Why you need to get lucky

Our narrative as a capitalistic society is this - to the victors go the spoils. And those victors are of course, the best warriors in that field.

As a result, we like to focus on controlling our outcomes. It’s something most of us strive to do. We want to maximise our chances. We want to believe; that our talent, our skills, our product, our startup, is the only reason we do or do not make it.

We also want to believe in some sort of justice. Some meritocracy feels like a fundamental requirement to sustain hope - an essential part of what it means to be human.

But the narrative is a lie. A meritocracy this is not. And Lady Luck has a fair bit to do with that.

Where you’re born, who to and, where, have a much bigger impact of your success than skill or talents you possess. Not to mention gender, sexual orientation and race.

When you’re born matters too. Gladwell found this with sports and it extends to the boardroom - summer babies are less likely to make it to have that CEO title before their name. Something as inoffensive as the month of your birth has potential ramifications for the rest of your life. Prospective parents, take note - best keep it in your trousers over October/November.

It’s not to say that we’re destined to be victims to our birth, rather to show how much seemingly innocuous events can have a disproportionate impact on our life.

Even if you accept the above as true, there’s a good chance you think it’s limited in it’s affect on you. That on balance, the best people (read - you) the most talented, rise to the top.

Unfortunately, life’s not fair. If Donald Trump wasn’t proof enough that luck trumps talent, there’s science to back it up.

Two Italian scientists ran a toy mathematical simulation. A bunch of ‘agents’ started out with various levels of talent given to them. They went about their simulated business, being exposed to various levels of luck or misfortune as they went.

Their findings? "The most talented individuals were rarely the most successful. In general, mediocre-but-lucky people were much more successful than more-talented-but-unlucky individuals. The most successful agents tended to be those who were only slightly above average in talent but with a lot of luck in their lives."

This gets even more interesting when you take into account that these lucky breaks compound.

"We tend to give out resources to those who have a past history of success, and tend to ignore those who have been unsuccessful, assuming that the most successful are also the most competent."

It’s not just talent this concept works for.

Meet, the concept of increasing returns.

"Increasing returns are the tendency for that which is ahead to get further ahead, for that which loses advantage to lose further advantage. They are mechanisms of positive feedback that operate—within markets, businesses, and industries—to reinforce that which gains success or aggravate that which suffers loss."

This idea of increasing returns is far more pervasive than we like to think. So even in business, if you catch a lucky break, an inferior product can become the gold standard.

QWERTY, the standard keyboard for English speaking nations (and more) was designed to slow typists down, so they could prevent jams in the typewriter. Just so happens, that the first mass produced typewriters featured them, so they stuck. The more typewriters that had them - the more people learned to type in the layout - the more typewriters were produced with` them. A layout made to be suboptimal, to slow us down... got lucky, and benefitted from increasing returns. Now I’m typing on one today.

IBM became the first major supplier of computers. So early adopters bought them. So they became the standard. This despite the fact IBM President at the time is famously quoted that they'd sell 5 computers...[1] [2] The famous phrase "you can’t get fired for buying IBM" shows how one event can cascade far beyond the intention of the initial action.

Luck may start the snowball. Increasing returns makes it more likely to become an avalanche.

Increasing returns are at the heart of tech. The giants today, AirBnB, all the social media giants, Uber, Amazon... all benefit from increasing returns. [3]

So if we can say with confidence that luck is a key ingredient in success and if we can see that once we get that break, increasing returns will help us continue to compound our success, what do we do?

Could we take decisions that optimise our chances of getting lucky? [4]

Perhaps it’s a sad idea. Something so free, so natural, so uncontrollable as luck being put into a business strategy straight jacket. But though I think we can optimise for luck, its beauty is you can’t control it. The vagina you enter the world from will never be up for your pre-selected choice of preference. [5]

So even though we can’t guarantee it, or control it, how could we optimise for it?

You start with awareness.

The very fact you can be aware of the effect of a lucky break is a good start. And one most people underplay, undervalue or insist isn’t true.

From a mindset point of view, acceptance that certain outcomes are thanks to the universe is healthy. It helps you to not turn into an arrogant wanker if good fortune smiles on you. [6] And helps keep your spirits high when you hit a bad patch.

More practically, it can help in your decision making. It stops you over-engineering the wrong things (best product) and keeps you focusing on the right things (marquee logos).

Most founders look at their path to success as incremental actions. One more sale, one more hire, one more feature.

Having an awareness of the role of luck and it’s disproportionate upside thanks to our friend increasing returns means that big bet strategies should feature.

There’s a clear example I can think of where we sabotaged luck rather than optimising for it in my first startup. We’d managed to land a cost based consulting project for a marquee client. Listed company. Billions in revenue. All the big guys were their clients.

We got in there, got to the top dogs and then we got stubborn. And we got scared. We didn’t want to do it again at cost. We worried it would cost us too much with no promise of future work. We didn’t move on go live dates, didn’t make it happen at any cost. And so, we didn’t get the work.

Who knows what that could’ve led to. Maybe us licking our wounds at the money we lost making the pilot happen. But maybe, just maybe... a whole lot more. By not optimising for luck, I guess I’ll never know.

Apart from doing what it takes to get the right logos, the other big area I think you can use to optimise for luck is being known.

Being known is a massive one. Personal brand in the space, company brand that’s narrative based, working hard to get the right influencers to talk about you, the right journalists to know you and the right advisors to work with you. Never sleep on the luck that being known gets you.

The best example of this - Marc Benioff. He hired actors to protest outside a competitors conference. And even considered hiring a tank to drive to the event. Publicity stunt, sure. But he ramped his chances of the hundreds of attendees at his competitors conference becoming Salesforce customers in the future by radically driving awareness. Benioff is also a Godfather level example of narrative positioning. His famous ‘No software’ started a revolution not just for CRM, but for how we buy software completely. (Recommend his book).

*An aside, people who say brand is for B2C and not B2B ‘serious’ brands need to get out of the 1980’s. Fast.*

In some cases, you can optimise for luck to get something you don’t have right now. Harry Stebbings is an oft-cited example of creating his own luck. He created a brand to achieve his goals. Starting at 19, he produced the 20 minute VC, a podcast on, well, VC. A few years and millions of listeners later, he now IS a VC.

As with anything, this isn’t a silver bullet. There is no guarantee this will work. For every Harry Stebbings or Benioff there’s a graveyard of failed attempts at finding the big break. But much like the Barbell Strategy, do you want to be taking some big bets that might pay off disproportionately thanks to luck. Or always make mid size ‘safe’ efforts.

A question - do you know what ‘luck’ would look like for you? What things would disproportionately move the needle in your life? Your work? And what are you doing about increasing the chances that happens? Luck is far less likely to find you if you’re not thinking about and acting on things to help it along.

Once we understand how much luck matters, when we understand that it breeds more luck (increasing returns), we can take steps to optimise it. Once we understand how much luck matters, we can be braver with challenging the current inequality we see in the world. And most of all, once we understand how much luck matters, we become obligated to be kinder, to be the lucky break others need.

[1] Even though the accuracy of this is contested, we can assume he wasn't omniscient enough to predict what happened, even if he thought it'd be more than 5.
[2] There are other examples. VHS and BETA Max. Nuclear reactor design. Backward clocks. Steam powered vs Gasoline cars.
[3] There is a difference between increasing returns and the more often discussed network effect. Network effect assumes a strategy that you need to fulfil to be successful. Increasing returns may well occur just as a result of sheer luck.
[4] VC's are well aware of this. Power law is as close you can get to graphing luck as possible. And the model the industry lives by.
[5] This doesn't mean you can do nothing and rely on luck. Hard work, talent, effort - all matter. They are just massively amplified and in some cases overtaken by luck.
[6] This raises other questions on how we value 'successful' individuals and should raise questions for areas such as taxation.

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