#BusinessAnalogy 006 - The Monkey Trap, Sunk Cost Fallacy, Eating Money & Billion Dollar Ideas!
https://www.linkedin.com/pulse/businessanalogy-4-monkey-trap-boni-aditya-ccmrc/
INTRODUCTION - My First Encounter with the Trap
The story begins with a poster in the room of one of the professors in my college.
It read - NEVER EVER EVER EVER GIVE UP!
But as a Kid , I saw the Tollywood Movie Challenge starting Chiranjeevi and Suhasni.
The protagonist of the movie gambles and the veteran gamblers let him win!
After the first win, he takes the money and begins to leave.
One of the gamblers asks him "You are winning, why don't you keep playing?"
The protagonist replies
"A clever person knows exactly when to give up! I know what happens if I keep playing this game!"
But the moral of the story is that one must know when to give up and when to hold on, it is easy to say, Never Ever Ever Ever Give up, but that is also absurd.
This analogy is about what happens when you don't give up.
THE SUNK COST FALLACY & THE SUNK COST TRAP
But the real question we need to answer before trying to understand the consequences of not giving up is to understand the philosophy of people who refuse to give up or as behavioral scientists call it "The Sunk Cost Fallacy".
The answer to the question "Why do people hold on to something/someone even when it hurts them so much?"
Trapping a Monkey - A Master Class in Not Letting Go
It is difficult to trap a monkey if you were to use traditional methods.
Monkeys are also clever, they are not going to fall for your traps.
To trap a monkey you need a little bit more sophisticated trap and the trap that the African Tribes use is called the "Fist in the Cookie Jar" strategy.
Capturing a monkey is done through more complicated traps, they are known as "mental traps".
Here is how it is done. See the video below.
https://www.linkedin.com/feed/update/urn:li:activity:7185698398530928642
ELEMENTS OF THE ANALOGY
Another funny story from Nasruddin illustrates the sunk cost fallacy with a humorous story.
Mulla Nasrudin, as everyone knows, comes from a country where fruit is fruit, and meat is meat, and curry is never eaten.
One day he was plodding along a dusty Indian road, having newly descended from the high mountains of Kafiristan, when a great thirst overtook him. ‘Soon’, he said to himself, ‘I must come across somewhere that good fruit is to be had.’
No sooner were the words formed in his brain than he rounded a corner and saw sitting in the shade of a tree a benevolent-looking man, with a basket in front of him. Piled high in the basket were huge, shiny red fruits. ‘This is what I need,’ said Nasrudin.
Taking two tiny coppers from the knot at the end of his turban, he handed them to the fruit-seller. Without a word the man handed him the whole basket, for this kind of fruit is cheap in India, and people usually buy it in smaller amounts. Nasrudin sat down in the place vacated by the fruiterer, and started to munch the fruits.
Within a few seconds, his mouth was burning. Tears streamed down his cheeks, fire was in his throat. The Mulla went on eating.
An hour or two passed, and then an Afghan hillman came past.
Nasrudin hailed him. ‘Brother, these infidel fruits must come from the very mouth of Sheitan!’ ‘Fool!’ said the hillman.
‘Hast thou never heard of the chillis of Hindustan?
Stop eating them at once, or death will surely claim a victim before the sun is down.’
‘I cannot move from here’, gasped the Mulla, ‘until I have finished the whole basketful.’ ‘Madman! Those fruits belong in curry! Throw them away at once.’
‘I am not eating fruit any more,’ croaked Nasrudin, ‘I am eating my money.’
ENTREPRENEURS & THE MONKEY TRAP
I have seen entrepreneurs run after wrong ideas with their life savings, pulling out their PF (Provident fund) to ride the wave, pawning the jewellery of their spouses to dream big, and selling their fixed assets to, you guessed it "never ever ever ever ever give up", absolutely convinced that they have a billion dollar idea.
They burn millions of dollars, not just their own but also of their friends, families, fools, and of investors in a wild goose chase, all the while not realizing that they are in a MONKEY TRAP.
They also throw good money after bad and burn all that money at the altar.
Entrepreneurs do not have a framework to understand these sunk cost traps or money traps.
Let's use the monkey trap analogy for this situation.
The Entrepreneur finds a new idea, the seeds in a Jar.
He believes that he has to pursue this idea and create a new business. So he puts his hand into the jar and grabs the seeds. He invests a few hundred thousand rupees and kick-starts the business.
The entrepreneur has grabbed onto a fistful of grains and his hand is now stuck in the jar.
The entrepreneur now has invested and is not receiving any returns on his investment and he has reached the end of his runway.
Now the entrepreneur does not give up, he then runs around and finds more investors, some of them take loans or pawn their property to keep their startup running.
Some entrepreneur take loans at exorbitant rates since most of them have quit their jobs and now have no credit scores.
This is when the fist tightens, i.e. the entrepreneur is now clenching the first even harder but he is not giving up the grip on the grains and letting out his hand out of the jar.
This happens not just once but in multiple tug of war between the clenched fist and the jar.
Finally, the war ends when the entrepreneur runs out of money and the business goes bankrupt.
This is the moment when the monkey is captured by the tribesmen and loses his freedom. Why?
Because he does not have the ability to let go of a few grains.
Alas if only the money knew what "SUNK COST FALLACY WAS"
DOUBLE DOWN ON INVESTMENT
On a lighter note, here is a scene from The Big Bang Theory, where Sheldon Cooper tries albeit unsuccessfully to monkey-trap the university board for $560 million dollars.
REFERENCES
https://aspireapp.com/blog/understanding-and-overcoming-sunk-cost-fallacy-in-business
https://idriesshahfoundation.org/pdfviewer/the-pleasantries-of-the-incredible-mulla-nasrudin/?auto_viewer=true#page=&zoom=auto&pagemode=none