Do you believe that you make your own luck? Is there a way to do business which will guarantee you success? Or is success determined by luck? Entrepreneurs have to have skills, and keep developing new ones; but even if you had all the skills in the world, are you destined for greatness? Do you need to make the right decisions to be successful? Do you take risks based on the belief in your abilities?
Or, do you believe that your situation is no more special than the next? Is there a chance that you will fail for one reason or another, maybe for a reason beyond your control? Are the real winners those that make sensible decisions and don’t risk too much?
I’ve just finished reading the book “Fooled by Randomness” by Nassim Nicholas Taleb. It’s an observation on how we are all taken in by success, and how it leads us to believe that there is a certain thing which caused it. The author asserts that just because someone is successful with a particular business, it doesn’t mean that what they did was the direct cause of the success, nor that they would be able to repeat their success in exactly the same way if they did it again. Observing someone’s success, we tend to attribute their success to something that they actually did, but as we are biased to only want to observe successful people, anything those people will do will seem to us to be certain to lead to success.
It reminds me of the stories I’ve read of people in Scotland living to be 100. Some attribute it to eating porridge every day. But is that really the cause? Sure, it might have helped them be healthy, but if a large proportion of people in Scotland eat porridge for breakfast anyway, a bias arises which leads to those reaching 100 falsely attributing their longevity to it anyway.
Another point the author makes is that you can only make good decisions in hindsight. No one knows at the time of an event what the effect of the event will be. (c.f. the butterfly effect: can a butterfly flapping its wings in India can cause a tornado in America?) Historically, things are interesting, but only after history filters out the noise. Most of what is happening now is just noise, trivial and unimportant. So you can’t always make the “best” decision at the time you need to make it. You can’t possibly know the outcome. You can only see afterwards if the decision you made was one which led to the outcome you desired.
The next book on my reading list is “Founders at Work”, by Jessica Livingston. I’ve read 2 chapters already, the stories of PayPal and Hotmail as start-ups. They were both really enthralling. Interestingly, the founders of both those companies attributed their success to luck, at least in part. I’d always been taught that one makes one’s own luck, but these very rich founders of some of the most valuable companies in history seem to think otherwise.
Another good point from the Founders book, was that the owners of Yahoo turned down Google for $1million, at a time when its owners would have gladly sold Google for that amount. Yahoo also didn’t compete with Hotmail because they didn’t think anyone would ever want to use web-based e-mail. So just because Yahoo are one of the most successful companies in the world, it doesn’t mean that everything they touch turns to gold.
This week I also listened to the SmallBizPod podcast. A recent show aired an interview with Ben Casnocha, another successful entrepreneur. He acknowledged that randomness plays a big part in his businesses too. He even tries to do random things himself, in order to be find success in random places. He might visit a conference on a topic which he has never had anything to do with before, or learn something totally new. The host of the podcast commented that he didn’t believe in luck, and, as the comments from the listeners demonstrated, most other people don’t neither. But maybe there’s something to it.
I think it’s important, and smart, to take this possibility of randomness into account. 50% of start-ups in the U.S. fail in their first year, and 95% in the first five years. That’s an incredible risk. Obviously no one starts a business believing that they are going to fail, but most of them do. It’s really hard just to survive. But I don’t want to just be a survivor, I want to be a winner.
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