This post is influenced by two of my favorite books, ‘Fooled By Randomness’ And ‘Steve Jobs’
Whenever I go to the bookstore, I see a lot of intoxicating books on the rules to be successful. They are all merely accounts of survivorship bias. We often assume the extremely successful have something special in them that others don’t. Most of us try to emulate them, thinking if it worked for them then it should work for us too. Well, reality doesn’t work that way.
In all the biographies that I have read, all of the subjects were completely different having different personality traits with only a few similarities. A personality trait may work in one environment and fail miserably in another.
I’ll share stories of two most recognizable faces in business world below:
A legendary entrepreneur named ‘X’ was a binary thinker. He used to label everything as either ‘amazing’ or ‘shit’. He regularly used to berate employees and humiliate them for not being able to do something that was really hard to do in the first place. He used to steal ideas of other people while not giving them credit and portraying himself as the greatest living legend ever to have walked the surface of the earth. He rarely praised any of his employees and gave out criticism publicly to the point of humiliating them. He made his employees cry while also bitching about his executives and bosses behind their backs. Not forgetting, humiliating his very own ex-girlfriend and mother of his daughter by trying to prove in court that she could have slept with millions of men. Left her and his daughter to rot and begg for financial support. And he had hundreds of millions in net worth. On top of that, he was anti-loyal, cruel and unapologetic. He was obsessed with Eastern religions and enlightenment. And for all the talk of enlightenment, he was probably farthest away from it. He was delusional to the point that he could reject something with conclusive evidence and turn his mind away from it. One day, he got cancer. He spent nine months trying to cure cancer by going on vegan and weird natural-based diets despite everyone advising him against it (which he did for a lot of his life). His delusion cut short his life for good. I could go on and fill a few pages writing about his vices. You get it, he was not the kind of guy you would want to be stuck on an elevator with. Yet, he is hailed as one of the most influential entrepreneurs of all time and probably the most recognizable face when it comes to entrepreneurship.
In case you are still wondering, ‘X’ in this puzzle is ‘Steve Jobs’. And I learned all of it from his official biography (Do read it if you have time, great book). First of all, I don’t hate him and neither am I trying to paint him in a bad light for he had many great qualities too. All I have tried to do is to understand him. When it comes to Steve Jobs, many have tried to emulate his approach after reading his biography. And it works miserably for most people.
The world is not binary. For every vice Steve Jobs had, he had many such qualities that separated him from everyone else. They were essential for his success. Most of his rivals couldn’t think past to please investors for the next quarterly result. Steve Jobs focused on great products and played over the long term. He was extremely obsessive about the products he built. He was obsessed with the design and beauty of his products to a degree that would have exhausted almost anybody on the planet. He was a brilliant salesperson who was able to make a cult out of a publicly listed company. At Apple, it was said that ‘designers come first, then the engineers’. Such commitment to beauty and aesthetics made Apple the only lifestyle product in the tech industry. He built a whole integrated product with software and hardware for his products which hasn’t been replicated by any company till now except Apple. He did not listen to popular wisdom which dictated to create products according to customer’s desires. For he said that ‘the customer doesn’t know what they want till we give it to them’.
He avoided tacky-looking products like the plague. Once, he refused to wear an ugly oxygen mask in a hospital bed even though it could have ended his life. He instructed the hospital staff to bring aesthetically beautiful masks. If someone could be that obsessive about beauty in his deathbed, imagine him at the office during the weekdays. Even after treating his employees without much respect, he was able to make them rally to work in battle mode to deliver quality products. He could convincingly make himself and his colleagues believe in improbable events which was partly attributed to his ‘reality distortion field’. This delusion made him billions but also cut his life short when diagnosed with cancer. For the thing that makes them, also breaks them.
Having said that, if he had listened to business books or success literature, he would have been broke.
Consider Warren Buffett as another example. He has taken Dale Carnegie’s teachings about making friends to every cell in his body and applied them everywhere in life to form a web of trust. He hates confrontations, even in times of great moral crisis which can destroy relationships and businesses. Extremely protective of his reputation and obsessed with finding great investing bargains to the last dollar. He regularly learns from his mistakes and destroys his best ideas. He showers his employees with trust and is extremely aware of his biases. Rarely does he lash out against anyone publicly or call out anyone for bad behavior. And unlike Jobs, he learns a lot from books. One could consider him as an antidote to ‘Steve Jobs’. The only similarity between them might be that they are obsessive about their pursuits.
The lies that were told
I always grew up believing that there were certain rules to success. Like having discipline, waking up on time, being regular at studies, etc. These things no doubt help you and are the way one should behave but they alone will not make you successful.
Steve Jobs operated in a way that optimized his best qualities. He could bring out the best in him. He did not learn much from his mistakes. He might have fared better if he optimized his behavior around his mistakes. But he didn’t. And despite that, he did well in that environment.
If reading the above stories makes you believe that the only way to be a billionaire is to be like ‘Steve Jobs’ or ‘Warren Buffett’, then you have fallen prey to a simple mistake that people regularly make.
Reality is far more complicated than our feeble brains make it out to be. Aping the behavior of Steve Jobs or Warren Buffett or any other billionaire will not make you as successful as them. It might probably make you broke. If it worked for them doesn’t mean it will work for you. One can only take some ideas from such people and incorporate them into their lives at maximum. But it would not be wise to overdose on that drink.
The role of luck
It is impossible to predict the future consistently. The predictions that happen are usually a one-off or a fluke. They are not likely to be repeated. But somehow, we believe that the future can be predictable. Somehow, we believe that we know what is going to happen despite having an extremely terrible track record at predictions. Just take a look at all the predictions that the so-called ‘experts’ have had during the pandemic. It is often the case that we can mispredict our entire life and yet be as confident as ever about our next prediction.
Success in business or other non-predictable professions is very much vastly influenced by luck. Anyone who says otherwise has fallen prey to hindsight bias. Yes, skill and obsession are necessary but they are the bare minimum. Skill can make you successful with high probability but extreme wealth is largely the result of a favorable environment and ‘being at the right place at the right time’.
To paraphrase Nassim Nicholas Taleb – ‘Mild success can be explained by skills and labor. Extreme success boils down to variance’
An idiot riding on really strong tailwinds with great luck can become successful and speak at TED conferences whereas the smartest person can fail due to numerous headwinds in his way. The probability of someone knowledgeable, hardworking, smart, disciplined, and ethical to succeed is way higher. That’s it. It doesn’t rule out the possibility of a spectacular failure for the same person.
The alternative Jobs
Steve Jobs could have had his entrepreneurial career cut short. What if he hadn’t met Wozniak? What if he wasn’t able to get the information about Xerox GUI? What if his successors at Apple weren’t morons and he had to stick with NeXt (which was a big failure)? What if Disney didn’t come to finance PiXar? What if he wasn’t given up for adoption and his upbringing then would have been different? What if he had been born 20 years earlier or later effectively missing out on the software and electronic boom? Or what if he was born in Bangladesh to some unknown fish farmer? There are too many ways he could have not ridden the tailwinds to success in Silicon Valley. For every Steve Jobs, there would be at least a thousand Steve No-Jobs who failed spectacularly and sometimes to no fault of their own. They were just shit out of luck. That is why I find it extremely unethical to make fun of an entrepreneur for failing. Its brave to take a risk knowing that one can most likely lose it all and yet take the risk.
Even Warren Buffett survived many times in his career despite being a storehouse of wisdom. And some instances could have seriously damaged him. Buying Berkshire Hathaway was a great mistake that could have ended him. Many of his investments suffered in their initial years. Not to forget the Salomon brother’s crisis that almost put him out of business and destroyed his reputation. I worship the wisdom of Buffett and Munger yet I would still agree that the gods were kind to them on many occasions.
Luck and skill in Predictable v/s Non-predictable Professions
A cardiac surgeon who has performed successful heart operations in most of the cases is skilled. A dentist is skilled (At least the one I visit). Similarly, a computer programmer is skilled. They operate within certain boundaries where conditions don’t change. And it is very easy to judge their skill within a short span of time. Their skills are robust and will stand the test of time. Variance in the results of dentist cleaning your teeth won’t vary much. These types of professions are what I refer to as ‘predictable professions’. Your experience vastly reduces the probability of making a mistake. It is easy to distinguish a good cardiac surgeon from a bad cardiac surgeon. And it can be done rather quickly. And hopefully not at your expense.
Consequently, It is extremely hard to judge a good investor in comparison to a bad investor. Even decades of data might be proven wrong in a week. Some investors have made hundreds of millions over decades only to lose it in a few weeks. Would one call such investors skillful?
Predictable professions don’t make up any billionaires because they lack asymmetric effects and optionalities to make big bucks. One needs some kind of asymmetricity to be extremely successful. And trying to chase any kind of asymmetry often involves spectacular failures with a rare outlier of spectacular success.
For example, Elon Musk in 2008 was hours away from bankruptcy and would have been bankrupt if Daimler had not stepped in and funded his ailing car company at the last moment. He is regarded as a genius today and is a cult-like figure for millions. But had his third SpaceX rocket blew up or Daimler’s investment wouldn’t have come through at the time of a crisis, his name would have been on crappy Buzzfeed articles which pollute the internet with headlines like “10 idiots who blew up big money’ and so forth. It’s really easy to declare someone an idiot in the event of a failure and much easier to declare someone a genius in the event of a success.
Idiots do blow up regularly but not everyone who blows up is an idiot.
Probabilities and Payoffs
Someone who has achieved financial freedom is successful. Someone who can buy a whole village its financial freedom (i.e., a billionaire) is extremely successful. Achieving success is hard. Achieving extreme success is extremely hard and is usually not completely in your hands. Success stories often get million-dollar deals because we are suckers for them. Personally, I prefer failure stories as they tell you what to avoid which is much more important.
Having extreme success is tough because the odds are always against you. There are no rules for success or extreme success in general. You can increase the probability to the maximum. Any book telling you such stuff is probably making a fool out of you and giving you the hope of certainty in an uncertain world.
Phil Knight, the founder of Nike in his brilliant Memoir Shoe Dog writes
“And those who urge entrepreneurs to never give up? Charlatans. Sometimes you have to give up. Sometimes knowing when to give up, when to try something else, is genius. Giving up doesn’t mean stopping. Don’t ever stop. Luck plays a big role. Yes, I’d like to publicly acknowledge the power of luck. Athletes get lucky, poets get lucky, businesses get lucky. Hard work is critical, a good team is essential, brains and determination are invaluable, but luck may decide the outcome.“
Rewards in Life are all about probabilities and payoffs. That’s what we all try to maximize in our life.
And I’ll leave it at that.