The Johns Hopkins University
Thursday, May 22 | Homewood Field
[Note: Prepared text. Not checked against
To our honorary degree recipients and our new members of the Society of Scholars, to
our trustees and alumni, faculty and staff, to our parents, family members and friends,
but most of all, to our brand new graduates, I bring greetings on behalf of all of Johns
By ancient tradition at the great universities, degree candidates did not receive their
academic credentials until they first passed a grueling and sometimes humiliating public
examination. The exam was held before a committee of dour and humorless
octogenarians, and usually conducted in an obscure dead language.
Eventually this procedure was recognized to be cruel and excessive punishment, even
for university students. The tradition ended. But there still remained the need for some
last excruciating rite of passage that all graduates must suffer before receiving their
Hence, the commencement speech.
This morning you may consider me not as your university president, but as the one last
calcified tradition standing between you and your family, your friends, your fun, your
freedom, your future.
With that thought planted foremost in my mind, I decided that today I would tell you a
story you have never heard before, since it was something that happened to me, in my
past. I hope it will provide you with a useful insight in your future.
This morning I want to tell you how hedge fund managers and cancer survivors can
sometimes be alike.
In 1984, while I was a radiologist and professor at Stanford University, I had the
opportunity to take a
six-month sabbatical to Italy, teaching young physicians about research in advanced
imaging methods. It was truly one of our family's most memorable experiences. And as
an aside, I highly recommend spending a month or two (or more) in Italy, should you
have the opportunity to do so.
One day, just as I was getting home from my office at the University of Trieste, I
received a telephone call from a colleague of mine who was a venture capitalist in
"Bill," he said, "would you be willing to take a short trip to Athens? There is a doctor
over there treating patients with advanced cancer who has a cure. It is miraculous, and
we want to purchase the rights to his anti-cancer drug."
"O.K.," I said, "I'd be happy to go, but first I'd like to stop off at the North Pole and say
hello to Santa Claus."
My friend was not amused by my humor or my skepticism. "Don't be so sarcastic," he
said, "this is for real. My best friend had advanced brain cancer, was given only a
couple of months to live. After having been to all the best places in the U.S. for cancer
therapy, he went over to see this Greek physician, and now he is 100 percent
I tried everything I could to convince my colleague that this was a waste of my time and
his firm's money for me to go investigate. But based upon his friend's remarkable
remission, he was adamant that I go.
Since I had never been to Greece, a day or two in Athens with a chance to see the
Acropolis and Parthenon sounded pretty good. So the next day I bought an airline
ticket, and away I flew.
As soon as I arrived, I was shuttled by limo over to this doctor's office. I sat in a chair
next to him while he examined a series of patients. He had previously taken blood
samples from each of them. He claimed he could determine through blood work if they
had active cancer, and which organs were involved in the spread of the disease. This
was an astounding claim in and of itself, considering this was 1984, well before we
knew anything about the existence of cancer tumor markers or telltale genetic
After giving the patients the good or bad news about their blood test results, the doctor
would pull out a very large syringe filled with a clear solution and inject it into their
arms. The patients told me they would feel a warm glow all over their body for a minute
or so after the shot. According to the doctor's reckoning, some of these patients no
longer had active cancer. Nonetheless, he gave them the injection prophylactically.
After the last of the morning's patients was seen, we took a break for lunch, during
which I interviewed the doctor. Did he have records on all of his patients? Could he tell
me how many were living and how many died? Could he show me imaging studies such
as X-rays, ultrasound, and CAT scans both before and after treatment?
The answer to these and many more questions was 'no' — he had no records, no
systematically collected data, no comparison studies.
Next, I asked if I could see his laboratory where he synthesized the anti-cancer drug.
This discussion took the form of a protracted series of negotiations. First he said no.
Later he said OK but with certain restrictions, and so on. Finally, at the end of the day I
was told we would visit his laboratory. However, for reasons he was not anxious to
disclose, we could not be seen entering the building which housed his laboratory.
We ended up climbing through a back window, going up the back staircase to the top
His laboratory looked like the coffee room in my office. There was a hot plate, some
glassware, and little else, with no evidence of any chemical, scientific or biologic
activity having taken place there in the past decade.
Clearly this doctor was a fraud.
I wanted to take the limo straight back to the airport and hop on the next plane back to
Italy. But it was already too late to catch the last flight of the day. Instead, I got a tour
of the Acropolis and was invited to interview a number of the doctor's patients the
following morning before returning home.
The next day the doctor lined up meetings with a dozen patients undergoing treatment.
Included in the group were two mothers of children afflicted with terminal cancer. One
by one, each of them told me the story of their illness, how they had come to Greece for
treatment, and the results. And I have to tell you, the stories sounded inspirational.
I discovered that all of the patients were from the U.S. Later, I learned this was because
the doctor had lost his Greek medical license, so he could not see patients from his own
country any longer. All the patients I interviewed had just high school or junior college
educations. Most were from the Bible belt of the South. They were honest working
people, stretched pretty thin to make recurrent trips to Athens for treatment. But all of
them had been to some of the very best cancer hospitals in the U.S., where they had
received multiple treatments before being told that their cancers were beyond hope. All
were told to go home to put their affairs in order for the limited time before they would
You might think these people gullible. But how many of us, upon receiving this kind of
death sentence, would not consider grasping at any straw that might provide hope of a
cure, or at least hope of stabilizing the disease to give a little longer life? How many
parents here today wouldn't do anything to save your child?
Each of the patients told me about coming to Greece feeling like they couldn't go on
another week. But after treatment they were feeling remarkably better — with
more appetite, more energy, and renewed hope.
What was I to make of this? I began thinking maybe I could have misjudged. Maybe
this doctor's diagnostic and treatment methods were truly miraculous.
Most compelling of all were the stories told by the mothers of the two children with
cancer. Sometimes in life we encounter powerful reasons to believe things that we
know can not be true.
Sad to say (and it is sad, because who doesn't want to stumble upon the cure for
cancer?) in the end, reason prevailed. Having looked at all the evidence, and especially
the lack of evidence, I concluded that this doctor was a fraud and his cancer treatment a
sham. That in itself might not have been upsetting, had it not been so clear that the
doctor was taking advantage of the fears of his patients by extracting large sums of
money in exchange for false hope.
I headed back to Italy, happy to no longer be in the company of such a charlatan. I
called my venture capital colleague, and told him very clearly: "This is a sham. Do not
He thanked me politely. I later found out that he ignored my advice and went forward
with an attempt to license the doctor's drug. But they were never able to reach
agreement on licensing terms, so the venture capital firm was spared a miserable
economic failure. And my colleague's friend — the one who had seemingly been
cured of his inoperable brain tumor — did not fare well. Sadly, he died of his
cancer a couple of months after my trip to Greece.
So, what is the lesson here? Why did I conclude that the treatment didn't work when
patient after patient sat across from me and assured me from personal experience that in
fact it did?
There is an important reason, and a thought I want to share with you this morning: I
recognized that I was seeing only the survivors. The people who enthusiastically told be
about their cures were those who were well enough to get on an airplane and fly for
many hours from the U.S. to Greece. They were the lucky few. All the others —
the ones who were not doing so well, or who had already died — could not make
the trip to be considered. So I was interviewing a highly biased selection of
This phenomenon is called the survivorship bias, and it occurs in many fields beyond
cancer treatment. Nassim Taleb, in his book Fooled by Randomness, makes a
compelling case that many celebrated financial gurus — managers of hedge
funds and mutual funds and editors of pricey financial newsletters — are in fact
lucky survivors. They are individuals who got it right, and made piles of money, largely
through chance. His lesson from Wall Street and mine in Greece are the same: Don't
believe the advice you get from lucky survivors.
But it's hard to know who they are. Our problem is we too often mistake blind luck for
consummate skill. Today's brilliant strategist might tomorrow prove to be but a lucky
fool, as we are seeing in financial markets across the globe right now.
Survivorship bias is a problem that extends far beyond cancer patients and hedge fund
managers though. I have, in fact, come to conclude that the most pernicious and
dangerous survivors are often ideas.
People have a tendency to hold tight to wrong ideas, even when there is ample evidence
to the contrary. Julius Caesar observed this two thousand years ago, when he wrote that
men "willingly believe what they wish."
An example from my own schooling: When I was a medical student, we were taught
that ulcers in the stomach were due to too much acid secretion. Ulcers were the result of
acids — this was the established dogma.
It was a concept that survived, even in the face of contrary evidence.
In 1960, a Japanese physician who had gastric ulcers published a biopsy of his stomach
in a physiology textbook If you look at the photograph in the text there are some little
funny spiral shaped things around the site of the ulcer. My guess is that probably 10,
000 people looked at that picture over a period of more than 20 years. No one, though,
seemed to take much notice of the little spirals.
Then in the 1980s this crazy doctor in Australia, Dr. Barry Marshall, wondered if
perhaps stomach ulcers are caused by bacteria. But even a first year medical students
could tell him why that was a dumb idea. As everybody knows, bacteria can't grow in a
high acid environment.
That's always a tip off. Whenever they say "as everybody knows" beware what
Dr. Marshall had this theory — this crazy idea — and he kept trying to
culture bacteria out of stomach ulcers. He tried and tried and tried, and he failed and
failed and failed.
Finally, through persistence and some good luck, he was one day able to culture these
bacteria — little spiral shaped bacteria. He proved that garden variety stomach
ulcers were due to bacteria, which today we treat — successfully — with
If you were to go back to that 1960 article of Dr. Ito from Japan, you will clearly see the
spiral-shaped bacteria hiding in plain sight where everyone could see them. And yet, the
belief that ulcers came from too much acid survived.
Knowing about survivorship bias means knowing that it's OK to question ideas and
beliefs other people insist are true.
This is what makes it so exciting this morning to be a student graduating from Johns
Hopkins University. As a famous Nobel laureate once said, "Discovery often consists of
seeing what everyone else has seen, but thinking what no one else has thought."
You are exceptionally well prepared to do this. In so much of our world — in the
sciences and humanities, business and politics, medicine and government —
there are mistaken beliefs that have survived all this time largely through force of habit.
They are spirals of misinformation, hiding in plain sight.
Today, the faculty has certified you, the deans have approved you, and I am now
— at last — about to set you loose upon the world. Members of the
Classes of 2008: go forth; go far; ask the tough questions; challenge stale beliefs. We
are immensely proud of what you have done, and even more, of who you will soon
Godspeed graduates, and may all of you fare well on the journey ahead.