Narrative Fallacy

Something interesting happens every time a company fails. Everyone suddenly has a perfect explanation why.

"Their product market fit was wrong." "The founders didn't execute well." "Market timing was off."

Funny thing is, these same people watched the company for years and saw none of these problems. Only in retrospect does everything seem obvious.

This is narrative fallacy at work. Humans hate random events. We need stories. Need things to make sense. So we create perfect explanations after the fact.

Watched this play out recently when a beast of a tech company sunsetted in our space. Post-mortem articles claimed their business model was obviously flawed. Yet two years ago, these same publications praised their "innovative approach to market penetration."

The reality? Success and failure are messier than our stories. Companies succeed despite terrible decisions. Great execution sometimes ends in failure. Markets are random, complex, chaotic.

This need for narrative affects daily decisions too. Someone gets fit - they create a perfect story about discipline and dedication. But maybe they just found a workout they enjoyed. Or met the right friend group. Or their schedule changed.

But their narrative now makes the next person assume that without discipline and dedication, it is impossible to actually get fit. Sure, those are traits that help along the way, but perhaps if we spent time breaking this fallacy, this person would have explained that it was because he found a workout routine that he absolutely loved and hence was able to be dedicated to it.

That distinction makes all the difference.

A relationship ends, and suddenly everything that happened in the past year becomes "obvious signs it wasn't working." Yet none of these were obvious at the time.

Even simple things: When we ace an exam, it's because we studied smart. When we fail, it's because the teacher was unclear. Both might be random variance in test-taking ability that day.

The dangerous part isn't creating these narratives. It's believing them. Making future decisions based on stories we've invented to explain the past.

Some people succeed because of their choices. Others despite them. Most? A complex mix of decisions, timing, and luck that's impossible to fully untangle.

The most practical approach? Build systems that work without needing perfect explanations. Test everything. Keep what works. Don't waste too much time explaining why.