Starting a Business – Planning – Part 2

Part 2.1

Amazon had desks made of doors, which became a symbol of frugality, Facebook connected the world and ‘moved fast and broke things’, Apple had a famous garage and a visionary founder.

These stories are part of who these companies are, part of their narrative, their origin, their mythology.

Part 2.2

There are likely one hundred things that made these companies successful, and also likely that the interaction between these attributes, decisions and traits played a part as well.

We all love stories. When we seek to explain something, nothing resonates quite like a story.

Particularly one with a definitive judgement. That’s why the news and the popular experts get the air time they do – they deal in certainties and stories.

Reality, unfortunately, is more subtle than that. Probabilities and skill combine to create the reality behind a story.

Part 2.3

Dark matter exists.

Dark matter exists in business, dark matter exists in history. The businesses that didn’t make it, the losers of the battles, never to be heard from again.

We don’t hear the stories of the thousands of companies that didn’t make it. Even though they may have had a hacking culture, doors for desks, or even started in a garage.

There is a silent cemetery of businesses that we never hear from, which makes testing the hypothesis of what made certain companies survive and thrive over others very difficult.

Couple this with the unpredictability of the future and we may want to ask, why bother – is it all up to chance?

Part 2.4

No – Skill and luck both play key roles.

Being successful in business is a little bit like being good at poker. You need to learn the probabilities and rules of the game that give you the biggest chance.

You will experience volatility, ups and downs, but play enough hands in the right way and you will be successful.

You can judge the skilled players by their track record over time. The longer they have been playing successfully, the more likely they have figured out the rules of the game.

The more outlandish you want your success to be, the more you are going to have to put yourself out there and potentially lose some big hands.

In part 3 – tips on how to get lucky

Part 2.5

In summary;

• Origin stories exist and we flock to them like moths to a flame, it is in our nature
• However; these are often misleading and oversimplified
• We only here from the winners (there are huge missing datasets, those that weren’t successful)
• This, coupled with the uncertainty of the future makes defining cause and effect relationships difficult.
• It isn’t all luck, success comes from a mixture of skill and luck, much like playing poker.
• You can figure out the percentage plays, which will pay off over time as the volatility smooths out – more on this next time!

Where did I get these ideas? This blog is a combination of things I have read, heard, pondered, and in the end weaved together. At the end of each post I will do my best to provide some rough references, please let me know if I have made mistakes, as I most likely will;

• The Black Swan – Nassim Nicholas Taleb (this post leans heavily on his work)
• Antifragile – Nassim Nicholas Taleb (as above)
• Thinking, Fast and Slow – Daniel Kahneman
• Superforecasting – The Art and Science of Prediction – Philip Tetlock, Dan Gardner
• The Everything Store: Jeff Bezos and the Age of Amazon – Brad Stone
• Akimbo (Podcast) – Seth Godin
• Principles – Ray Dalio

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