That being said, you'll never win if you don't try. One must be prepared to take advantage of opportunity ("luck") when it happens, and showing up consistently (being in the right place) is half the battle. Being smart and working hard at the right things also vastly increases one's chances.
For some people, dropping out of college and spending a few years working on a project that might pay out spectacularly is negligible. Sure, it's a few years of lifespan, but you learned some stuff and your future trajectory isn't going to be dragged down by a failure in your early 20s.
For others, one shot is all they'll ever get. If they don't get the degree and the right job out of college, the trajectory of their life will be permanently inflected downward.
Circumstances of birth have a huge impact on what chances are rational to take.
Precisely. People love to trot out Bill Gates as some business genius, but he got lucky, a lot, first by being born to wealth, then by getting the contract with IBM. Later , Microsoft got by with underhanded and shady business tactics (FUD) while clearly shipping far inferior product.
Luck is involved in getting to the top. However there is a lot of hard work required to take advantage of it. The unsuccessful often have better luck when you look close - but they don't use their luck.
In hindsight, we know what really worked was Windows and Office. It is a kind of luck to be so ahead of the curve, you can sort of coast, although it's a lot of hard work, somehow the right people falls in your lap as well as predatory opportunities (clone, buy and steal your competition).
While hobbyists and IBM scrambled, someone invested into the budding IBM PC-clone platform. This is business acumen fueled by superior technological vision and clarity (though at the same time blind).
Jobs had his own niche, catering more for end-UX and designers also ruthlessly, ironically.
They could have done _something_ with all that spare time but they rather vegged out and whiled away their time.
Like work ethic has nothing to do with it. They completely ignore that fact that there is a set of life choices that limits the downside, slowly builds the upside, and allows a person to create opportunities.
Most startups fail: they are NOT a sensible financial investment as an individual. Your poker stack is your time and the opportunity cost of a normal job. Your reward is too variable to be a sensible risk to take.
A common statistic is one success per 10 VC investment. But a VC turns down 100 startups for every one they fund, so your individual chances of success are much lower than that.
If a person only does startups then they have a very significant chance of getting $0 in return.
The kelly criterion[1] for 100x return (say 100MM after 10 years work == 5th of working life and opportunity cost of $1MM wages) and 1 in 20 chance of success (a large overestimate) says you should invest 1/25th of your pot.
For that to be sensible as an individual you could:
A. hugely reduce time invested (hard if you want outsized returns),
B. lower risk i.e. don’t take all-or-nothing VC money,
C. pool your risk with other startups (now you are a VC - hard)
D. already have millions (so 1/25th is big enough)
E. live forever (infinite dice rolls).
F. value the social outcomes of being a founder very highly (I think this is common)
G. Have some inside knowledge that changes the risks (large risk you are kidding yourself - reality shows that).
I seriously think being a founder is not a sensible financial decision, and I think it is very smart not to be a founder.
Note the distinction between your statement about "the successful" and the topic at hand - "huge success". Success isn't a simple binary dichotomy... it is, IMO, more of a continuum. One can be "successful" without being, say, a billionaire founder of a Silicon Valley unicorn. I would argue that we should keep this in mind when talking about what goes into success. Yeah, it probably does take some "luck" to become the billionaire guy (say, Mark Cuban or Mark Zuckerberg). But becoming the owner of a successful and growing landscaping business, or car dealership in your local town, etc., etc., etc? Maybe not as much so.
That being said, you'll never win if you don't try. One must be prepared to take advantage of opportunity ("luck") when it happens, and showing up consistently (being in the right place) is half the battle. Being smart and working hard at the right things also vastly increases one's chances.
Agreed. And since what most people are really talking about when they say "luck" - which is to say chance, uncontrollable events - are outside of our control anyway, there's no real reason to even think about it. All one can do is work as hard as possible, engage in the behaviors that tend to (create|discover|capture|foster|whatever-you-want-to-call-it) "good luck" and just take the ride as far as it goes.
Cliches may be trite, but as a certain character in a certain movie once said "just because something is trite doesn't make it less true". And the old cliches "the harder I work, the luckier I get" and "luck = preparation + opportunity" still hold as far as I'm concerned.
I can point to a number of friends that tried their own thing and threw in the towel, so to speak, too early. From my view it usually boiled down to multiple bad decisions that stacked up or the inability to be realistic with how to run a company (trying to start something limited capital or domain knowledge/skill, calculated runways being too short, etc). That said, after all was said and done none of them really complained about "luck" or blamed external factors, they gave it their shot(s) and understood the risks.
Maybe a bit harsh and my opinion, but I feel like that most people that keep harping heavily on the luck argument for their failures just use it as a copout for their own incompetence. And i'm saying this as someone that understands I've been extremely lucky. If i were to fail outright tomorrow I would not blame it on anything but myself.
Luck probably plays a huge factor (maybe the ultimate factor) in building billion vs million dollar companies, but when you distill it down to something smaller you absolutely can manage your "luck" and it doesn't require getting money from your parents or having capital to try 5x times or whatever that people here keep spouting.
The problem is that the alternative is a dangerous narrative, because you can't control how lucky you are (and you don't always know your luck ahead of time), but you can control how much effort you put in.
If you go around telling people that it's basically just luck then they don't even try and then they aren't in a position to capitalize even if they are one of the lucky ones.
People also tend to focus on the billionaires, where the only way to really make it to that level is to win the "right place at the right time" lottery that a million other people who tried just as hard will lose. But far, far more people succeed in building a lifestyle business than succeed in founding a unicorn, and it's disingenuous to count all of those small successes as failures just because they're not all filthy rich.
Right, and one mustn't ever expect this to matter on its own. It's necessary but not sufficient. As you allude to, it's a vector - there's magnitude of work, and direction. Neither on its own is enough, you must have both aligned.
I think this is one of the more important things a successful academic career doesn't teach you. There, the correct direction for achieving success is almost entirely set for you, so all you need to focus on is magnitude of hard work. More or less, working harder directly translates to more success.
When you have to choose your own direction of work, this can be a counter productive takeaway because overly prioritising magintude of work can mean you don't focus enough on direction.
Put another way, you have to work hard, but also occasionally have to step back from the work you're doing, take a look around and get the bigger picture, and decide if you're actually working on the right thing right now.
Getting hired at a small company that goes on to become a Unicorn or just being in the right place at the right time. Like getting hired a month before a big acquisition are 100% luck. However, starting a company, taking the risks and beating the odds, is not luck, its gumption and timing.
Most of the wealth in "Tech" comes from luck. There are very few Founders who maintain enough ownership to cash out big especially compared all the employees who took the right job at the right time and scored big with options or an exit...
So yes, luck is a major factor in extreme success. But effort and persistence are necessary pre-requisites to even be in a position to take advantage of the luck when it arises.
Of course this also partly explains why wealth tends to flow uphill: the rich have large nets.
That is part of the mental challenge of being an entrepreneur isn't it? Maybe you'll make it, and maybe you won't. Maybe your hard work will be paid back, or maybe it will all be wasted on a stupid dream.
There is only 1 way to find out.