My experience of learning from personal experiences.

If you google ‘quotes on experience’ you will get a long list of quotes written by wise people. Below are just some of these quotes:

Experience is the teacher of all things — Julius Caesar

Be brave, take risks, nothing can replace experience — Paulo Coelho

The only source of knowledge is the experience — Albert Einstein

I believe that if a movie is made on ‘Teachers’ then ‘Personal Experience’ would be the hero.

In stark contrast to what these wise men have said — a few years back when I started reading on investing and psychology, I learned that vicarious experience is potentially a far better teacher than personal experience.

Vicarious experience is the experience acquired through watching, listening to, or reading about the activities of other people, rather than by doing the activities yourself.

In this article, I want to share my thoughts on why personal experience is not always a good teacher and my suggestions on when we could learn from personal experiences and when from vicarious.

Firstly, let’s see why a personal experience might not always be the best teacher?

The over-teacher

Imagine you were once duped by your business partner and you suffered a huge financial loss because of it. It took you almost a year and many visits to the court to recover those losses. Mental agony and reputational loss, irrecoverable.

And then you make a promise to yourself — “Never ever, ever again, do business with a Partner”

We all know that synergistic partnerships can create far more economic value than 1-man shows. But in your case, you might even turn down a partnership offer made by Elon Musk or Jeff Bezos. Why? Because your personal experience has taught you that ‘Never do business with a partner’.

Personal experiences don’t just teach, they over-teach. We must understand that our experience is no more significant than anyone else’s. But yes, it is not easy to under-weigh our personal experiences. After all, we are the center of our universe.

Not wide

There is a limit to our personal experiences. We cannot experience everything in our life-time. Our database of experiences will always be very small, and if we use only our tiny database as our teacher then we will surely mess-up.

This is the reason why sometimes we make judgments about an entire country based on our experience dealing with 3 people from that country. Afterall our database has only those 3 data points.

Humans learn through pattern formation, and that requires a lot of unbiased data points that cannot come only through personal experience.

Our database must include our own experiences and vicarious experiences. And more importantly, all of them should be given equal weight. Just because we know a healthy person who smokes a lot must not change our view on the hazards of smoking.

Having a large database of personal and vicarious experience is very helpful as one aberrant data point won’t change our view. But having a small database of overweighed personal experiences is a sure-shot path to distorted judgments.

Expensive mistakes

Learning from personal experiences is synonymous with learning from mistakes. However, some mistakes could be expensive.

You don’t have to start, run, take huge debt, go bankrupt, and shut-down an airline business to learn that leverage can be risky in a cyclical business with a lot of competitors and low bargaining power while dealing with customers. Michael Porter has already taught us this through his learnings of different businesses. Moreover, many airline entrepreneurs have already proved him right.

Delayed feedback

Learning from mistakes (personal experiences) happens when we realize, we made a mistake. And we realize it when we get feedback. However, not all mistakes in life come with an instant feedback mechanism. You can teach kids not to touch a burning candle by making them experience themselves as they will quickly receive the feedback. But you cannot teach them that cigarette smoking is hazardous by making them smoke. The feedback in the form of deteriorating health will come only after a few decades.

So then, what should we learn from personal experiences? Or should we learn only through vicarious experiences? The answer is definitely No. For some subjects, the only teacher who can teach you is a personal experience.

Imagine how difficult driving a car is! Your one leg is on the clutch, other toggling between brake and accelerator. Both your hands on the steering, with occasionally one hand being used for changing gears and at the same moment one of your legs pressing the clutch and other moving away from the accelerator, and both your eyes processing light coming in from the windscreen. And your ears processing the sound waves coming out of the speakers. Phew! No wonder why self-driving cars are so difficult to make.

Although so many decisions have to be made simultaneously, driving is so easy. We do it almost involuntarily. This is because a neural path has been formed — imagine this like a file lying on the desktop of your laptop. Your computer need not go into multiple folders to open the file. For our brain to build a neural path, the vicarious experience won’t help. We can only build such complex neural paths through trial and error (feedback faster the better).

This is the same for riding a bicycle, carpentry, or swimming. Reading about driving will never help us to drive a car. Personal experience is the only teacher.

I believe that to learn any subject its very important to learn from the right teacher. Sometimes, personal experience is the right one. But sometimes it is not. We must always strive to learn from the right teacher.

Thank you!