I had started other companies before that had survived infancy and became modestly successful, but their profit margins had been thin or absent, every month was a struggle and, of most concern, I could see that macro societal and economic forces were tossing these businesses toward a rocky shore. Prosperity was not going to be in their future.
But that experience had tempered me and now, with my newer business, I was smarter, mistakes would be fewer, prosperity more likely. How could it be otherwise?
That period of lush growth and profit lasted for no more than three or four years, after which underlying demographic changes (those dastardly macro forces again) halted growth and sliced margins. Deciding diversification would be a clever strategy, I launched yet another business, for which we did lots of market research and planning. Two years later I closed that business down after losing one million dollars, a fortune to me then and now.
The business that did have a good run in the 1990s, I sold in 2009 in order to move writing to the center of my professional life. In my 30 year-career as an entrepreneur I had done okay. I was far from wealthy but I also didn’t end up bankrupt. In baseball terms, I had hit a solid single – no home run and no strike out. (I can’t resist noting that the year I started my first business, 1979, two other Seattle guys launched a company. Theirs dealt with an obscure, esoteric thing called software. You will have heard of Bill Gates and Paul Allen.)
A big shift in thinking about my 30 years of launching and running businesses was how I apportioned skill and luck. When younger I viewed skill (and the attendant traits of drive and perseverance) as the dominant factor. As I aged, I came to see luck as in the ascendant. Macro forces beyond my sight and control had as much to do with our successes and failures as anything I ever brought to the party.
This question of what is more important – luck or skill – (drive and perseverance are always necessary) carries political baggage. Conservatives, perhaps hearing echoes from their goddess Ayn Rand, tend to believe that an individual’s talent and effort account almost entirely for success. Liberals see larger forces beyond any entrepreneur’s control having a significant influence on results. I have known plenty of brilliant, prudent entrepreneurs who were also good managers, who got slaughtered in the marketplace. Conversely I have known feeble-minded jerks who made fortunes.
It turns out that this question has attracted the attention of academics. Economist Robert Frank recently reported in the New York Times about research that suggests that “chance events may influence market outcomes far more heavily than previously thought.” Frank closes his essay by observing that “we should keep celebrating the talented, hard-working people who have succeeded in their businesses or careers. But the research provides an important moral lesson: that these people might also do well to remain more humbly mindful of their own good fortune.”
Even the Times conservative columnist David Brooks weighed in on this subject last week, noting that “Great companies, charities and nations were built by groups of individuals who each vastly overestimated their own autonomy. [Brooks sees this as a useful, perhaps even necessary, delusion.] As an ambitious executive, it’s important that you believe that you will deserve credit for everything you achieve. As a human being, it’s important for you to know that’s nonsense.”
To a significant degree we are balls being constantly kicked up by that spinning roulette wheel. Side-effects can be dizziness, bruises, existential discomfort, humility, magnanimity and empathy.