Posting by Arun Natarajan in The Startup Journey web log.
I recently watched an interview with MphasiS-BFL's Chairman & CEO Jerry Rao television ( Udaya TV on February 20, 2004), when he said - quite firmly - that luck plays a huge role in any entrepreneur's success. He said a large part of his success was owed to the fact that he was "at the right place at the right time".
Rao gave examples to prove his point about luck being so important. For instance, his highly successful career with Citibank had begun "willy nilly" - via a campus placement at IIM-A. And even his founding of Mphasis Corporation, a California-based software company that subsequently merged with BFL Software to form Mphasis-BFL, was sparked off by a chance meeting with MphasiS' future co-founder during a flight trip.
Rao's remarkably candid and humble admission made me think about the role of luck in my own entrepreneurial endeavors as well as that of my friends. And sure enough, I could think of quite a few instances where sheer luck - good or bad - made all the difference.
Obviously we all know about the definition of luck as something that happens when "preparation meets opportunity". But is this always true? How about an entrepreneur whose idea was simply too early to market? What if the market that he was going after, blooms - to the benefit of his followers - two years after his start-up folds up?
As I was thinking more on these lines, as luck would have it (!), I ran across articles and interviews with other leading entrepreneurs which backed Rao's views on the Luck Factor.
Guy Kawasaki (the former Apple executive who founded investment bank Garage.com) says in his Forbes.com column that if he were to allocate weights to factors that contribute to entrepreneurial success, he would give 20% to experience, 10 % to classroom learning, 30% to hard work and 40% to luck. 40 per cent!
Seth Godin (who founded online entertainment and marketing company Yoyodyne and sold it to Yahoo!) actully wrote an article titled "The L Factor" in Fast Company magazine. "Friendster, the online social networking service, is the latest viral rage. It recently turned down a chance to be acquired by Google for $30 million. Just a few years ago, though, SixDegrees.com was offering almost precisely the same service, and it's no longer on the radar," he points out.
"Every time you launch a product or service .... you're either going to hit or not. If you get lucky, you're entitled to deny that luck had anything to do with it. But if you fail - and you probably will - understanding the role of the L factor will keep you sane. And if you've planned for it, it will keep you solvent as well. Solvent enough to try again and again, until you make it (and take all the credit)," Godin says.
Other entrepreneurs like Vani Kola, founder of software firms RightWorks (sold to ICG) and Nth Orbit, do not believe luck has any magical quality to it. It isn't something that will happen to you if you just sit back and relax. Or just another employee.
"Luck is the ability to recognize and take advantage of an opportunity.... It's being able to take the risk, and if you're wrong, you have to be able to change it," she said during a panel discussion at Silicon Valley's Churchill Club.
So, can entrepreneurs "plan" to get lucky?
Godin feels that the answer is to spread your bets. "Do that with lots of products, not just one or two. Cut your overhead so you have plenty of chips, ready for another spin of the roulette wheel," he advises.
Sergio Magistri of InVision Technologies (a company which makes explosive detection systems for airport security), another member of the Churchill Club panel, thinks having the "smartest possible team working together" is a good insurance against bad luck. When he was asked in an interview whether, after the September 11 attacks, his company felt like they had "won the lottery", Magistri replied saying "Yes, but you wouldn't believe how many tickets we bought." Yes, InVision was in exactly the right business post 9/11. But in preparation for it, the team had to make "investment in time, in people, in energy, in human work, in getting your people to work together the right way".
Amnon Landan, Chairman & CEO of enterprise software company Mercury Interactive and another member of the Churchill Club panel, provides a military analogy. "When they shoot at you, you can stay behind a rock and you'll be safe, or you can try and get to whomever is shooting at you. So you jump from one rock, to the other one, to the other one. You get exposed in the process, but in the end, you can actually point at who is shooting at you and take care of business. When you take this approach, you increase the risk but you increase the likelihood that you'll win," he said. "I think that's what entrepreneurs do - they take more risks so when they fail, they fail big. But they increase their likelihood that they'll be lucky".
So, the bottom line on the "L Factor" seems to be that if you have the other qualities required of a good enterpreneur (i.e. education, experience and hard work), there is a high probability that you will get lucky as well.
Arun Natarajan is Editor of TSJ Media. He can be reached at arun(at)tsjmedia.com