Are we too alike?
You’ve got a business idea. Mum or dad or other family members will help you get started, won’t they? Or perhaps an old school friend.
Before signing up to work alongside your nearest and dearest, think instead about the skills each of you has and whether they are good fit – it might pay off in the end. New research called The Cost of Friendship examines the venture capital industry and finds that it can be costly to choose business partners based on factors such as knowing each other from school or work.
Of course, friends and family who have complementary skills (so have ability as well as affinity) could be a good match.
Let’s ask for a second opinion
The Harvard University researchers write that “birds of a feather” often share the same point of view and might be more likely to ignore or not sufficiently consider the disadvantages of their position. They might not pay enough attention to advice from experts outside the group.
It is similar to the confirmation bias seen in investing and elsewhere. In the confirmation trap, people build a case to justify their view instead of reaching an unbiased conclusion from surveying all evidence.
Before investing in a new business, house or other major decision, it might pay to look for information that contradicts your expectations. Ask people who you know will challenge you on your decision – see if your conviction can withstand the pushback.