[sanjiallblue]

This article ignores a very central tenet of becoming rich:

Luck.

Most people didn't get in the position they were because they were geniuses. Few individuals fill that role. They get there because they were lucky. Bill Gates certainly wasn't the best programmer of his day and he most definitely wasn't the most adept businessman and he wasn't the most brilliant thief.

He was lucky.

He turned out a product that everyone wanted at exactly the right time. Now, as businesses have evolved alongside technology there certainly is slightly less luck (I would personally contend only slightly). But the founders of Netflix probably weren't the first people to think about mailing rental DVDs to customers, they just had the money and the capital to make it happen when the market was just enough ready to accept their existence. They developed expertise in that particular business, mailing DVDs to customers, and killed an entire other industry (for all intents and purposes) in the process.

How the author relates this to their streaming model (what was motivated the change) is baffling to me. Her entire premise seems to try and imply that the wealthy are somehow more intelligent and that, pardon the frankness, is fucking idiotic.

Netflix didn't become a giant through streaming content. They parlayed DVD money into a streaming business because the whole industry was making a very obvious shift in that direction. I mean hell, if they were half the geniuses that the author makes them out to be they wouldn't have selected Silverlight as the backbone of their service.

All I saw was a group of lucky people in one industry try to jump into another industry that appeared deceptively similar, and just because Hastings is their CEO doesn't make me think he's intelligent. If anything he's demonstrated that he doesn't fully understand the economics of splitting media.

The Quickster Announcement came off to me as a very stubborn businessman, tricked into thinking himself intelligent and a captain of industry by his fabulous luck, making a rash decision to vindicate a strong opinion he had behind closed doors.

The only thing I can take from this article is that money does a very good job of making the rich think that they're intelligent.

[confluence]

Thank you, thank you, THANK YOU!

If only more people knew this they would stop finding patterns where they probably don't exist.

We should scream it to the rooftops.

Skill + Luck = Success

Skill is probably necessary, but not sufficient for success.

All success is due to the confluence of differing variables:

capital/relations/knowledge/attitude/technology/society/education/opportunism/alliances/utility etc. etc.

over a long period of time.

Humans like to explain things away through single factor theorems.

Either "the rich are rich because they are intelligent", or "they are lucky". False dichotomy alert!

To become rich it is usually a combination of the two, with luck playing the bigger role in leveraging skill to the highest levels of success in noisy areas ( business vs. athletics ).

Wealth like stock market prices and other one bit measures of systems of ASTROUNDING complexity rarely tell you what it was that lead to it being the way it is.

It's like sound analysis.

The addition of various agents which produce a point in space over time, to which you do not know which percentage is violin ( skill ), and which percentage is the cymbal ( luck ).

[dredmorbius]

I'd amend that: skill + determination + luck = success

Though you might roll up skill and determination into skill alone.

Otherwise, very well put.

[megaman821]

Just because something has a low odds of happening doesn't mean the main attributing factor was luck. Skill, intelligence, and determination play a far more important role.

If everything was mainly luck based why don't China and India have most the world's richest people? They have by far more tickets in "rich lottery" than the rest of the world.

[ImprovedSilence]

It's really more a matter of persistance if you ask me. you can have bad "luck" and fail 50 times. But you only need to get "lucky" once, to be successful.

Fall down seven times, stand up eight - Chinese Proverb.

[nazgulnarsil]

this belief pays little if any rent.

[gwern]

It pays plenty of rent. It tells us to expect all the usual randomness results about Wall Street, traders, hedge fund managers, etc. It tells us to expect something that looks like a random distribution like a Poisson in most terms of business success. It tells us to expect plenty of leaders to flame out simply because they got where they were through random rolls of the dice and for once their dice came up snake eyes.

[nazgulnarsil]

I'm sorry but quantifying the role chance plays in some given process DOES pay rent, the general belief "X is like Y because of luck" isn't useful.

[sanjiallblue]

I beg to differ, but I'm sorry if you haven't had the same luck.

[paulhauggis]

"He was lucky."

Luck plays a part in everything. It's lucky that we live on the third planet from the sun, which is habitable, so you were able to get your PHD.

However, I'm really tired of people attributing success to mostly luck, which is what it sounds like in your post. Winning the lottery or gambling is mostly luck. A successful business takes about 1%-5% luck. The rest is skill and/or intelligence.

Everyone has potential opportunities that pass them by on a daily basis. The ones that can recognize them (with the skills/intelligence) and actually decide to act one them are successful. I had many at my last job and nobody else saw them because they just didn't have the skills.

"Netflix didn't become a giant through streaming content. They parlayed DVD money into a streaming business because the whole industry was making a very obvious shift in that direction. I mean hell, if they were half the geniuses that the author makes them out to be they wouldn't have selected Silverlight as the backbone of their service."

If it was so obvious why didn't someone else do it? It's not like they had the most money? Also, everyone makes mistakes, even "geniuses".

If it was mostly luck. I could sit here and do nothing and I would have a successful company tomorrow. You and I both know this won't happen.

"All I saw was a group of lucky people in one industry try to jump into another industry that appeared deceptively similar, and just because Hastings is their CEO doesn't make me think he's intelligent. If anything he's demonstrated that he doesn't fully understand the economics of splitting media."

Strange how "luck" as you say seems to follow them around. You get lucky in one industry and make millions of dollars and then you get lucky in another similar industry and have the most popular streaming service in the world.

"The Quickster Announcement came off to me as a very stubborn businessman, tricked into thinking himself intelligent and a captain of industry by his fabulous luck, making a rash decision to vindicate a strong opinion he had behind closed doors."

Yeah, that was a dumb decision.

[_delirium]

> A successful business takes about 1%-5% luck. The rest is skill and/or intelligence.

I'd put it considerably higher than that, especially in markets that have strong dynamical-system type effects (winner-take-all markets, strong dependence on feedback factors like visibility/brand, etc.), where small differences early on that are nearly impossible to predict can magnify arbitrarily to large differences later on. If I had to put a number on it, probably 60-70% luck, once you pass a baseline level of competence.

Even in my own personal endeavors, it's really surprising, and---even in hindsight!---seemingly random what stuff succeeds and what doesn't, and which factors turn out to matter. Especially true of any sort of online commerce, where the difference between successful and unsuccessful websites is in part the quality of the content or product, but also strongly dependent on the vicissitudes of information flow, "virality", etc. Nonlinear dynamical systems have complex dynamics, and they don't always correlate very strongly with anything except the system's internal dynamics...