I think the main factor is luck. It's like a sword in an online game. You can add critical chance to it by maximizing stats but it's always capped. If you have good team stats, good product stats and good markets stats, you just improve your chances. By how much? Impossible to compute in real life, in a game that would be +15%, so every few hits (products in our case) you will blow a critical. So let's just call it luck in the end.
After building 3 products/companies from scratch and working on countless others from small side projects to massive unicorn success stories, I can't deny the luck factor, but it rubs me the wrong way when people focus on it as an explanation of success.
For one thing, luck is not really a single factor, rather it's the sum effect of all the chaos and entropy in human systems. Any given instance of luck (eg. IBM licensing MS-DOS in 1981 because they didn't foresee the market value of software) is just one-off serendipity unrelated to all other instances of luck. In a tautological sense luck is definitely the most important thing because if it wasn't, a given opportunity would be obvious and already exploited.
But my true critique is more personal—luck is by definition is something which one has no agency over. Some use this as a mental crutch to justify sour grapes about their own lack of success. However by focusing on luck and thinking of it as the end-all-be-all, one can easily lose sight or motivation to do the things under their control, which, ironically, could improve their luck.
The better mental model I believe is to focus on your base qualities: develop hard skills, a work ethic, systems understanding, and relationships. No one is great at everything, but within these broad categories are many valuable traits, and by combining a few of them you can open the door to novel opportunities. By doing so, you are primed for luck (although you still may need to recognize and seize it), and will be in a much better position than someone whose mental energy was on the things outside of their control.
I think the main factor is momentum. People underestimate just how brutally hard it is to do literally anything when you aren’t already doing it regularly.
Luck plays a huge role in early momentum. So does money and previous experience and a growing market. They all fade sharply as you get established.
It’s still not a particular helpful frame to evaluate startup success. In some ways it’s a tautology, momentum comes from momentum. But I still think it’s probably more descriptive than most of the original post.
That’s why the best startup advice is often so frustratingly vague. Stay focused, pick the right collaborators, release the first version as quickly as possible. They’re all dancing around the same basic idea which is you need to get the flywheel moving at basically any cost.
Luck is not a factor here, in that you have no control over it. This conversation is about what factors you can control are the most important. Which ones reduce the amount of Luck you need.
No one is saying you can reduce Luck out of the equation, but choosing the right Time to be in the right Market seems to matter more than anything else.
I don't believe luck is a significant factor. The number of entrepreneurs who have second and third companies with successful exits effectively demonstrates that someone can consistently do the right things to win, react to challenges in the right ways, and repeat their success. If luck was a significant factor that would not happen.
The more you win, the more you are going to win. The more you lose, the more you are going to lose. If you win one time people will treat you differently than if you lose. Easier to get capital. Psychologically it will affect you and others around you. Win twice, and this will escalate, people will literally be in awe over you. People will literally do whatever you will tweet. There is also an extremely low chance that you are always going to win in your lifetime, many books will be written about you while a huge graveyard of entrepereneurs that were more capable than you have written on their tombstones: "But what have I done wrong?". But it wasn't their fault, they actually did whatever it was in their power. They were fooled and led to ruin by randomness.
You have to consider the problem from first principles.
A startup is always: creating value by addressing a need for a group of people.
Skill and luck weave through all of this. Finding the group of people? Maybe you strategize and seek those out, often they end up being the group you’re a part of or adjacent to (luck or skill?). How about finding that need for that people, and an important need too? If you have past experience maybe you know where to look, maybe you know how to filter the opportunities better and what to focus on. The process of creating value? Maybe you went into a discipline seeking those skills specifically for a startup, or you just happen to know people with the necessary skills to execute.
Overall: it’s a hard problem with constantly changing rules and strategies, and often you end up competing with other smart and talented people. Skill stacks the odds, but the problem is so complex that what we call luck is just the lack of deep understanding of the problem.
There is probably a set of steps that you could take one after the other that guarantees you’d make $1 billion dollars. Figuring that out is so difficult and complex and changing that thus far the best one can do is be as skilled and hardworking as possible, optimizing where you can, but even that doesn’t guarantee the solution: hence luck. The whole thing IS a skill problem, but it’s so complex that all the parts we can’t fit in the equation we just call luck.
Serial founders have gone farther in deciphering that “luck” into skill, so luck is less of a factor for them.
>"The number of entrepreneurs who have second and third companies"
If that were true, I would expect each next conpany to be much more succesfull as the person accumulates capital, network and skills.
Instead what I've seen (and i do not study this as my day job) is that someone has a very successfull startup, and then creates a few 'meh' companies.
Peter Thiel never replicated his success, Elon's Boring Company and Hyperloop are unimpressive, Mark Zukerberg or Blly G never surpassed their initial success.
This leads me to conclude that with the right skill, funds and connections you can create a business, but to have explosively growing startup is really not a repeatable process
Peter Thiel never replicated his success, Elon's Boring Company and Hyperloop are unimpressive.
Thiel's Palantir is a $40B company. That's a long way shy of PayPal but its certainly quite successful. Musk has had moderate success with Tesla and SpaceX.
They might not have surpassed PayPal (yet) but they are both doing successful second and third businesses.
So to me this disprobes the hypothesys: if it were a skill the way programming is, your 5th business should be mwaay more successfull than your first, just like your 5th react app is better thsn your first
I'm not saying founder ability is the only consideration. There's plenty of other factors - timing, market size, team, etc. Those are things that can be improved with skill and practise. I'm just saying luck - something that can't be improved with experience - isn't a significant factor in my opinion.
I'm not suggesting that poster above is saying this, but I have found a lot of founders who fail say that luck is important, while a lot of serial entrepreneurs say luck isn't a big factor. On some level it might be the case that people use luck as an excuse for their failure because they're unwilling to be introspective enough to work out a more tangible set of reasons why their startup failed. On the other hand, maybe the serial entrepreneurs are just lucky and like to say it was actually their skill instead.
It could be both. Some people are better at others at identifying market currents. From the outside, we call it "luck," because how else would you explain it? I'd imagine a lot of it is based on gut-feeling after months of research / interaction with the market.
