How do we break luck down into its component parts, so we can create luck for ourselves and for others…
Chance comes first. Then what you do with the chance.
How much of success is actually just good luck?
Those who have been successful like to say:
The harder I worked the luckier I got.
There is a truthiness to that which appeals. But it’s an unhelpful prescription.
I’ve worked on some startups that have gone on to achieve remarkable success. And I’ve worked on others that are thankfully mostly forgotten to the passage of time (except for the useful scar tissue). But the difference between those outcomes isn’t explained by how hard we worked, or even how much we wanted to be successful.
Rather than trying to belittle the role that luck played, we need to be more specific and break luck down into its component parts. Then we can understand how we can create luck for ourselves and for others…
Timing is everything.
Trade Me is a great example of this. The site launched in 1999, the same year as the very first ADSL connection in NZ, and a year before the Southern Cross Cable was commissioned. Many people were connecting to the internet for the very first time, and were hungry for something to do with it. At one point in the early 2000s Trade Me accounted for two-thirds of all domestic web page views.
By the time we sold the business to Fairfax in 2006 about 70% of New Zealanders were online and about half of those connections were broadband.1 That trend gave us a fast growing group of people to target as customers.2
Many successful startup ideas are actually failed startup ideas from an earlier era. For example, online groceries were an expensive mistake in 1999,3 but an essential service by 2020.
It’s not enough to have an innovative idea, we also need to execute. But it’s much easier to execute if we’re selling something that people are ready to buy.
If we want to create When-Luck, we need to think about the waves that are coming next, and paddle to position ourselves so we are there ready to capitalise on them when they break. We need to be able to describe not only “why?” but also “why now?”
We are the average of the people we spend the most time with.
The cliché is: it’s not what you know but who you know.
We can hear that and complain that we don’t know the right people. Or we can realise we all know people. The question we should ask about our specific group is just: do they lift us up or drag us down?
We mostly underestimate the impact that our friends and colleagues have on our lives. When we spend time with people who behave a certain way, odds are that we will behave that way too, for better or for worse (unfortunately this seems to be true for negative behaviours just as much as for positive behaviours). So, it’s important that we choose those people carefully.
This is actually one of the keys to self-improvement. If we want to be fit and healthy, we need to choose friends who are fit and healthy. If we want a better balance between work time and family time, we should find others to work with who already do this. Likewise, if we want to really push ourselves in our career it will be much easier with colleagues who are doing the same.
Team culture is a huge and under-appreciated aspect of all successful startups.
This is why second-time founders sometimes struggle to repeat their success. It’s a long hard job to build an impressive team with a strong culture. Those are both rare and fragile things. It’s daunting to think about going back to the beginning and starting again with a blank slate.
If we want to create Who-Luck we need to be more selective about the people we surround ourselves with.
Related: Most People
What unique combination of skills do we have?
Steve Jobs famously described Apple as a company that exists at the intersection of technology and the liberal arts. In his mind it was the combination of these two things that made it great.
As he explained:
A lot of people in our industry haven’t had very diverse experiences. So they don’t have enough dots to connect, and they end up with very linear solutions without a broad perspective on the problem.
This is a powerful idea that we can use to select and shape the things we work on. But it requires two uncommon adjustments. We need to accept that being excellent at just one thing isn’t enough. And, then we need to think harder about how the different things that we are good at or excited about can be combined.
Related: Be a Good Dictator
This is true for individuals. But it’s especially true for teams. When everybody we’re working with looks the same and thinks the same, there is no intersection. But when we have different people bringing different skills and experience to the group, the whole can be much greater than the sum of the parts.
Teams that are diverse are less likely to be blindsided by a perspective that they lack or by unconscious bias. They are more likely to surface and traverse all of the options when making difficult choices. They are more likely to spot obscure competitive threats. They end up improving each other by complementing individual weaknesses with collective strength.
If we want to create What-Luck we need to understand our unique collection of skills, both individually and collectively, and then explore the ways they complement each other and combine to create something new.
We shape our environment, but mostly we are shaped by our environment.
For example, it’s not an accident that Xero was started in Wellington.
It was, at the time at least, a great melting pot of people with recent relevant startup experience looking for the next interesting thing to work on, including some of us with capital to invest from recent exits.
It’s a small city, physically constrained by the harbour and hills. It often feels like everybody knows each other. There are lots of opportunities to bump into other interesting people.
It’s also famous for terrible weather - the wind and rain that hits you sideways certainly create plenty of incentive to be indoors and working hard.
That might feel like a unique set of circumstances. But actually every place has a competitive advantage. We just need to find it and appreciate it.
It’s not just cities. We can also apply this idea to our whole country.
For example, we could reframe our geographic isolation as a feature rather than a bug:
We’re not a long way from anywhere, in the middle of nowhere, unless you believe right here isn’t somewhere.
With the benefit of hindsight New Zealand was the perfect place to test the go-to-market strategy (using accountants as a channel to small business customers) that Xero would later execute successfully in much larger markets in Australia and the UK. Big enough to highlight the lessons but not so big that the potential got stamped out before it could gather momentum.
To create Where-Luck we need to understand and leverage the advantages we get from our environment.4
Related: The Tyranny of Distance
These different types of luck all re-enforce each other.
For example, we can create luck right at the very beginning. If we can clearly articulate our values well then it makes everything else easier.
The more ambitious and meaningful the mission, the easier it will be to attract others who resonate with those, and will want to join the team. This in turn increases our Who-Luck, and in some cases mitigates bad Where-Luck.
Related: Inconvenient Values
Of course, there is always an element of pure chance involved in any success or failure too. There are critical moments when we desperately need to roll a double-six or we’re done.
But those are pretty rare in my experience.
More often luck is not something that happens to us, it’s the things we do that create the opportunity. Then it just depends whether we take it or not.
That’s how it worked for everybody you envy and admire.
Until you make the unconscious conscious,
it will direct your life and you will call it fate.
— Carl Jung
Several months after Trade Me was sold the NZ government announced a major shift in how telecommunications was regulated, including the unbundling of the “local loop” network which allowed ISPs to compete with the incumbents which controlled the copper network. It’s nostalgic to read some of my old blog posts from that time and think about how much Spark and Chorus (nee Telecom) have re-invented themselves in the years since. ↩︎
Of course, this also created some significant challenges - we needed to ensure we didn’t push beyond the capability of the browsers and internet connections that most people were using back then, and we had to teach people the basics of how to protect themselves online. While both of those things felt like work at the time, they both made us stronger. ↩︎
In 1999 I was living in Sydney and working as a consultant for Accenture. At the time the CEO was George Shaheen. He left the company that year, apparently one year short of qualifying for a lucrative retirement package, to move to Silicon Valley and become the founding CEO at Webvan. I also quit that year to start Flathunt, which later became the basis for Trade Me Property. Unfortunately Webvan became one of the high-profile failures from the initial dot-com bubble - they raised $375m in an IPO and valued at nearly $9b, but by 2001 were out of business. I guess only one of us was lucky? ↩︎
The slightly less comfortable way of saying this is: if our current environment isn’t a good match for what we’re working on, we probably need to move! ↩︎
Working on a startup is much more like racing a BMX bike than riding a roller coaster.
Here is some unusual advice for people working on a startup, or thinking about it: swim.
To be considered successful we just have to do those things that most people don’t.
Be a Good Dictator
Think about the intersection of the things that you care about, have authority in and are prepared to take responsibility for.
What rugby teams and rowing squads can teach us about building and managing diverse boards and executive teams.
The Tyranny of Distance
New Zealand is often condescendingly described as a small island a long way from anywhere. Is it, though?
Why is it so hard to articulate and document shared team values?