Whenever successful entrepreneurs are asked for the secrets of their success, it strikes me that their answers inevitably involve one or all of the following: (1) persist, i.e. do not give up; (2) learn from your mistakes; and (3) give the customers what they want.
I have always found it troublesome that such advice sounds too simple, that there must be someting else, the secret that makes such entrepreneurs special. But perhaps there isn’t. Perhaps entrepreneurial success is indeed built from the iteration of these simple rules.
Why – I hear you ask – isn’t everyone successful then? I see the answer in the fact that entrepreneurial outcomes – huge success, failure and everything in between – are chaotic. The key to understanding the term chaotic is not to confuse it with random. Both chaos and randomness imply unpredictability but in different ways.
Randomness is what creates lottery winners and it is clear to us that there is no secret to becoming a lottery winner. Hence we never invite lottery winners to speak about their success. This is because random outcomes are non-deterministic, i.e. there is no particular reason why they happen; they just do.
Chaotic outcomes, on the other hand, are deterministic but unpredictable. In other words, the rules that generate the outcomes are clear. They can be very simple but iterative, that is applying the rule over and over. Just like persisting, learning and responding to customers. In entrepreneurial settings, such iteration traces non-linear paths, which means that there is no telling where you might end up. Miniscule differences at the outset can end up widely apart. I love the analogy of kneading dough. If you put two chocolate chips next to one another and continue by pressing, stretching and folding – simple, iterative rules – there is no telling where the two chips will end up in the final form.
Many successful entrepreneurs say that entrepreneurship is simple. It indeed is – the action rules are simple. There is just no telling where you will end up.
The opening sentence of Tolstoy’s Anna Karenina –
“Happy families are all alike; every unhappy family is unhappy in its own way”
– has inspired the term “The Anna Karenina” principle. It readily applies to entrepreneurship:
Successful entrepreneurs are all alike; every non-successful entrepreneur fails in his or her own way. Success, then, is not about ensuring positive factors, but avoiding all the negative ones.
Succeeding by avoiding failure may sound like an oxymoron, but if you replace “avoid” with “learning from and adapting to”, then success is all about finding and ironing out the kinks.
This article fits very nicely with my earlier posts about success, failure, and Black Swans.
Success Is Random, So Court Serendipity http://www.fastcompany.com/3000910/success-random-so-court-serendipity
A very intriguing TED talk by Tyler Cowen. Let me recap some of his main points:
1. People love stories.
2. No one describes their life as mess. People typically describe it as a journey, battle, novel, race, play, etc.
3. By telling stories, we are imposing order on the mess that we observe. When something is in the form of a story, often we remember it when we shouldn’t.
4. We should be suspicious of stories … and give in instead to “epistemological hovering and messiness and incompleteness … where not everything ties up into a complete bow and you are really not on a journey … you are here for some messy reason or reasons and you do not know what it is”
We do get excited and inspired by entrepreneurial stories, so where does this leave us? I am personally very wary of extrapolating from individual stories, particularly in the form of “key takeaways” [my favourite are “work hard”, “believe in yourself”, “be persistent”, “challenge the status quo”, “take risks”]. We first need to understand why these things worked in the particular case before blindly applying them to another.
If you dig under any entrepreneurial success story, you will inevitably find some trigger events that could not have been anticipated and that are crucial for the unfolding of the story the way it did. Think of Kiva’s being featured on DailyKos on October 27, 2005 or being the subject of a PBS Frontline documentary on October 31, 2006. Both were watershed events for attracting lenders and proving the viability of the concept. Their effects are clearly seen on this exciting visualization of Kiva’s growth.
Or think of Paul Terrell’s placing an order for 100 Apple I computers (worth $50,000) for his Byte Shop Computer Store, having seen Steve Wozniak’s demonstration of the computer at Homebrew Computer Club meetings. Up to that point, Jobs and Wozniak’s business concept had been to sell printed circuitboards to fellow club members.
When thinking of such events, Nassim Taleb’s idea of Black Swans comes to mind. These are rare, unanticipatable events with extreme impact that are relatively easy to explain retrospectively. One of the key examples is that the ten best days account for around half of US stock market returns over the past 50 years.
It seems plausible then to think of (successful) entrepreneurship as herding Black Swans. No matter how skilled or ambitious the herder, without a few of these rare birds in the flock, the entrepreneurial journey may never turn out to be historic or exciting.