The Boston Globe’s article Being lucky really is more important than being good stimulated me to think about what factors are involved in an entrepreneur’s success.The article is wholly based on a simulation run by unnamed and uncited Italian researchers. According to the author, luck trumps intelligence.
But the remarkable thing is that despite its simplicity, this stripped-down simulation can reproduce a poorly understood but vitally important fact about economic life — that the distribution of deserts looks totally different than the distribution of talent. In the end, the secret ingredient is nothing more than luck.
Given the lack of a citation for the simulation Mr. Horowitz depends on for his conclusion it’s impossible to judge the validity (relevancy) and reliability (repeatability) of the experiment.
I never gave the issue of what role luck plays in the success of startups much thought until I started listening to the podcast How I Built This by Guy Raz. The last question
Guy Raz dives into the stories behind some of the world’s best known companies. How I Built This weaves a narrative journey about innovators, entrepreneurs and idealists—and the movements they built.
First of all I highly recommend this podcast. Guy Raz is an excellent interviewer and he manages to get a lot of highly successful entrepreneurs on his podcast. But what struck me about Guy’s interviewing was the last question he asks all his guests: What role did luck play in the success of your venture? While I’ve only listened to a handful of these podcasts there hasn’t been a single entrepreneur whose answer was None.
And from my experience as an entrepreneur and mentor I see a number of variables in the success of startups:
- Persistence – as I’ve written elsewhere on this blog, this is my number one criteria. Or as one entrepreneur put it, “relentless persistence.”
- Timing – see my post on Bill Gross’s research on timing and success. While I don’t agree with Bill Gross that timing is absolutely the determining factor I think most entrepreneurs and even mentors don’t rate this factor highly enough. If you are too early, as I’ve been with a couple of ventures you fail because the supporting infrastructure (in my case smartphones) was widely distributed enough. If you are too late, like any number of would be competitors to Facebook, you also lose.
- Visibility to key players – It’s not who you know, it’s who knows you. Which should be a far larger network. This plays a critical role when raising capital and recruiting staff, two of the three key roles of a startup CEO (the other being setting and communicating the vision of the venture).
- Talent – founders need to possess a singular outstanding talent. Whether that be salesmanship like Steve Jobs, or engineering wizardry, like his co-founder Steve Wozniak. It’s not enough to just be smart, or well-educated.
- Intelligence – While intelligence helps, I’ve known many, many very intelligent founders, but a significant portion lacked what I called “street smarts”, shrewdness, canniness: a combination of experience, intelligence, common sense, and competitiveness.
- Luck – I rate luck both last and least. In my experience and in the experience of Guy Raz’s interviewees, luck certainly plays a part. Often it’s being in the right place at the right time. Or as the saying goes, luck is a matter of preparation meeting opportunity. But except for a few cases, luck is not the determining factor in a venture’s success.
Probably the best part of the Boston Globe article is not the article but the raft of comments that follow it. I highly recommend scanning the comments and reading those that pop out at you.