That doesn't actually apply here, though it might if it were worded: 'Are all successful startups just lucky?'. 'No' is not a valid answer to a 'What if?' question.
Of course they are lucky. Luck is not the only thing, you really do need something useful and it has to work so you need to know your audience, but luck is a big part of it.
You have to be in the right place at the right time. That is all luck.
This, to me, implies an extraordinary claim of prophetic insight.
The person who "recognizes" the opportunity is still doing a lot of guesswork, and good luck has as much to do with his recognition of the opportunity as it does anything else.
Networking and having a head start are also key factors--show me a successful tech startup and I'd lay better-than-even odds on the founder(s) coming from a life of (relative) privilege (and also being white, if in America). What could be luckier than being born to the "correct" parents?
Though the right place at the right time is almost never at home watching TV. Getting out and meeting a lot of people greatly increases the chance that you will be in the right place at some point.
Bizarre - the last link I was on was a random ESPN quiz with UVa star Joe Harris in which that quote was one of the questions. (I realize this is a pretty meaningless and useless comment, but seeing this quote 2 times in less than 10 seconds was too much not to mention).
I'm unable to find a definitive reference, but Gary Player (golfing legend) is also attributed with the quote: "The harder I practice, the luckier I get." Perhaps that's why it was on ESPN.
Pretty sure George Simmons has this quote of Player's on one of the chapter pages in his "Precalculus Mathematics in a Nutshell" book.
The upshot is that its origin is unknown, but goes back at least to a Walter Winchell column from 1949. Gary Player used it and became associated with it. The attribution to Jefferson is nonsense, of course.
It was just because Thomas Jefferson said it and Joe Harris goes to the University he founded, it's just bizarre that I saw it 2 times in less than 10 seconds.
Is it bizarre? Given the number of people on HN, the number of things you're likely to read -- it seems inevitable that "bizarre" coincidences will certainly happen.
Critics said he won many battles simply because of luck; Napoleon responded, "Give me lucky generals," aware that "luck" comes to leaders who recognize opportunity, and seize it.
Seems like this is kind of a parallel to his "lottery" analogy - doing those things is sort of like buying another ticket. Your chances might be better but it doesn't mean you're going to win.
It keeps me up at night that you could work your entire life in startups, do everything right and even work on good ideas, and you could still never really succeed. Then I realize that success (in terms of an exit or something similar) can't be the goal: I work on startups because I like building things (edit: things that have the potential to have a tremendous impact) and I want to change the world.
Changing the world doesn't mean changing EVERYTHING about the world, or the entire world, just a part of it. I want to make huge changes, but you also have to find a level of satisfaction in making smaller changes
Well, of course it's fickle to define what exactly constitutes changing the world. As per the butterfly effect, anything could be said to change the world, but let me attempt a definition: I'm thinking it has to be major (substantially different from what was before and affecting a lot of people, most of whom are and remains perfect strangers to you), deterministic (ie. what you did caused the change) and lasting (still identified as a change by strangers at least a few years after the fact).
Making that kind of change is really quite difficult and requires both luck and financial success (which in itself requires luck).
That said, I think it's perfectly honourable to be a good guy and do a good job without changing the world. My argument is merely that in my view, changing the world is a quite higher bar than "just" being successful.
> Then I realize that success (in terms of an exit or something similar) can't be the goal: I work on startups because I like building things and I want to change the world.
While the above might be a commendable personal goal, startups are indeed created for their possible exit value. The vision, the tech and the kind of things you end up working on are commanded or at least heavily influenced by these circumstances. In that sense there isn't too much difference from working for an innovative established company (except you don't get a shot at the money pot).
The startups I work on have that as a top level goal, absolutely and 100% - as a person, you have to focus on and reward the process as much as the potential result, or it won't work. Paul Singh is fond of saying "we always celebrate the result, but we need to celebrate the process". Putting more people in the right process will produce more positive results, even if not all those people can achieve the massive results we're learning for.
I don't think "and of course, I also have to pay the bills" is an instructive part of anyone's life mantra. "The bills" are whatever you decide they're going to be - there's a very low fixed cost to staying alive, what you decide you need beyond that is up to you.
I have no trouble paying the bills now, but I've gone through times working on a startup where I lived on less than $4 a day, for example, without any regrets. That's not my life now, but the point is my life's goal isn't to maintain the high standard of living I enjoy now, it's to build things, try to change the world, and be happy. Having a decent amount of money does help the third thing in that list, but not without the other two.
It's great that you are in this situation. When its only you, well it comes down to the lowest denominator for living costs.
I think there is a lot of people that didn't start young with the entrepreneurship bug and ended up married with kids. With these people, paying the bills has a direct and noticeable impact on their family. I would say there is a lot of people in this situation and the dynamics of going "all in" with their idea just doesn't work the same.
I don't think you would argue with what I am saying at all, but there are many people that have obligations to others and we are not all single and only responsible for ourselves.
Being in this situation myself, I look at it as a optimization problem. Given the constraints I have, how can I optimize my situation to be successful with a company.
I understand that, and I'm trying to be as general as possible: paying the bills isn't part of your world view, what "paying the bills mean" is shaped and reified BY your worldview and goals. That's all I'm saying: "that's great, but you still have to pay the bills" doesn't have anything to do with a mantra by which you live your life, it's something you fit around and is shaped by what is core to how you want to live.
What if successful startup founders have high IQs? Or particular personalities making them persevere? It's entirely possible that all those methods and practices count for nothing or are completely eclipsed by IQs, luck, networks...
This argument is being made against education. How much education really matters and how much outcomes are just a matter of raw cognitive ability of students and (self-)selection?
Truth is that we don't know. So most people choose to follow in the footsteps of those who have demonstrable achievements and hope for the best.
BTW This might be the first time I'm seeing a ghost blog in the wild. Just browsing the Internet, not looking at ghost blogs specifically.
Well, according to statistics (see Kahneman) CEO 'performance' has very low correlation with perceived CEO performance. Also, past success has low correlation with future success. In other words, there isn't really a 'CEO skill', or a 'successful manager' skill. In other words, company success is not repeatable given the same set of people. In other words, yes, luck is extremely important.
There is no moral of the story other than: failure does not mean that you didn't do well.
Yes, we (should) all know that but somehow we are still deluged with books and blog posts from these lucky few telling the rest of us how to do it. Worse yet too many are taking it as gospel when they really should just do it their own way.
We are deluged by these narratives because they are easy to understand. Same thing with a lot of money is synonymous with success; money is easy to quantify.
When we start talking about randomness and luck, my sense is, that people begin to feel uncomfortable because it makes the world a much more less understandable place.
"There is no moral of the story other than: failure does not mean that you didn't do well."
While this lesson is pretty well internalized, I think there's some difficulty with the converse: just because you succeeded, doesn't mean what you were doing was right. Life is contingent.
Are those statistics for startups or Fortune 500s? Because the way I see it, at a small scale you are much more in control of your own destiny simply due to high agility and low communication overhead.
Among the best, luck is more important for winning than between best and mediocre (where skill is more important).
I thought this was common knowledge after being described in so many pop.sci. books like black swan,etc.
The problem is that it is hard to give each project any real chance of success without spending your full effort on seeing it through. A strategy like this will make you abandon your good projects at the first resemblance of a road block.
This has been on my mind lately as well, for some reason. That, and the point of this story http://sivers.org/horses which is basically that even after the fact, it's really hard to know anything[1].
I don't know if it's just from growing older but I feel a lot more humble when looking at peoples ideas and actions than earlier. I literally feel that I have no clue whether they will succeed or not whereas I used to quickly get quite strong feelings in one direction or the other. In one way, this feels more mature and zen but at the same time, it annoys me a bit. I feel that conviction is the trait of a leader and something I need to possess if I want to convince anybody to engage in my projects. Maybe I'll just practice faking it and hope they didn't read this comment :-)
Edit: [1] One of my favorite examples of this is in Felix Denis' book How To Get Rich where he describes that the problem with Apple is Steve Jobs. This was written 7 years ago when Apple was struggling and it looked like Steve Jobs was driving it into the ground with his stubbornness. (The book is excellent by the way, in spite of the tacky sounding title)
My intuition is that it's very random. A business professor and economist (Luigi Zingales) once commented that lots of firms tend to find new ideas all at the same time. When the market is ripe and the arrows point in the same direction, everyone seems to find it. Execution is important, but a lot of randomness hits the process too.
Thank you for posting a link to that story. It reminds me a bit of Boethius:
"It's my belief that history is a wheel. 'Inconstancy is my very essence,' says the wheel. Rise up on my spokes if you like but don't complain when you're cast back down into the depths. Good time pass away, but then so do the bad. Mutability is our tragedy, but it's also our hope. The worst of time, like the best, are always passing away."
IMHO, luck is only a factor in success. Failure is much more frequently pre-determined. For example, a startup with a great idea and a great execution still might fail, while a startup with a terrible idea or poor execution will almost definitely fail. I think of startups as needing to be not good but good enough: if the idea and execution are good enough, other factors start mattering. However, if they are not good enough, then no amount of luck will change that in the long run.
For example, the Color app had all the resources (funding, contacts), but the basic value proposition was just not there. They never had a chance. OTOH, Turntable.fm had a great product, but as luck would have it, they did not make it. Either the timing wasn't right or something else, but despite everything they are having to pivot.
To echo the monkeys writing Shakespeare analogy, if a hundred startups are throwing darts at a dartboard, there's a decent chance that at least one of them will hit the bullseye.
Where network effects are involved, they may not even need to hit the bullseye - just getting closer to the bullseye than anyone else may be enough.
High growth start-ups are nothing but luck. How does a company built in a garage with practically no marketing budget get such high growth numbers in the initial stages (facebook, twitter, snapchat, instagram,etc)? They manage to go viral. Pure herd mentality.
I know it's not the point of the article, specifically, but it's very difficult to draw any startup conclusions based on a game company. Games are notoriously difficult to make into successful products, even more-so than your average startup.
That said, I do think the author has a lot of good points. Surely there is a portion of "randomness"/luck, but there's also a healthy dose of focus & determination that make things work.
To play a bit of devil's advocate, I do feel that in the last few years the idea of "success" has somewhat diverged from what it used to mean. Is Twitter successful? To their founders & early investors, certainly they are. In 5 years, will Twitter still be relevant & a worthwhile investment to their millions of new stockholders?
Was Zynga "successful"? Again: to early investors, they were wildly successful. They were able to dump their shares onto a greater fool.
To me, those are two examples of "lucky" startups. A startup like Salesforce is less "lucky" and more a well-executed product. It's not as sexy as a Facebook/Twitter/Zynga, but it's a solid business addressing a specific need. It isn't reliant on "scale massively and figure out a sustainable business model later", which to me is what the aforementioned companies are.
To paint a picture, some startups have fisherman tactics: throw as wide of a net as possible, catch as many things as possible and some small portion will be valuable. These would be startups to whom luck would seem to play a larger role (in my opinion).
Others are more focused: identify a specific set of targets to go after, and hunt them down. This would be more like Salesforce. To me, these are the startups that don't rely as much on luck.
I agree with you, I don't know the Saleforce history but I'm quite sure that at the beginning of the company, they had lot of luck. I'm sure at least 10 other companies tried to address the same problem on the same market and failed.
Execution is mandatory but lot of the execution is also based on lot of uncontrollable parameters, hire the right guy at the right time.
Look at Evernote for example, they were almost bankrupt even if the execution was good, the market here and so on. It's a pure luck if the are still there and so strong.
Have you heard of the concept of increasing your luck surface area? If my memory serves me correctly is that all of the work, networking, etc. you do the more opportunities you have to get lucky. You can't have chance encounters in your basement. You can't stumble onto investors for a product that doesn't exist.
I think it goes along the lines of the quote from The entertainment industry that every overnight success is a result of years of hard work (paying your dues in the form of acting/music lessons, community theater/coffee house performances, tons of auditions).
The game industry is a special case because it is at an intersection between technology and entertainment. Success is very difficult to predict or repeat. You can't just fill a need in a niche because any other game, really any other form of entertainment, is a substitute for your product.
Luck and skill tend to have the same distributions (generally a normal curve). As an outsider looking in, it is difficult to tell the difference. In fact, it can be difficult as an insider as well. We may have a plan, and attribute our success, or failure, to the plan rather than to luck. Or something could look like luck to an outsider because they don't understand all of the intricacies that go into making a system work.
If successful startups are just lucky, I have some questions:
- What's the expected monetary return for someone wishing to enter the startup game? In particular, is it positive or negative? For example, the usual platitude "you miss 100% of the shots you don't take" also applies to the lottery, where the expected return is negative. Could it be the case that rational people just shouldn't do startups?
- What's the expected return after adjusting for diminishing marginal utility of money? For example, a person with 2 million dollars is not 2x happier than a person with 1 million. This increases the impact of the previous point: even if the decision to a startup gives you positive expected money, it could still lead to negative expected change in happiness. Most of the monetary wins go to a lucky few, which doesn't raise their happiness enough to compensate for the unhappiness of the unlucky many.
- What's the expected return if you take the previous two points into account, and also compare against the next best thing you could've done instead of a startup? For example, is there anyone on Earth who's deciding whether to do a startup and who wouldn't get higher expected money, happiness... everything, just by getting hired at Google?
- Given the above points, is it ever morally okay to advise someone to do a startup? What advice would you give people if you were truly, honestly immune to survivorship bias?
It's not random in the sense that "anybody who tries has an equal chance at success." The prior you're missing is a person's ability, current mind, and biological mental capacity. Some people are just waaaaaaaaay smarter than other people. "All people are created equal" is a fantasy when you reach extremes (sport abilities, mental abilities, creative abilities).
Now, once you have a baseline genius startup mind, no success is guaranteed anyway. Twitter would be nothing without an Internet-famous founder and techcrunch hyping it up constantly its first few years of existence.
That's not saying you can't be rich. Anybody can always get dumb success (especially these days) with things like advertising or affiliates or ebooks.
The money doesn't enable your happiness — the freedom money provides enables your happiness. You can substitute being rich with having a job/life you don't hate plus a good salary.
"That's not saying you can't be rich. Anybody can always get dumb success (especially these days) with things like advertising or affiliates or ebooks."
People that are doing this should speakup but I don't believe "anybody" can do the above. Your statement is general to a certain extent and could apply to many areas but I don't think successful people in these areas are any less smart, hardworking, determined than startup founders.
I know people who write really low quality populist fiction on the Amazon Kindle store and bring in over $3k/month. Over time, the old books still sell, so you have recurring revenue that gets compounded as time goes on.
There are other examples, but that's the easiest to understand.
If successful startups are just lucky then you should have as many startups as you can to get more chance at winning. That could mean focusing on quantity instead quality. Also that can be the reason behind MVPs: do something minimal that works then move onto the next project.
The only startups that are "lucky" are those that never validate before development and still find traction.
I define validating as getting 3 paying customers before building a viable app.
You could have built an abridged or simpler version of your game and asked people to pay you to play it. If that posed problems, you could have pivoted to a different premise for the game.
181 comments
[ 3.1 ms ] story [ 221 ms ] threadYou have to be in the right place at the right time. That is all luck.
You also have to recognize the opportunity and take it. That's what "making your own luck" is all about - exploiting opportunities to their full.
The person who "recognizes" the opportunity is still doing a lot of guesswork, and good luck has as much to do with his recognition of the opportunity as it does anything else.
Networking and having a head start are also key factors--show me a successful tech startup and I'd lay better-than-even odds on the founder(s) coming from a life of (relative) privilege (and also being white, if in America). What could be luckier than being born to the "correct" parents?
-- Thomas Jefferson (apocryphal; see [0])
[0]: http://www.monticello.org/site/research-and-collections/i-am...
Pretty sure George Simmons has this quote of Player's on one of the chapter pages in his "Precalculus Mathematics in a Nutshell" book.
http://quoteinvestigator.com/2010/07/14/luck/
The upshot is that its origin is unknown, but goes back at least to a Walter Winchell column from 1949. Gary Player used it and became associated with it. The attribution to Jefferson is nonsense, of course.
(wikipedia - Napoleon)
--Louis Pasteur
[1] http://en.wikipedia.org/wiki/Segway_PT#Early_history_and_pre...
-- leveling up in Morrowind (no idea who to attribute this quote to)
You do need to be good at marketing. You do need to get product-market-fit quickly. You do need to have a good product, and so on.
The better you are at these things, the less luck is required. But you cannot get the amount of luck needed down to zero.
I like what Seth Godin has to say on failing until you succeed:
http://www.youtube.com/watch?v=fDtkBsWgzWE
And this article by Scott Adams:
"What's the best way to climb to the top? Be a failure."
http://online.wsj.com/news/articles/SB1000142405270230462610...
I love the quote "if I fail more times than you I win."
Making that kind of change is really quite difficult and requires both luck and financial success (which in itself requires luck).
That said, I think it's perfectly honourable to be a good guy and do a good job without changing the world. My argument is merely that in my view, changing the world is a quite higher bar than "just" being successful.
While the above might be a commendable personal goal, startups are indeed created for their possible exit value. The vision, the tech and the kind of things you end up working on are commanded or at least heavily influenced by these circumstances. In that sense there isn't too much difference from working for an innovative established company (except you don't get a shot at the money pot).
That's nice, but you also need to be able to pay the bills, right?
I have no trouble paying the bills now, but I've gone through times working on a startup where I lived on less than $4 a day, for example, without any regrets. That's not my life now, but the point is my life's goal isn't to maintain the high standard of living I enjoy now, it's to build things, try to change the world, and be happy. Having a decent amount of money does help the third thing in that list, but not without the other two.
I think there is a lot of people that didn't start young with the entrepreneurship bug and ended up married with kids. With these people, paying the bills has a direct and noticeable impact on their family. I would say there is a lot of people in this situation and the dynamics of going "all in" with their idea just doesn't work the same.
I don't think you would argue with what I am saying at all, but there are many people that have obligations to others and we are not all single and only responsible for ourselves.
Being in this situation myself, I look at it as a optimization problem. Given the constraints I have, how can I optimize my situation to be successful with a company.
This argument is being made against education. How much education really matters and how much outcomes are just a matter of raw cognitive ability of students and (self-)selection?
Truth is that we don't know. So most people choose to follow in the footsteps of those who have demonstrable achievements and hope for the best.
BTW This might be the first time I'm seeing a ghost blog in the wild. Just browsing the Internet, not looking at ghost blogs specifically.
I moved to ghost 2 days ago and for the moment, it works quite nicely!
There is no moral of the story other than: failure does not mean that you didn't do well.
When we start talking about randomness and luck, my sense is, that people begin to feel uncomfortable because it makes the world a much more less understandable place.
While this lesson is pretty well internalized, I think there's some difficulty with the converse: just because you succeeded, doesn't mean what you were doing was right. Life is contingent.
Just because your company ran out of money and ceased to exists doesn't mean you failed.
Just because your company grew very quickly, IPO'd at a high price, and had consistently large profits for many years, doesn't mean you succeeded.
I don't know if it's just from growing older but I feel a lot more humble when looking at peoples ideas and actions than earlier. I literally feel that I have no clue whether they will succeed or not whereas I used to quickly get quite strong feelings in one direction or the other. In one way, this feels more mature and zen but at the same time, it annoys me a bit. I feel that conviction is the trait of a leader and something I need to possess if I want to convince anybody to engage in my projects. Maybe I'll just practice faking it and hope they didn't read this comment :-)
Edit: [1] One of my favorite examples of this is in Felix Denis' book How To Get Rich where he describes that the problem with Apple is Steve Jobs. This was written 7 years ago when Apple was struggling and it looked like Steve Jobs was driving it into the ground with his stubbornness. (The book is excellent by the way, in spite of the tacky sounding title)
"It's my belief that history is a wheel. 'Inconstancy is my very essence,' says the wheel. Rise up on my spokes if you like but don't complain when you're cast back down into the depths. Good time pass away, but then so do the bad. Mutability is our tragedy, but it's also our hope. The worst of time, like the best, are always passing away."
I forget where I read this; it may have been on Twitter, but it could apply to startups and probably many other facets of life.
Edit: Found the source. https://twitter.com/MattRix/status/401072871323086848
For example, the Color app had all the resources (funding, contacts), but the basic value proposition was just not there. They never had a chance. OTOH, Turntable.fm had a great product, but as luck would have it, they did not make it. Either the timing wasn't right or something else, but despite everything they are having to pivot.
Where network effects are involved, they may not even need to hit the bullseye - just getting closer to the bullseye than anyone else may be enough.
That said, I do think the author has a lot of good points. Surely there is a portion of "randomness"/luck, but there's also a healthy dose of focus & determination that make things work.
To play a bit of devil's advocate, I do feel that in the last few years the idea of "success" has somewhat diverged from what it used to mean. Is Twitter successful? To their founders & early investors, certainly they are. In 5 years, will Twitter still be relevant & a worthwhile investment to their millions of new stockholders?
Was Zynga "successful"? Again: to early investors, they were wildly successful. They were able to dump their shares onto a greater fool.
To me, those are two examples of "lucky" startups. A startup like Salesforce is less "lucky" and more a well-executed product. It's not as sexy as a Facebook/Twitter/Zynga, but it's a solid business addressing a specific need. It isn't reliant on "scale massively and figure out a sustainable business model later", which to me is what the aforementioned companies are.
To paint a picture, some startups have fisherman tactics: throw as wide of a net as possible, catch as many things as possible and some small portion will be valuable. These would be startups to whom luck would seem to play a larger role (in my opinion).
Others are more focused: identify a specific set of targets to go after, and hunt them down. This would be more like Salesforce. To me, these are the startups that don't rely as much on luck.
I agree with you, I don't know the Saleforce history but I'm quite sure that at the beginning of the company, they had lot of luck. I'm sure at least 10 other companies tried to address the same problem on the same market and failed.
Execution is mandatory but lot of the execution is also based on lot of uncontrollable parameters, hire the right guy at the right time.
Look at Evernote for example, they were almost bankrupt even if the execution was good, the market here and so on. It's a pure luck if the are still there and so strong.
I think it goes along the lines of the quote from The entertainment industry that every overnight success is a result of years of hard work (paying your dues in the form of acting/music lessons, community theater/coffee house performances, tons of auditions).
- What's the expected monetary return for someone wishing to enter the startup game? In particular, is it positive or negative? For example, the usual platitude "you miss 100% of the shots you don't take" also applies to the lottery, where the expected return is negative. Could it be the case that rational people just shouldn't do startups?
- What's the expected return after adjusting for diminishing marginal utility of money? For example, a person with 2 million dollars is not 2x happier than a person with 1 million. This increases the impact of the previous point: even if the decision to a startup gives you positive expected money, it could still lead to negative expected change in happiness. Most of the monetary wins go to a lucky few, which doesn't raise their happiness enough to compensate for the unhappiness of the unlucky many.
- What's the expected return if you take the previous two points into account, and also compare against the next best thing you could've done instead of a startup? For example, is there anyone on Earth who's deciding whether to do a startup and who wouldn't get higher expected money, happiness... everything, just by getting hired at Google?
- Given the above points, is it ever morally okay to advise someone to do a startup? What advice would you give people if you were truly, honestly immune to survivorship bias?
Now, once you have a baseline genius startup mind, no success is guaranteed anyway. Twitter would be nothing without an Internet-famous founder and techcrunch hyping it up constantly its first few years of existence.
That's not saying you can't be rich. Anybody can always get dumb success (especially these days) with things like advertising or affiliates or ebooks.
The money doesn't enable your happiness — the freedom money provides enables your happiness. You can substitute being rich with having a job/life you don't hate plus a good salary.
People that are doing this should speakup but I don't believe "anybody" can do the above. Your statement is general to a certain extent and could apply to many areas but I don't think successful people in these areas are any less smart, hardworking, determined than startup founders.
There are other examples, but that's the easiest to understand.
I define validating as getting 3 paying customers before building a viable app.
You could have built an abridged or simpler version of your game and asked people to pay you to play it. If that posed problems, you could have pivoted to a different premise for the game.