Is Success Random and Successful Entrepreneurs Just Lucky?

Leonard Mlodinow in his book “ The Drunkard’s Walk” comments on how randomness rules our lives.

He reminds us of our statistics classes,  Pascal triangle, probability laws, randomness, series, sequences, limit. Shows us how we can make mistakes, misled by our intuition, that ignores the influence of random events (the "Ask Marilyn" example is remarkable) and presents a historic context on some people that have made a relevant contribution to such field.

And concludes with his view that, in the end, chance is more fundamental than causality: some of us will be successful and others unsuccessful – things are not really about competence and realization.

It is about this specific subject, in what it relates to entrepreneurship, that I want to comment.

Although I agree that we can all be placed statistically within a “normal curve” distributing different degrees of success, and that factors beyond our control have a relevant impact on the final outcome, our individual position in the curve is not random.

There is a difference between random and “of unknown trend or cause”, or even "uncontrollable" - and Mlodinow seems to often use these different concepts interchangeably. The consequences may be similar in some aspects, but it is incorrect to classify as random events that are very difficult to foresee or control.

Actually it is questionable if pure randomness can be achieved, as even the mentioned movement of a "dye in a glass of water" will have causes and trends that may be unkown, but not necessarily random.

I read in such determinism - "Randomness Rules!" - an implicit connotation of resignation,  like "there is nothing you can do, just give up"! It is like randomness is a “god”, the omnipotent cause of what we can not explain.

It is true that when we look at the whole population (say of entrepreneurs or fund managers) the chances are high that some will be positive outliers, that others will fail and the average will not beat the “market”. However, implying as a general truth that randomness is the main reason for outperformance (he mentions Bill Gates as an example) just underestimates the value of people who plan their actions, prepare for contingencies or know how to react to unforeseen events.

Of course, such events will take place and will have an impact. Good or bad luck are relevant. But individual decisions, actions or omissions will also significantly affect the outcome.

Entrepreneuring - actually life - is a lot about dealing with the imponderable, unforeseen and uncontrollable. Being lucky helps. But, do not underestimate the importance of doing your share of effective work. Be competent, proactive, anticipate, be flexible, adapt and, most important, persevere.

“Chances” that you will place yourself among the outperformers are just higher.

First Impressions about the Angel Investment World

As I am getting my first contacts with the world of Angel Investing, I am surprised with some seed investors who act in the market with the strategy of making several (dozens, hundreds) investments, often not even appropriately reviewed, trying by chance to get one big deal.

I believe that Angel Investing is different from that, what looks to me more like “supposedly educated” gambling - often betting with other’s people money - and sometimes also targeting at personal media exposure.

I believe in Angels trying to get an appropriate return for their financial risk, but also trying to contribute to the enterprise, sharing experience, network and coaching young people into good leadership practices.

On the other side, I have also seen a number of “entrepreneurs” aiming more at making money by selling stock of their early stage companies than from dividends of the profitable companies they were supposed to build. Of course, making money is a key aspect, driver of all such effort - and there is nothing wrong with that! - but it is not everything we, entrepreneurs, are usually looking for (see my previous post “personality profile”).

I believe that business related Entrepreneurship is about building an enterprise that should add value to the society. Within this context, it is about building a company that generates profit, operating within ethical principles.

Dear entrepreneur, remind that making money for ourselves from deficit generating business may be nice, but probably wastes society’s resources and investors’ net worth.  Making money as a consequence of a succesful company, an entity that you created and turned into a profitable and self sustained operation, is truly rewarding.

Angels and entrepreneurs should pursue to make money and also build value to society.

About Values and Culture - Inbev/ Anheuser Busch's Brito speech

Values and culture make a difference. They are not only the "law" to be followed by the whole organization but, when well disseminated in the company, also an important tool to facilitate fast decision making at all levels, making such company more agile, allowing for better customer service, etc.

According to Collins and Porras, in their best seller "Built to Last", companies that persevered in their culture for different management generations have outperformed their competitors in the market.

The enclosed video, a speech of Anheuser Busch's CEO at Stanford about the culture being introduced in the company by the new controlling group, presents what I consider to be some of the most important Entrepreneurial values - effective and already proven as a successful management model in different company sizes, industries and geographies:

• Sense of ownership;
• Focus on results
• Meritocracy
• Cost consciousness - spending in what makes sense for the customer and for the shareholder
• Candid relationships
• Acting fast, sense of urgency

Enjoy the video.

http://www.youtube.com/watch?v=OSnWnqq23JU

Personality Profile of a Start-up Entrepreneur

The personality profile is a relevant factor for a person to decide (and act) to start-up a new business. Several factors (including high motivation and drive) necessary to take the risks usually associated to such venture must have a direct relation with his/her personality.

I do not intend to associate specific characteristics as necessary for a start-up entrepreneur. However, I hope that, sharing some elements of my personality profile that I believe were critical for my motivation, decision and (what I consider) success, could provide good insight for people considering to pursue the similar track of starting and running a business in which he/she wants to maintain a relevant share of ownership.

For some time, I thought that it related to making money. However, going back to those early moments, I can see that the motivation behind my decision related more to my personality and other drivers than with the single objective of “becoming rich”.

Having my own company had been in my blood since I can remember. The fact that my father was an entrepreneur himself and that, while working with him, I had a chance of trying some of the sweet flavors (while protected from the taste of the sour side) of having my company had a relevant influence.

Such background was relevant. But other key drivers that made me quit a promising career at a leading consulting company - we did not even have a house and my wife was expecting our second child! -and undertake the risk of investing all our savings in a project to be started from scratch.

One of such drivers was an objective to be on my own, not to depend on how others would evaluate me but, rather, on what I could accomplish by myself. Not have to deal with corporate politics or even networking to step-up my professional career (although I do realize that there are drawbacks from such characteristic).

A second aspect was that I wanted to be in control, to be in charge of my life and to determine my priorities. “No boss”, autonomy to make my decisions and to follow my own rules. I wanted to do it myself, do it my way and do it now!

I had the energy, self-confidence, a lot of anxiety and I wanted to earn most of the value that I would generate. Finally, yes, I wanted to make money, too!

The risk did not matter much. All of those factors were stressful, but the potential dividends in terms of personal satisfaction, including the feeling of Realizing (in the sense of make real – “Entreprendre”) were very motivating.

Concept: DISC Personality Profile Assessment
(I am not an expert on DISC, but I want to share this interesting concept, helpful in several moments of my career. My experience has shown that the use of the DISC profile can be useful when recruiting for some specific functions. Moreover, I have also noticed that a number of start-up entrepreneurs have similar DISC profiles)

As described in Wikipedia, DISC is a four quadrant behavioral model based on the work of William Marston (Harvard) PhD to examine the behavior of normal individuals in their environment.

His research indicated that some relevant characteristics of behavior can be grouped into specific 'personality styles' with specific characteristics common to each style. All individuals can be classified acoording to such four quadrants.

DISC is an acronym for:

Dominance – relating to control, power and assertiveness
Influence – relating to social situations, ability to convince and to communication
Steadiness – relating to patience and thoughtfulness
Conscientiousness (or caution, compliance) – relating to rules, structure and organization

My Personality Profile
This profile refers mostly to the period when starting-up our companies in the 1980's/90's. Some of the elements remain the same, others have evolved or subsided in recent years.

Below I list some elements of my personality that I consider to have been relevant in my entrepreneurship experience.

• Highly Result oriented
• Want to be in control
• Ambitious, self-centered
• Like “to do it and do it now”
• Deal well with Uncertainty, Risk of loss, failure
• Low conformity with established order, rules – make changes
• High ability to persuade others, mostly through enthusiasm, emotion
• Persistent, self motivated, able to be hit and quickly find strength to start over, to be there the next day

My DISC graph usually shows that I am a very high D; high I; very low S; and low C.

In summary, I am confident that my decision to start-up and run my own company had more to do with certain personal characteristics and, consequently, personal needs and desires than with the objective of making money, by itself.

Such elements were so strong that I knew I would be frustrated and unhappy to follow a regular career at a company where I did not have a lot of autonomy and control. Starting my own company was just what I had to do.