A toast to most critical element for business success: luck

The successful business leaders try to convey an aura that their success is due to hard work, ingenuity, and gutsy decisions. While I have no doubt that they would have done all these things, I can't help but ask "Doesn't every business founder?". Are there not thousands of smart, gutsy, ingenious, big-dream, hard working company founders out there right now who are equally capable of a success?

What the successful want is to perpetuate the survivor bias fallacy: that they must be special since they flourished in this cut-throat world and are on-top of the pyramid. and they do this for a number of obvious self-interests: publicity, privilege, easier to obtain funding, how-I-did-it book deals, etc.

We all have our favourite stories of business successes on the back of fortuitous events. Some of mine:

  • Bill Gates' mother on the board with the IBM CEO with Gary Kildall (CP/M) missing his meeting with IBM setting in motion the rise of Microsoft.
  • Richard Branson and the fledgling Virgin Airlines getting the approval to use Heathrow airport days away from bankruptcy.
  • My own...

Years ago, I founded a software company with enough success for people to be interested in purchasing it. My 3rd offer was a publicly-listed financial software company with a very complete financial software platform except one missing element which my functionality fit to a T. It was more than just a dollars/cents acquisition but a strategic one and they wanted me. Over the course of about a year, they raised the price until I could no longer say No. They did their due diligence, everyone was happy, and pretty much as my signature was still drying on the contract, the news from the US told of the collapse of Lehman Brothers and the start of the GFC.

Had I waited for this year plus a week, they would probably reconsidered due to this news, or at least, downsized the offer considerably. Not only that but the GFC destroyed the very business model which supported my company and if I didn't sell I would have most likely died a death of a thousand cuts.

But we would have never heard of Bill Gates or Richard Branson had the world behaved slightly different. The truth is Jeff Bezos is very replaceable at the top. He is the #1 du jour. If he had not survived the probable multitude of life/death moments that every startup has early on, we would be idolising someone else who would also be asking us to believe and praise their own herculean efforts. Bezos is on top now because there is a 100% probability that someone will. That's it.

Once you admit to yourself that luck plays the critical role in success then things become a lot easier; a lot simpler. Firstly, you stop believing that your destiny is all on your shoulders and the midnight oil must be burnt. You start to think of partnerships, joint ventures, win/win associations, anything to increase the probability of good fortune.

Secondly, rather than a myopic bull-in-a-china-shop view, you start looking at probabilities. For example, it is common that people who have one big success to look solely for that 2nd big success. Their expectations become higher. What is the probability that the luck of a big success comes to you again? You feel like you now have all the experience, skills, and network to kill it a 2nd time. The world is your playground. Sure it happens, just like you hear stories of people getting hit by lightning multiple times. Would be interesting to research the percentage of bankruptcies from people who have had a previous success. But you don't hear about them.

Thirdly, failure and success becomes less personal. We remain humble. Sort-of like the Rudyard Kipling poem. If I had waited another week to sign the buyout I would have probably never forgiven myself. But how was I supposed to know that the entire US MBS industry was caving in at that moment? Am I somehow smart because I didn't wait?

The business community would be very different without the survivor bias. While we would still celebrate the individuals who have reached the top, there would be less idolisation of them. We would recognise them as just people doing the actions that somehow eventually worked out. Good on them. Happy for them. And if we were more realistic about the role of luck in business successes, then the advise given out would be to increase your visibility in order to increase the chance that luck will favour you. This is why networking is so recommended. You want to meet more people and gain more visibility so that the chance of bumping into someone who wants your product/service at that time and is willing to sign a cheque becomes greater. You want a promotion at work? Become more visible to upper management so that on the off-chance that an upper manager luckily decides to retire or they themselves move up, that your name comes up.

So here's a toast to good luck. May you all be visited by it.

Eric Handbury
W: https://www.dbupdate.net
E: dbupdate.net@gmail.com

Comments

Post a Comment

Popular posts from this blog

Use Open Banking as the Source of Truth

One of the added benefits to Open Banking is the fact that we now have a public Source of Truth (SoT) for bank products (under the Products API). It's not perfect as banks will only ever do the minimum required by any regulations. But it is certainly enough to be useful. Your own Product Source-of-Truth In order for the banks to publish all this data on their products probably means, based on how big and complicated most banks are, that they would need to compile all this information from a variety of internal systems and data repositories. Not necessarily an easy job, both to compile this information and to maintain it's accuracy. But now that the banks have a central repository with all their product data, it's guaranteed to be up-to-date, and in a computer-software-friendly format (JSON), then possibilities open-up as to how they can use this data within their own internal systems. In fact it can be treated, for business purposes, as a single SoT database; an enterprise ...
Read more

Our issues with the Open Banking Product API

On the face of it, the Open Banking Product (OB) API is a great idea. Every banks product data in the public domain using a common and computer-friendly format updated in a timely fashion. However, like any standards implementation, the devil is in the details. It goes without saying that an API Standard must be usable by the intended audience for it's intended purpose. If the purpose is for parties to be able to download bank product information in a computer-friendly format to massage and display to consumers then the complete information must be available. The following is our list of issues that we feel deviate from this purpose. Note: Since we are in Australia, we are going by the  Consumer Data Rights . Lack of data totality There is nothing in the Standard that states a required minimum data-set. The Standard states that it is a complicated task to define a Standard which can encompass the vast range of financial product options, and we agree in principle but certainly not i...
Read more