What if successful startups are just lucky?

http://blog.ploki.info/what-if-successful-startups-are-just-lucky/

by adelivet • 13 years ago

216 176 13 years ago

blog.ploki.info

mhurron• 13 years ago

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.

choult• 13 years ago

You have to be in the right place at the right time.

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.

Iftheshoefits• 13 years ago

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?

rythie2• 13 years ago

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.

jxf• 13 years ago

"I am a great believer in luck, and I find the harder I work, the more I have of it."

-- Thomas Jefferson (apocryphal; see [0])

[0] http://www.monticello.org/site/research-and-collections/i-am...

tomasien8• 13 years ago

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).

evanspa• 13 years ago

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.

MichaelGG2• 13 years ago

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.

kristofferR• 13 years ago

  Luck is when preparation meets opportunity.
  – Seneca

  Fools wait for a lucky day but every day is a lucky day for an industrious man.
  – Buddha

sien• 13 years ago

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.

(wikipedia - Napoleon)

craigyk• 13 years ago

It takes both. luck is a constant that can range between 0 -> inf, and work is the multiplier 0 -> 1.

bippi• 13 years ago

Chance favors the prepared mind.

--Louis Pasteur

smky80• 13 years ago

His slaves worked pretty hard too though. Just saying.

rokhayakebe2• 13 years ago

They wait for IT to come. I became IT.

csense• 13 years ago

You turned into a Segway?

[1] http://en.wikipedia.org/wiki/Segway_PT#Early_history_and_pre...

benihana• 13 years ago

"The results of hard work and dedication always look like luck to saps."

-- leveling up in Morrowind (no idea who to attribute this quote to)

baddox8• 13 years ago

And buying more lottery tickets increases the chances of winning the lottery.

vijayr• 13 years ago

LUCK is also defined as 'Labor Under Correct Knowledge'

rowyourboat• 13 years ago

It's doing-the-right-things plus luck.

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.

chew8272• 13 years ago

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.

adventured• 13 years ago

"Think of it like a lottery. In this case the obvious decision is to buy more tickets in order to get more chances to win."

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...

acemtp7• 13 years ago

Nice links, thanks

chew8272• 13 years ago

I love Seth Godin, he seems to have universally good advice. Sometimes his blog is hard to follow but it's usually a pretty good read.

I love the quote "if I fail more times than you I win."

tomasien8• 13 years ago

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.

mseebach2• 13 years ago

What about "changing the world" (for the better, presumably) doesn't require financial independence AND a good chunk of luck on top of that?

tomasien8• 13 years ago

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

varjag• 13 years ago

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).

tomasien8• 13 years ago

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.

enraged_camel• 13 years ago

> I work on startups because I like building things and I want to change the world.

That's nice, but you also need to be able to pay the bills, right?

tomasien8• 13 years ago

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.

spindritf• 13 years ago

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.

acemtp7• 13 years ago

As you said, we don't know.

I moved to ghost 2 days ago and for the moment, it works quite nicely!

alecco• 13 years ago

Interesting topic, but the blogpost lacks data.

sz4kerto2• 13 years ago

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.

HNJohnC• 13 years ago

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.

TDL• 13 years ago

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.

jfb• 13 years ago

"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.

sz4kerto2• 13 years ago

Oh yes, that might be even more important. See the Superinvestors of America: http://www.tilsonfunds.com/superinvestors.html

baddox8• 13 years ago

This is really just semantic. You can play around with definitions and construct all sorts of truisms:

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.

agilord• 13 years ago

Care to provide pointers on the correlations (research paper, whatever)?

Narretz• 13 years ago

I can't tell you the exact study, but you can find it in Kahnemann's Thinking Fast and Slow.

dasil003• 13 years ago

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.

polskibus• 13 years ago

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.

dsugarman• 13 years ago

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.

kristiandupont• 13 years ago

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)

mathattack• 13 years ago

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.

minikites• 13 years ago

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."

jacques_chester• 13 years ago

Otherwise expressed as

   This too shall pass.

acemtp7• 13 years ago

Really love your comment. Thanks for the link, it's really interesting

dpeck• 13 years ago

Chance favors the prepared mind.

james4k• 13 years ago

"Success in [indie] game development is lucky like poker, not lucky like the lottery."

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

tehwalrus• 13 years ago

of course they are. But you have to have been working hard all those months/years, so you can capitalise on the luck when it comes.

ThomPete• 13 years ago

First you are lucky, then you have a network.

IgorPartola• 13 years ago

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.

jackgavigan• 13 years ago

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.

lacero• 13 years ago

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.

JonFish85• 13 years ago

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.

acemtp7• 13 years ago

I'm the author. Thanks for the comment.

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.

wj• 13 years ago

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).

georgeecollins• 13 years ago

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.

thejteam• 13 years ago

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.

cousin_it• 13 years ago

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?

seiji2• 13 years ago

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.

avenger1232• 13 years ago

"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.

spyder• 13 years ago

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.

Guest2931• 13 years ago

It's similar to a video going viral. Luck is always a factor, but you need less of it as the quality of your video increases.

boldpanda• 13 years ago

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.

_xhok• 13 years ago

It seems weird to be shocked that success in a startup depends on luck. Of course it does; we already know that from seeing how widely the returns fluctuate. But that doesn't mean successful startup founders aren't smart. A good way to put it would be that, while your chances of success are random, if you're smart and determined your chances are higher. If you aren't smart or determined, you don't qualify for the lottery at all.

dreamdu5t• 13 years ago

This argument compares apples to oranges. Your game was not the same as World of Warcraft. It had completely different graphics, different marketing, distribution, gameplay, etc. Facebook is not Google+. Windows is not OS X.

Lottery tickets are apples to apples. Yes, the problem domains for these start-ups may overlap, but these are not apples to apples. Your MMO was not the same as WoW.

The differentiating factor between your MMO and WoW was not just luck. They're different games.

DanielBMarkham• 13 years ago

To put a little finer point on it, what if successful startups have enough randomly-uncontrolled and untracked things happen to them to make them successful as to be not reproducible?

So you do all the right things, and you still only have a 1-in-20 chance. Or the other guy does all the wrong things, and he sells out in two years for 20 Million. A third guy does some good things and some really bad things, still manages to grow and flip, then he writes a book on "How to have a successful startup" that claims to know the answers.

As far as I can tell, this is pretty close to the state of things, and that's okay. It just means 1) you can't give up, and 2) you need to choose your strategy based on this state of affairs.

What you don't want to do is to acknowledge there is randomness, then throw in the towel. Or to go on some jag where you hero worship Zuckerberg or some other rich schmuck simply because the startup lottery hit for them. The truth is much more complicated -- and involves a lot of hard work.

ferrantim• 13 years ago

Great blog Vianney. I just attended a conference last week full of silicon valley's best and brightest (http://warmgun.com/). I don't think that things are totally random, but I was struck by the million different ways to success (and failure). Chance definitely has a lot to do with it. It allows the really hard work to pay off.

cromwellian• 13 years ago

My essay on the subject, cast in terms of climbing a fitness landscape and getting stuck in local optima: https://plus.google.com/u/1/+RayCromwell/posts/5bhdU8hF68t

FD3SA• 13 years ago

One important point to realize for the author is that games are not services, they are works of art. As such, you can't say this is an incredible game with the same objectivity as this is an incredible service.

Ryzom was a great game, but MMOs are built on one thing: atmosphere. Blizzard made WoW precisely because WarCraft was its longest running and most popular brand to date. Blizzard already had a massive fan base of WC fans ready to play WOW. The lore was considered a masterpiece, which immediately immersed the players in the world before they even played it.

With services, things are much more objective, because we don't care about branding. Using a service like Dropbox is not a deeply emotional experience, but it does work very well. Apple is one of the few companies that can instill emotion into its services and hardware, and that is due to their marketing and design philosophies, which are considered the best in the world. However, this is nowhere near the level of emotion that art invokes.

As such, I would advise the author to carefully distinguish between art and service. When making art, you should never make it with the expectation that others will like it. You should make it such that it satisfies your own tastes. If others like it, you know that your taste is shared. If not, your tastes are unique. It's a win win.

Don't regret making works of art. It is all that succeeds us when we leave this realm.

bluekite2000• 13 years ago

"Don't regret making works of art. It is all that succeeds us when we leave this realm." Good words my man!

Amadou• 13 years ago

Don't regret making works of art. It is all that succeeds us when we leave this realm.

Until someone turns off the hosting servers.

scott_karana• 13 years ago

Why would anyone do that unless they were dead? :-)

rokhayakebe2• 13 years ago

Don't regret making works of art. It is all that succeeds us when we leave this realm.

Sometimes I feel this is our main differentiation from other species.

kovalkos• 13 years ago

Yeah, any member of animal kingdom can rationally analyze situations and make logical decisions based on facts, but art, on the other hand, is unique to humans. </s>

MichaelGG2• 13 years ago

Don't regret making works of art. It is all that succeeds us when we leave this realm.

Scientific discoveries also persist after your death. While making art is fine, it's hardly the only thing that people are known for.

On top of that, practically any action can leave a lasting impact, even terrible ones. So "effects persisting after you die" isn't really a way to determine value of your actions.

prostoalex• 13 years ago

When making art, you should never make it with the expectation that others will like it. You should make it such that it satisfies your own tastes.

I don't know, to me both are businesses and have to deal with things such as user acquisition, user retention, average revenue per user, etc.

We've read about the author releasing the game, but don't know the back story about user acquisition - what channels were used, what was the performance of those channels, what viral mechanisms were put in place, what A/B tests were run, how user stickiness was determined and improved upon.

Behind every "luck" story there's some dude or team of dudes whose entire job is user growth.

rythie2• 13 years ago

I've noticed that people who win the lottery are the ones who bought tickets. Also the ones that win usually play every week, increasing their chances.

So at this point how are you defining lucky? They might be lucky but then they also worked harder and longer (i.e. bought more tickets)

robotnik• 13 years ago

The lottery analogy made me think of this: Even if most startups fail, is the expected value nonetheless positive?

segmondy• 13 years ago

If successful startups are just lucky, then getting an A on your project/exams in school was all luck. Can someone show us someone making money with shitty products today? Yeah, it's possible to get popular with an incomplete buggy product, but if it's filling a need, it's better than nothing. You will still have to work hard and improve to maintain your position.

Say what you might about how facebooks earlier/current code was/is horrible and in PHP, Facebook has done amazing things to be able to handle a billion users every second/every day. Say what you might about how simple instagram or snapshot is, they filled a need and grew. Their products doesn't "suck", sure they might be valued ridiculously by some groups of investors, but don't discount their work.

Successful startups are not JUST lucky. There is always an element of lucky, but there is also the hardwork. One mistake a lot of "failed" startups make is thinking and believing that they failed. If your goal is to create an application that solves a certain problem and you do so. You have succeeded. A lot of startups have this goal, they don't really have a goal of making money. After they achieve a goal of building their app, then they want to make money and when they fail on that end, they consider everything a failure. The truth is that making money is not just about your apps or how smart you are or hard you worked to designed.

It takes a very different set of skills to market, hustle, and sell. A lot of programmers don't have those business skills, and they whine and cry when the world don't rush to their door for the better mouse trap. Don't cry, the world didn't know because you failed to market or they have heavily vested in another one because you started late.

If you want to really realize that startups are not just lucky, find the other group we don't talk about on HN that make money off the internet. The hustlers, these are guys with little to zero tech knowledge. They do whatever they can, outsource via internet, basic wordpress sites, they sell actually products, their business is rarely based on ads, their business is physical products, software as a service or ebooks etc. Technology is usually a small part of their game, maybe 10%, the other 90% is pure sweat and hustling. We don't hear for them, but there are many of them out there, making very good money.

Successful starts are not lucky, they out hustled the rest and that's just what it is. So if you wish to make money, don't just stay a hacker, become a hacker and a hustler.

Sakes2• 13 years ago

I used to think I was really smart and that my intelligence would carry me when I finally set out to start a company.

Wrong, while I still consider myself to be smart, I don't think I'm savvy enough to rely upon good decisions to carry me. There are plenty of people smarter than me that have failed in their ventures. So, I've reverted to a brute force strategy coupled with an unrelenting resolve to see projects to completion.

Just lucky? Not just. When you build your companies with a willingness to change, frequently self re-evaluating, you will amaze yourself with how much you grow as an entrepreneur. It is ridiculous what I know today when compared against my assumptions 2 years ago.

When the author was talking about the failed MMO, I took him at his word when he said his team created an amazing game. So the point of failure is obviously marketing. Who knows what could have been if those game developers had a comparable marketing team in their corner. What if they launched a beta 1 year into development to help develop a core user group as well as aid in gamer feedback which could then be redigested by the marketing team to help them create buzz.

I love this rumored quote assumedly from Jack Dorsey "It only took 10 years for me to become an overnight success." The entrepreneur that doesn't die is hardened and polished in failure over a number of years. When luck finally strikes, he will have the tools, experience, insight, vision to take full advantage.

I'm 2 years into this journey, hopefully I'll find luck in year 3, and hopefully I will have grown enough to take full advantage of it.

kansface• 13 years ago

You missed the point of the article. Ultimately, the universe is unfair. No special insight, ability, breakthrough, or perseverance is sufficient to change that.

Sakes2• 13 years ago

I didn't say anything about fair. I didn't even say that you don't need luck. I believe you do need luck. But, you can remove a lot of your dependence on luck by getting better at the game over time, as well as by playing a lot. Just ask anyone that plays Texas Hold'em.

Want to score more? Get your number of shots on goal up. Luck is just the positive result of chance being realized. Chance to succeed vs chance to fail. So as long as you don't care about the number of failures you stack up, you just keep rolling the dice until you succeed.

Perseverance is sufficient as long as it is accompanied by adaptability. You simply need the ability to recognize your strengths/weaknesses/personality type and play the game accordingly. Either invest in improving your weaknesses, or spend time networking to find a partner to complement them. Even better, pick an idea where your weaknesses will not be a factor.

What makes startups so hard is all the opportunities to fail that come along as you try and build something new. Every month, or every week, there is a new thing that wants to kill you. Sometimes these things have nothing to with the company. But, there are sooo many ways to mitigate these problems and you learn how to do so better and better the longer you play the game.

If you'd like me to go into some more personal details to show some examples, just let me know.

Edited: minor edits.

pg• 13 years ago

All successful startups are lucky, but they're never just lucky. If they were, we could save ourselves a lot of work reading applications and doing interviews. We could just pick randomly instead. If we did that for one batch, you'd really be able to tell the difference, believe me.

ForHackernews• 13 years ago

Why not try it? http://www.investorhome.com/darts.htm

yarou• 13 years ago

Spot on. I think it's important to mention the context of Taleb's philosophy. You have to keep in mind that in certain jobs, like trading, it is fairly plausible that successful traders are plain lucky because all traders eventually blow up. In the startup world, this analogy doesn't hold for a number of reasons. If you are genuinely skilled, you will succeed. Perhaps not on the first try, but you will succeed eventually.

paulbaumgart• 13 years ago

The crucial difference might be that the finance world is zero-sum while the startup world (wealth creation) is positive-sum.

socillion• 13 years ago

If you are genuinely skilled, you will succeed.

Some skilled people succeed, therefore all skilled people succeed eventually?

Alternatively, it's a tautological statement that defines "genuinely skilled" people as those who succeeded, therefore unsuccessful people must not be skilled.

boomzilla• 13 years ago

I think the OP's point is after filtering out obviously non-successful startups, the chance of success is potentially non-correlated with other "traits", "characteristics", or "metrics" etc. that people often associate with successful startups/founders.

It would be an interesting experiment if YC lower the acceptance threshold to say twice the original batch, and randomly pick from that bigger pool, and see if there's any difference between the ones that didn't make the original cut and those did. (A/B in its finest :)

acemtp7• 13 years ago

It's not luck for you, it's luck for entrepreneur.

Your job is to select people who were lucky enough to meet the right people, meet the market, had luck to have enough traction, lived in a country where he could spend time learning and so on...

But when you are entrepreneur, you have to maximize your luck by maximizing number of opportunities.

nwhitehead2• 13 years ago

I would absolutely love to see a double-blind randomized experiment with controls for YC applications. In one batch, randomly and secretly assign CONTROL or EXPERIMENT to each application (in whatever proportion you are comfortable with). Of the CONTROL batch, do regular reviews. For the EXPERIMENT batch, randomly accept the same percentage of groups as the control. Then have people outside of the reviewers try to label each group correctly at different stages and see how they do. These people could be: YC alums, YC staff not on the interview loop, VCs making investments, outside experienced CEOs, successful startup founders.

For full double-blindness you could even do interviews with the EXPERIMENT group, then use a program to automatically either use the interview result or not. This might be aggravating for reviewers, though, seeing their work wasted by random choices.

jbooth3• 13 years ago

It'd be unfair to great startups in the experiment batch -- not that it's pg's job to make life fair for people, but it'd put a big dent in YC's reputation. Why spend time flying out there if there's a chance your interview doesn't even matter?

fragsworth• 13 years ago

How can you really do any experiments on this kind of shit, when the real winning investments exist in front of a zipf curve?

You get one or two huge winners out of hundreds, and they are so huge that they are bigger than all the others combined. The investors care most about getting these rare winners, and if YC does any kind of controlled study on who becomes these winners, I don't believe there will be any statistical significance to speak of.

brudgers2• 13 years ago

If it were just luck then the companies rejected by YC should statistically perform as well as those selected for interviews which should perform as well as those offered spots in a given batch.

powera• 13 years ago

So pg's years of experience getting better than random results is irrelevant and you'll only believe him if he does a long experiment (that would cost him lots of money if it's not just luck) to prove something he already believes?

pesenti2• 13 years ago

In order for us to "believe you", you would need to test your hypothesis at least once - for example, by selecting a small number the startups you invest in at random and see how they fare compared to the other startups. Keep in mind that most stock pickers would respond exactly like you even though their choices are rarely (if ever) better than chance.

vacri• 13 years ago

If I was to walk for the first time into your kitchen and tell you that your hotplate was turned on, would you not believe me until I'd also experienced your hotplate turned off? You would discount my previous experiences with hotplates, because maybe, just maybe, your hotplate is hot enough to boil water when it's unpowered?

The idea that the null hypothesis is the only source of information needs to die.

acangiano• 13 years ago

That would actually be a rather interesting, if costly, experiment for you guys to try.

lifeformed• 13 years ago

Basically, the random choice is pulled from the pool of all the talented and productive people. So the best we can do is try our best to continuously be talented and productive, and hope we get lucky one of the times.

diminish• 13 years ago

It's best if founders are all up to get some fun, and investors are in to get lucky, not vice versa.

loceng• 13 years ago

What about if given enough time and access to enough resources?

wellboy• 13 years ago

You just need to let in exclusively the crazy startups, the insane ones. That's the only metric.

90% failure rates, but the remaining 10% (5 startups) is all Dropboxes and AirBNBs --> Average YC startup valuation up 10-fold.

kevando• 13 years ago

So you're saying my app that helps hamsters connect via foursquare has a chance?

minikomi• 13 years ago

This makes me wonder if there's some kind of fantasy football for startups played behind the scenes by some people.

man_bear_pig2• 13 years ago

More interesting than double-blind test is if each of the yc partners play fantasy startup.

a) each pick his/her top 5 yc companies per batch that they think will be most successful (and main drivers why) b) each pick his/her bottom 5 that they think will be least successful (and main drivers why) c) each assign the value of each of the 5 most successful companies 5 years from now. (and build a bridge as to how that value will be achieved).

and then run some fun numbers on your predictive capabilities.

when i ran "c" for my private equity firm on all investments made over 20 years in various vintages and industries, i found my answer as to why my job of building complex financial models was pretty much worthless number painting. very low predictive ability in value drivers and financial projections being met (these are later stage businesses, too). also, i realized that i should get out when every newer vintage had a larger % of the driver of value stemming from leverage (i.e. financial engineering) than ebitda outperformance.

mdda• 13 years ago

NB: There is a lot of hard-earned wisdom distilled in man_bear_pig's comment.

rbanffy• 13 years ago

I was discussing a somewhat related subject yesterday, on an in-company product development workshop.

For a DropBox-like product, feeling safe you won't lose your files is the baseline. If you cannot reliably ensure the files won't get randomly deleted, you don't have a product. Once you have a product, the value you add gets increasingly more subtle - better metadata capture, nicer ways to organize your files, an outstanding slideshow or music app - and what determines your ultimate success may feel completely random and totally unrelated to the original way you defined your product.

It would be interesting if we could measure luck based on previous YC batches.

halfcat• 13 years ago

All you stat nerds keep on talking about statistical significance. While you are busy waving your hands, PG will keep raking in millions.

"Your best? Losers always whine about their best. Winners go home and fuck the prom queen."

mkramlich• 13 years ago

there is definitely an element of "luck" (timing, what other actors in the relevant space are doing, etc.)

but the way you hedge against that is by exposing yourself to lots of things with a potential net upside. both in parallel and serially. you might have bad luck with one thing, then good luck with another thing. just like the reasoning behind YC-style investment bets, it only takes one of your little bets to pay off huge in order to more than make up for all the other little failures. which leads to the other complimentary tactic: minimize your spend (money,time,energy) you're willing to risk on any given thing before you see an ROI from it. Also, you never have to completely give up on a thing --- in the software/digital world especially you don't have to destroy/delete/throwaway things, you simply passivate them (put on the backburner), press Pause, etc.

rjurney• 13 years ago

If startups are luck, you should found as many as possible.

inovator• 13 years ago

Exactly, that is why "most" of founders failed multiple times before they become successful.

sharemywin• 13 years ago

A start founders charisma points must be very high. You have to get others(co-founders, future employees, investors, ealry customers) to believe in your vision. And I'm not sure that's teachable. But, there are many ways to pull it off.

jcromartie• 13 years ago

This meme is particularly viral among game devs. They say "Notch was lucky", but what they really mean is that Minecraft resonated with the market more than they can comprehend. They say "my game failed, and I can't see why, so I must be unlucky", rather than saying "my game failed, because people didn't like it more than the alternatives".

Short of people being forced to purchase it, the only thing that makes a product successful is when people want it. How the product stands on its own merits is dependent on customers knowing about it, and choosing it over the alternatives.

When it comes to games, works in the same genre may not even be competing against each other because of the way gamers buy games. Plenty of gamers will buy Battlefield AND Call of Duty, or will buy Minecraft AND all of its derivative clones. They just won't buy things they don't want.

MMORPGs in the same genre, though, are often competing against each other. People can only play so many MMORPGs because of the time and social aspects.

amiune• 13 years ago

If you define luck as the happening of an event that the probability of not happening is greater than the probability of happening. Then all depends on how well you can calculate your probabilities of success and how much risk you want to take.

Of course you can't be 100% sure that you are going to be successful. But you must try to increase your probabilities as much as you can, trying to predict your probabilities as accurate as you can.

As Laplace said: "Life's most important questions are, for the most part, nothing but probability problems".

EricDeb• 13 years ago

Obviously successful startups are lucky. I think the idea of releasing quickly/efficiently is to test the market to see if a larger, more complex product is desired (IOW can you get lucky?). In the example provided, a beta release of one level of Ryzom could have saved years of dev time if it was not well received.

Mithaldu2• 13 years ago

They did a beta release. People loved it. Then they did a massive change to XP distribution shortly before release that forced people to run in single squads, because experience couldn't be shared among multiple squads cooperating anymore. People hated it. Nevrax didn't give a fuck and released anyhow.

neakor• 13 years ago

Luck by definition is based on chance, something one cannot fully control. A startup of course involves luck, simplify because no company can control all the factors involved in becoming a success. So yes, I completely agree that successful startups are lucky. However, it's not "just" lucky as your title suggests. Just like playing lottery or gambling, there are ways you can maximize your chances of winning. Buy more lottery tickets as your blog post says, is one way to maximize the chance. In the startup world, obtaining the right skills, choosing the right features to implement, making the right connections and a million and one others are all the things you can do to maximize your chances of building a successful startup. I think your post illustrates the right idea that there is luck and chance involved at building a successful startup. But isn't that the case for everything in life? In the end, the rule of thumb is, "do whatever you can, and the rest is luck".

adamb_• 13 years ago

"Even if it's not random, it's too complex to be controlled." - OP.

I think it's this realization that gives rise to quotes like, "Talent hits a target no one else can hit; Genius hits a target no one else can see." by Arthur Schopenhauer.

pan69• 13 years ago

Are famous artists such as musicians and actors just lucky or do they actually need the talent as well?

You can have all the talent in the world but not lucky to be in the right place at the right time. However, when you are at the right place at the right time you better make sure you bring the talent.

One doesn't exclude the other, you need both: talent + luck = success

scottmcleod• 13 years ago

"I'd rather be lucky than good - but nothing beats lucky and good."

goggles99• 13 years ago

LOL... sorry to laugh, but casual perception should tell you that if you have a startup and your first product's release is a PC game with a date that is four years out (Four YEARS?) - You are going to need more than just luck to be successful.

leoplct• 13 years ago

There is no lucky

http://en.wikipedia.org/wiki/Outliers_(book)

forgottenpaswrd• 13 years ago

No, not really.

About being too complex to be controlled, yes maybe, but there is very good people controlling complexity.

I know lots of entrepreneurs, as I am one myself.

The best entrepreneurs will learn from other people. Take for example Steve Jobs, he was not born knowing it all, he had fckng Robert Noyce as mentor, and all his life was spent learning from the best he could, like Polaroid inventor or Sony founder.(every year he will take 100 people from his company to learn from)

No matter were you are, there is always someone 10 to 20 years over you on a topic, and the best thing you could do is learn from them instead of thinking you are inventing gunpowder(Spanish expression that means you are inventing something revolutionary nobody knows about).

I personally know a man called Warren Buffet. This man, who is super rich old(normal old people believe they know it all) and famous will cold call you if he is interested in something you do for please explain it to him, and then he will start asking you deep questions about your business like crazy and if you ask him, he would do the same for you for anything you ask. This man has amazing amounts of valuable knowledge. In public he could not say what he really things because his word alone is capable of making markets go up or down.

Successful people do something called "masterminding", that is very similar to "pay it forward" in Silicon Valley. They learn form each other what works and what does not. They do it officially or by networking and just talking.

KSS42• 13 years ago

1/3 Talent, 1/3 Effort, 1/3 Luck

thejerz• 13 years ago

It all depends on what -- exactly -- you define as "luck."

izietto• 13 years ago

This is what I always thought.

hkbarton• 13 years ago

Great post and I'm totally agree. Once I got a idea, i do it quick and release it earlier, that's cool than just talking. but i usually lost after I release my first version of my project. I don't know how to promote my product, how to raise traffic and how to let people know my product, that makes me really confuse. I think marketing knowledge is also very important for engineer

Mithaldu2• 13 years ago

As a former player, and customer service representative of the game, i can say confidently that the reason Ryzom failed had nothing to do with bad luck, and everything with bad decisions and incompetence.

They had no qualms about changing large parts of the game. The prime example being that they changed the experience distribution in the game such that where it was first that any large group of players could play together and cooperate, after beta it was changed such that only squad-sized groups could cooperate and squads being in the same area only meant difficulties, since experience could not be shared anymore.

On the technical side they had a lot of terrible code as a result of much of their 50 man staff being students doing an internship for free there. They also had a very bad attitude towards volunteer support staff, where, for example, an issue on the web site would be reported, the dev in question would say nothing, and when asked five minutes later would say "What problem, i see none?" after obviously having fixed it.

Lastly, they also had a very bad attitude to players. The game had guilds and an ingame browser (kind of hidden, since it was the backend for 90% of the game UI), so some enterprising players had figured out how to use that to provide guild forums. The result being legal threats.

As much as i love the game still to this day, and still hold on fondly to the screenshots and memories i collected in its wonderful world, it wasn't luck that killed it. It was Nevrax' incompetence and shortsightedness.

devgutt• 13 years ago

I think that it is some misunderstanding between be successful and have money. Money is the consequence, but the objective of a business should be create real value. In this sense, if you have only a few customers but you are delivering real value, you are successful. Take youtube, for example. They were a very successful company in the beginning, delivering a delightful experience. Now, if you consider money as objective, they are still successful, but they are not. They now deliver a awful experience, with Ads in the beginning, middle and the end of each video. For me, no matter how much money they are making, they just not successful anymore.

GigabyteCoin• 13 years ago

Just because OPs game floundered does not mean that startups must be lucky to succeed.

OP was quite proud of his game, is confident is was great because there were 15 talented people working on it... but ultimately the idea didn't resonate with the public in the way they implemented it.

Notch on the other hand resonated with the public incredibly well. By giving away completely free versions and listening to, even literally interacting with game players: He now heads a very successful software company where most of the original code was written by one man.

I don't think a successful company necessarily involves luck at all.

pekk• 13 years ago

Obviously it can't be about luck, because that would deflate a lot of egos.

martindale• 13 years ago

"I am a great believer in luck, and I find the harder I work, the more I have of it." — Thomas Jefferson

"The harder I work, the luckier I get." — Samuel Goldwyn

baddox8• 13 years ago

The more lottery tickets you buy, the higher chance you have to win the lottery.

gwu78• 13 years ago

For anyone arguing that there is some causation behind a startup's success besides "luck", I challenge you to prove it.

It is not easy to prove causation.

For example, startup says "We did X and this was the direct cause of Y", where X is some random thing, and Y is "success". That is difficult to prove. And startups never say that. They just say "We did X." Maybe they also say they believe this was crucial somehow to their success. But they never try to prove causation.

Of course, no one demands anyone to prove causation when it comes to the actions and the success of any startup. The scientifc method does not apply here. We are happy to listen to someone tell us about what a startup did, about their eventual success and then let our imaginations make the supposed causal connections.

I do not think it's unreasonable to question, as does the OP, whether "luck" is a proper explanation for the success of a startup. If it were, then that leaves startups free to make their own rules instead of believing they must do X in order to produce Y. And I say that is fine. The fact is, doing X might not bring about Y for every startup that does X. Clearly there is more to this than a "formula", whether it is the YC's or someone else's.

man_bear_pig2• 13 years ago

Michael Jordan and Lebron James definitely get lucky... But I'd bet on them hitting that lucky shot more than 99% of other basketball players because they just know how to execute. One of my friends was a top 10 high frequency equity futures (snp minis) trader in the u.s. i used to think damn he gets lucky all the fking time. i mean at best it's like 70/30 ratio. just pure luck. how does he just call the tops and bottom and never read a sec filing or financials of a company?! nope he is really that good at execution, and that's why he's only right 70% of the time whereas others are just coin flipping.

a lot of times. timing is luck. but a lot of people get lucky on timing... it's like if the bubble bursted next year then people would have said there was never an easier market to raise money / take risks / make quick money in mobile,social, etc. but i'm pretty sure there's a ton of smart people with luck on their side that's trying to do that right now; and 100 other variables besides luck will make majority of businesses fail.

how do you define luck? break down the components of luck.

frozenport• 13 years ago

Guy releases a unfun game with less then half the budget of his competitors and no name recognition along with poor marketing. Also program was technically ambitious. Then claims its random chance.

THIS IS precisely why its not random!!!

adamzerner• 13 years ago

I think luck is a trivial factor in a startups success if you're smart. If you think about success more reductively, and ask yourself "what has to happen for me to succeed?" and "can I accomplish those things?", you'll see that luck isn't too big a factor. I wrote an article that talks about this: https://medium.com/i-m-h-o/cd29597704f9.

levlandau• 13 years ago

Honestly, this is poorly written. The author ends up giving advice even though he starts out claiming that is a problematic thing to do. His advice is not so different from common startup knowledge-- success is proportional to the number of swings of the bat. That I think any founder can take to the bank. It is true regardless of what your personal situation is. Obeying a simulated annealing algorithm rapidly through life keeps you from looking too far ahead and from getting stuck in ruts. There are many other generalizations largely independent of your personal story that are very helpful.

What if successful startups are just lucky?

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