minimization Framework(bijansabet.com)
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Jeff Bezos: Regret Minimization Framework
http://bijansabet.com/post/147533511/jeff-bezos-regret-minimization-framework
16 comments
It depends on what you mean by inaction. If by inaction you mean letting fear hold you on your current course then you may be right but we should distinguish between that and intelligently weighing and discarding an option.
The stories we hear about are the ones that worked out. That figures, the people who jacked in a $100,000 a year job to found a business that died on it's arse (and remember most do) aren't so willing to talk about it. It's important not to have your vision skewed by the availability of overwhelmingly positive examples.
Life throws a lot of chances at us and, if we've made good decisions up until now, there's a very real possibility that you're already in a situation that is better than those being offered to you.
I'm not saying don't try new stuff, just that the idea that staying where you are is automatically some sort of failure is bunk.
The stories we hear about are the ones that worked out. That figures, the people who jacked in a $100,000 a year job to found a business that died on it's arse (and remember most do) aren't so willing to talk about it. It's important not to have your vision skewed by the availability of overwhelmingly positive examples.
Life throws a lot of chances at us and, if we've made good decisions up until now, there's a very real possibility that you're already in a situation that is better than those being offered to you.
I'm not saying don't try new stuff, just that the idea that staying where you are is automatically some sort of failure is bunk.
Sure. I ditched a safe $60,000 a year (plus bonus and other meaty goodies) job because I wanted to work in software. This is good money in Orlando, FL and I did this in mid 2009, when the economy was terrifying. Eventually I ran out of money as an indie. So my effort did die on its arse. But now I work in the software business. It was awesome.
I'm sure there are plenty of ways I could have ended up less lucky than I have. I try to think of luck as a function of work, though. I want to believe I'm a survivor, but I've definitely been fortunate.
All I'm saying is that if you've got some sort of direction you feel is important but you never take action, that's the failure. If you take action and don't succeed, there's a lot you might do to make the most of your new position, thanks entirely to your having taken the risk.
I'm sure there are plenty of ways I could have ended up less lucky than I have. I try to think of luck as a function of work, though. I want to believe I'm a survivor, but I've definitely been fortunate.
All I'm saying is that if you've got some sort of direction you feel is important but you never take action, that's the failure. If you take action and don't succeed, there's a lot you might do to make the most of your new position, thanks entirely to your having taken the risk.
Interesting factoid - boss in the story was not just some random Wall Street dude, it was D. E. Shaw:
http://en.wikipedia.org/wiki/David_E._Shaw
http://en.wikipedia.org/wiki/David_E._Shaw
well, welcome to the American Dream, where you too can become a billionaire, as long as you start from a position with massive capital and a large hedge fund happy to take you back if you fail..
This is the stuff that motivational speakers thrive on. Of course the whole 'when I am 80, I don't want regrets' framework works, as long as you assume that you are going to be filthy rich no matter what choices you make.
This is the stuff that motivational speakers thrive on. Of course the whole 'when I am 80, I don't want regrets' framework works, as long as you assume that you are going to be filthy rich no matter what choices you make.
It works just as well when you're 23 years old, fresh out of college, and wondering whether you should put off finding a job for six months while you go backpacking around Southeast Asia.
What are the odds that I'll I find myself living on the street in 10 years, begging for spare change and cursing myself for having taken that vacation instead of immediately finding a job? And what are the odds that in 10 years I'll find myself with a house and kids, wishing I'd taken that dream trip while I had the chance?
Incidentally, it works just as well if you substitute "startup" for "dream trip".
What are the odds that I'll I find myself living on the street in 10 years, begging for spare change and cursing myself for having taken that vacation instead of immediately finding a job? And what are the odds that in 10 years I'll find myself with a house and kids, wishing I'd taken that dream trip while I had the chance?
Incidentally, it works just as well if you substitute "startup" for "dream trip".
I could see it working if you realize that you don't want to get to that age without, say, spending a lot of time with your children and being very present in their lives, as opposed to having more money because you worked hard.
For instance, I don't regret having moved to Italy even though I certainly have left a lot of money on the table in doing so.
For instance, I don't regret having moved to Italy even though I certainly have left a lot of money on the table in doing so.
As far as I know, Bezos wasn't born into wealth (upper middle class, perhaps), so perhaps the regret minimization framework was what got him to the point where he had massive capital and a hedge fund backup.
Or maybe it's all just random chance and you're better off laying on your couch all day.
Or maybe it's all just random chance and you're better off laying on your couch all day.
I've found a good technique to use - if you don't feel you are able to make the 'one' big decision (e.g. quit your job and work full-time on your startup) - is to make sure that every day you do something that moves you closer to your primary goal.
I find its similar to Bezos' regret minimization framework in that if you feel you are moving towards the goal, on a daily basis, no matter how slow it may be, then you are less likely to have regrets about the other 'distractions' to that goal that you encounter during the day.
I find its similar to Bezos' regret minimization framework in that if you feel you are moving towards the goal, on a daily basis, no matter how slow it may be, then you are less likely to have regrets about the other 'distractions' to that goal that you encounter during the day.
That's sort of what DHH suggests where anyone can start their own business by working on it just 10 hours a week or so. That advice is definitely working for me at the moment.
Just do a little bit every day, an hour or two towards your goal, and you'll get there soon enough.
Don't know where this quote is from, but I've seen it in Civ4 - "you move a mountain by first removing small rocks".
Just do a little bit every day, an hour or two towards your goal, and you'll get there soon enough.
Don't know where this quote is from, but I've seen it in Civ4 - "you move a mountain by first removing small rocks".
One thing you will surely regret at the age of 80 is if you will still have to work part time, not having saved enough for retirement. Starting a startup that fails costs you several hundred grand (which I know from a friend who started a startup that failed). For many people, although certainly not for Jeff Bezos, several hundred grand is a significant chunk of their total retirement savings.
Starting a startup that fails costs you several hundred grand
Nonsense. There are many, many different ways to start a startup, a large number of which won't cost you several hundred grand. The list of billion-dollar companies started part-time in someone's living room, or by someone with almost no experience (and therefore earning power) is pretty long. It's a mistake to think that it'll automatically cost you your retirement.
Nonsense. There are many, many different ways to start a startup, a large number of which won't cost you several hundred grand. The list of billion-dollar companies started part-time in someone's living room, or by someone with almost no experience (and therefore earning power) is pretty long. It's a mistake to think that it'll automatically cost you your retirement.
I think most people will regret not saving more money when they're 80. It's possibly worse for those in supposedly "stable" jobs with "good" pensions who retire only to find the pension fund is woefully underfunded. I think those people might regret the decades of corporate employment.
You have failed at properly saving for retirement if several (3-5) hundred grand is a significant > 49% of their total retirement savings.
Wow, what you're saying here is that you have failed at saving for your retirement if you don't have $1m in semi-liquid funds. Really? I guess that fewer than 10% of the population will ever be in that position. Your definition of failure seems to be "didn't succeed massively".
Ah, the lingering, slightly sweet odor of survivorship bias wafting in the breeze....
I'm sure there's at least a couple of octogenarians out there regretting their jetpack startup.
I'm sure there's at least a couple of octogenarians out there regretting their jetpack startup.
If one's regret is tied to the success or failure of the activity, then they might want to adjust their regret minimization algorithm accordingly.
I think a lot of entrepreneurs would regret not trying, or at least that's the impression I get from hearing stories of those who've tried and failed. It's just in their blood to give it a shot - win, lose or draw.
That goes for all kinds of activities, including ones where "failure" means death and success just means having a story to tell. People still give it a shot, knowing they would have regretted not doing it. I guess "jetpack tester" would be one such category.
I think a lot of entrepreneurs would regret not trying, or at least that's the impression I get from hearing stories of those who've tried and failed. It's just in their blood to give it a shot - win, lose or draw.
That goes for all kinds of activities, including ones where "failure" means death and success just means having a story to tell. People still give it a shot, knowing they would have regretted not doing it. I guess "jetpack tester" would be one such category.
I also have a similar technique. When I'm 70 or whatever, how would my biography look like?
Hopefully something like...'At 18 he moved out of the house, at 25 he started on a new startup, etc.' I want it to be full of events, doesn't matter if they were failures or successes, what matters that they're experiences and experiments.
Hopefully it won't be something like 'He joined company A at 22, and worked there till 65, and then retired.'
Hopefully something like...'At 18 he moved out of the house, at 25 he started on a new startup, etc.' I want it to be full of events, doesn't matter if they were failures or successes, what matters that they're experiences and experiments.
Hopefully it won't be something like 'He joined company A at 22, and worked there till 65, and then retired.'
His bonus must have been about $100K+ ... I wonder why he decided to give that up? That would have helped him starting a company.
Or maybe, my reasoning is the very reason I wont create an Amazon.com :( ...
I'm still confused as to why he decided to forego the bonus. The only thing I can think of is that he had some feeling about his idea and his capabilities w.r.t that idea that he couldnt wait?
Or maybe, my reasoning is the very reason I wont create an Amazon.com :( ...
I'm still confused as to why he decided to forego the bonus. The only thing I can think of is that he had some feeling about his idea and his capabilities w.r.t that idea that he couldnt wait?
It's very possible that if he'd waited then someone else would have got there first.
First mover advantage has been shown to be overstated (waves at what's left of Altavista and Netscape) but at the time he'd have been thinking "If I don't do this now, someone else will and I won't get the chance".
Remember too, if you're pulling in a six figure salary and have been for a few years, so long as you've been sensible, you're probably wealthy enough that that sort of money doesn't feel quite so significant.
First mover advantage has been shown to be overstated (waves at what's left of Altavista and Netscape) but at the time he'd have been thinking "If I don't do this now, someone else will and I won't get the chance".
Remember too, if you're pulling in a six figure salary and have been for a few years, so long as you've been sensible, you're probably wealthy enough that that sort of money doesn't feel quite so significant.
As I understand it, he was a VP at DE Shaw - which probably put his annual bonus at least several times higher than that (and low 7-figures wouldn't even be too unusual).
In a bank or hedge fund ... everyone is a VP ... Of course if he had the boss's ear - he was probably a special employee ...
I think it comes down to rationalizations: I know that I can rationalize doing something new and different. I can convince myself that a failed venture taught me something, whereas I have no way of telling myself that I shouldn't regret a missed opportunity.
It's much more common to be stuck wondering "what if" as opposed to "what if I hadn't".
It's much more common to be stuck wondering "what if" as opposed to "what if I hadn't".
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Good for Jeff. Regret minimization works for people who are low discounters - who are able to delay reward for long periods of time. Think people who have no problem putting their money in 3-year CD's earning two percent a year.
This framework isn't so useful for high discounters, or people who believe that they are living in a simulation. For them the short term benefit outweighs the regret they'll feel later on.
This framework isn't so useful for high discounters, or people who believe that they are living in a simulation. For them the short term benefit outweighs the regret they'll feel later on.
Isn't "Regret Minimization Framework" less awkwardly phrased as "go for it, you only live once".
Or is there some further implication we should be striving to meet octogenarian values and criteria of success?
I remember reading in one of Malcolm Gladwell's books that people tend to regret inaction much more than bad choices.
I guess what I'm saying is this "Framework" seems totally superfluous.
Or is there some further implication we should be striving to meet octogenarian values and criteria of success?
I remember reading in one of Malcolm Gladwell's books that people tend to regret inaction much more than bad choices.
I guess what I'm saying is this "Framework" seems totally superfluous.
I think that his formalization here helps as the framework will consider the global implication rather than local optimal. "Go for it, you only live once" symbolized a greedy solution that only optimized for the current satisfaction whereas the "regret minimization framework" tends to optimize for the whole consequences of different choices.
Yes, it is always inaction. It's easy to justify choices, but never easy to justify indecision.
or "better to repent than regret" (I believe that is also an english saying, though I may be wrong)
Hah, that's exactly how I make my big decisions except I asked it from the perspective of 'what will I regret not having done the most when on my deathbed?'.
wasn't that Mark Twain who said/wrote "20 years from now you will be more disappointed by the things that you didn't do than by the ones you did do"?
I'm sure it's true that Bezos at 80 wouldn't end up looking back and cursing himself for failure at starting a company. But it's a little naive to overlook that a lot of people would. Decent careers aren't exactly growing on trees.
Careers don't grow anywhere and they're not handed out like mittens or cupcakes.
Careers are made by each of us. Forged in the flame of your passion to do something interesting and meaningful with your days.
That's why it annoys me when big brand companies call their job section "Careers."
You get a decent career by taking risks and pursuing challenges. Going with the flow gives you a mediocre career – and who wants that?
Careers are made by each of us. Forged in the flame of your passion to do something interesting and meaningful with your days.
That's why it annoys me when big brand companies call their job section "Careers."
You get a decent career by taking risks and pursuing challenges. Going with the flow gives you a mediocre career – and who wants that?
If decent careers aren't growing on trees for you, you are doing something wrong.
If you've had a decent career for something like a decade, it's largely resumable, and the odds that a failed venture will help accelerate it are better than 50:50.
I also use the "what will I think about this when I'm 80 and looking back on it" approach. As a rule of thumb, it helps resolve a lot of choices easily, for the better.
But I hate it when old people try to tell me how to live!
Plunging toward something terrifying lets you know that you're making progress, pushing your limits, forcing growth. The best, most enjoyable points in my life have been preceded by fear (leaving home for college, starting really tough roles, dropping a safe job so I could get into the software business, moving across country).
Conversely, the points of the most significant stagnation have been entirely devoid of fear. If I'm not scared, clearly things are too safe, too mild, too absent of challenge.
I measure how well I'm using my days by recency of fear. I know if I'm getting too comfortable, things are getting slack and it's time to start evaluating what new risks and challenges could lead to interesting rewards.
Have I screwed up? Sure. Plenty of gambles didn't pan out, but each and every one of them taught me a lot. Most also gave me a great pivot to work with, leading to new opportunities I never would have found.
It's a more proactive regret minimization framework, but I like it. Most importantly, it got me to the Bay Area, the best place I've ever lived.