The Pursuit of Luck

I am somewhat a hermit.

I spend my days working as a free-lance business consultant.  My office is on a  small sheep grazing farm in Tasmania, the southern most state of Australia.

When I am not working I spend time writing, gardening or just thinking about my opinions, ideas and theories.

Or maybe drinking to escape the world of thinking!

My best friend Marcus is also somewhat a hermit.  He owns and runs an Internet business selling “how to speak Spanish” e-books and tutorials.  He too spends lots of  time thinking – generally about how to teach Espanol in a rich way and how to attract and secure more business in the very competitive Google AdWords world in which he operates.

Marcus and I meet a few times per week to play squash. Today in our three set break we were discussing how we both were living a hermit lifestyle in Tasmania and that it was time for us to “get out and about” and “mix it up again with the big end of town”.

Our discussion today was a revelation for me, and a very ironical one at that.

Here I am living the life of  a hermit, albeit a business consultant variety. At the same time I am writing a book on pursuing luck by increasing exposure to randomness and serendipity.

Exposure to a wide spectrum of life is a critical strategy of pursuing luck.

Collisions with people are part of this wide spectrum - whether they are experts, dreamers, odd people, tinkerers, poor people, elderly people,  people from different cultures, business people, artists, wealthy people, philosophers, environmentalists, politicians, thinkers or lazy people.

After all, it is people that have ideas not flora, fauna or innate objects.   It is people that believe in God or don’t. It is people that have complex ever changing needs and wants.  It is people that form society and it is sub-sets of people like economies, groupings, families and friendships – all of which define our lives.

In fairness to Marcus and I, we have not always been hermits.  We have lived and experienced “life in the fast lane”.  I have spent ten years working in Melbourne, perhaps the greatest city of Australia and I have worked with clients and on projects in London, New York, San Francisco, Los Angeles and San Diego.  Marcus lived in Tijuana Mexico for  over a decade. Most days he crossed the US border to San Diego to do business.

By mixing it with a variety of people from around the world I have enjoyed a successful career as a venture capitalist. Doing the same Marcus has built a successful  international Internet based Spanish language training business from scratch.

It’s just that it is now time for both of us to be grateful for the benefits  that our hermit lifestyles that have bestowed upon us, and get out and about and collide with more people and prepare for our next round of luck.

The proof that “people collisions” can lead to extraordinary creativity, innovation, output and serendipity is found throughout history.

This hit home to me when I visited Paris for the first time in 2001.  A group of us had arrived from Australia at 8am. Our first meeting was not until 5pm that night, so at the suggestion of a beautiful young lady, a Singaporean/Australian, who could speak a little more than a little French, we jumped in a couple of cabs and went to the Louvre.  As we only and then experienced an incredible calmness and openness as I as was spiritually moved by the  Renaissance collections.  I was moved in this way because I struggled to comprehend how people of the 14th to 17th centuries could produce such breathtakingly beautiful and captivating art.

• On reflection renaissance Italy consisted of densely  populated cities like Rome; teeming with artists, painters, craftsmen, and sculptors, all seeking the patronage of the Vatican and the monetary, spiritual and status rewards that it offered.  The artists bounced off each other and they interacted with each other.  They learnt from each other.  They learnt both informally and via strcutured Master and Apprecintic relationships.  Sometimes they worked in large teams painting  massive pieces.  They worked toward bewildering stretch goals set by the Vatican and wealthy aristocrats. They enjoyed intense rivalry for the attention of their religious, political and aristocrat masters.  They sought the status of their peers.   These people collided with each other and produced the most extraordinary period of creativity that the world has ever enjoyed.
• The Industrial Revolution in the 18th to the 19th century swept across the United Kingdom, Europe and North America.  It was the catalyst for major changes in agriculture, manufacturing, mining, and transport. It  had a profound effect on the socioeconomic and cultural conditions of these continents and it influenced almost every aspect of daily life.  At the heart of the Industrial Revolution was the bringing together of people and their ideas. Thought leaders, philosophers and entrepreneurs came together to create, invent and incrementally improve.  Large groups of  people cam to the industrial regions to work as systematic manual labourers. They are the unsung heroes.  Poaching, study tours and  technical encyclopedias facilitated the knowledge transfer as did interaction and “collisions” between people and their ideas.
• In the 19th and 20th centuries a dense population (forgive the double entendre) of bankers and financiers built what is still the major financial centre of the globe.  The Wall Street district to this day is jam packed with financial ”Masters of Universe” all bouncing off each other, networking,  learning from each other and copying each other.  Rivalry is fierce between the banks, investment banks, stock brokers, bond traders, commodity dealers and private equity firms.  It is a people soup that has created a tasty result.
• In the 20th and 21st centuries thousands of constantly colliding academics, entrepreneurs and venture capitalists in Silicon Valley have been responsible for changing our lives by making the computer and the Internet ubiquitous.   Intel, Cisco, Hewlett-Packard, Oracle, eBay, Google, Apple, Yahoo and Adobe is just a small handful of companies founded in Silicon Valley.  Yes it can be very tough to break into “the Valley”, but if you can,… your luck will increase exponentially. Interacting with great people is to “luck “as is words to “books”.
• An hour and half flight south from “San Fran” is  Hollywood.  This densely packed group of entrepreneurs and artists has given us the movie industry. Here producers, studios, directors, actors, cinematographers, audio technicians, expert on-set supporter contractors like builders and transport, post production, public relations and distributors collide.  They interact, they learn, they earn. They vie for each other’s attention and compete for status, fortune and fame.  It’s obvious that this business is a luck based business model.  And it is  also obvious that it is dependent upon its people schmoozing, people using and and people doing.

Get out there and interact with people.  People of all shapes, all sizes. People of all intelligences and people of all backgrounds.  Hang out where experts clusters.  If you want to be a bond trader start hawking your resume around Wall Street.  If you want to be an actor or a paparazzi photographer you need to rent a hovel for a decade in  LA.   Hawaii is probably the best place to train to become a pro-surfer.   Florida appears to be where all the tennis pros and coaches hang-out and you will need to be in San Diego if pharmaceutical drug development is your thing.  Budding chefs need to aim for Paris and would-be authors Manhattan.  If you want to design sky-scrappers then you should learn Arabic or Mandarin and move to the United Arab Emirates or China.  If you want to design cool electronic consumer products you probably need a job at Apple.  If Internet search is your thing then get a job at Alta Vista (just kidding) and if you want to bore yourself to death go to Washington and get a job as a political journalist.

There are two reasons the Pursuit of Luck does not apply to entering lotteries or gambling at casinos:

1) With the exception of buying a ticket or the act of a gambling, you can do nothing to influence circumstances which alter the randomness (the number of random collisions) of the process.

2) The upside in lotteries and casinos is limited.  The lottery and casino risk managers have built a rigid ceiling into the structure.  No matter what actions you take you cannot increase this ceiling.  The lottery jackpot for a single winner might $10m period.  You can’t win $3 billion at a casino because the managers will not let you make a bet that allows such an outcome.

The lottery and casinos are highly structured games of chance which cannot be influenced (pursued) by the participants in that game.

Only last month I wrote that the Venture Capital (VC) business is a business model based around luck.

Fred Wilson, a NYC VC describes his luck tipping point in the venture capital industry:

Then I got lucky. The Internet came along. I didn’t know anything about the business of the Internet. But then nobody else did either. I was 10 years into my career which wasn’t going anywhere as far as I could tell, I was antsy to do something big, and here was something that sure looked big to me. I convinced Euclid to invest in a few early Internet deals and became friends with the crazy entrepreneurs who ran them. It was a blast and in the span of two years, 1994 and 1995, I had found my calling.

The thing is that Fred thinks his success is based on some kooky “lady luck”  or “chance” thing but in fact he pursued luck.  How?

1. He broke the norms and went and got a job in venture capital straight out of MBA school, and did this in New York of all places, not Silicon Valley.
2. The fund was small in terms of $ (against the conventional wisdom of the day)
3. The fund was alike most VC models a luck business model – it was diversified
4. Fred learnt lots
5. He had intuition – in 1995  he thought that the Internet had promise and passionately convinced the partners of the VC fund to invest in some deals
6. Fred had the boldness of character to jump out of his safe employment and start a fund of his own to do these weird Internet deals
7. He invested with “crazy entrepreneurs” (crazy people make luck because they put you in different circumstances)

Fred pursued luck…and he got lucky.

To read more about Fred Wilson visit his blog.

Hunting for luck and trying to “bag the elephant” can be a lonely and soul destroying approach to business and life. It’s difficult becuase it can take months , years  or decades to feel gratification from your endeavours.

The lack of immediate gratification is made worse when the dull suit wearing nine to five conventional wisdom lovers look down on you and remind you that your odd and against the grain approach to life does not work.

Sometimes they are right.  Adopting a Pursuit of Luck approach to life does not always work out.

To combat the delayed gratification and the lack of love from “The Conformers”, a Luck Hunter needs a mechanism to survive the feelings of low self worth while he waits for the big pay-off.   The good news is that the mechanism is quite simple – enjoy all aspects of the Pursuit of Luck journey so that you receive lots of immediate gratification, while you wait for the delayed gratification that will come from bagging the elephant.

You can feel proud of yourself for doing things differently and not falling in line with the conventional wisdom sheep. You can enjoy the quirkiness of doing odd things, hanging out with odd people, taking a different route to work and taking the scissors to all of your neck-ties. You can feel pleasure from eating new foods, trying new wines and listening to music of different genres.  You can feel  liberated when you say “no” to the mundane and  turn away from boring people.  You can feel empowered when you meet new people .  You can feel meaning when you experience a sincere and dynamic conversation with other human beings.   You can experience a changing brain when you learn another language, increase your vocabulary in your native tongue, play an instrument, read philosophy and write down your thoughts.  You can feel more worldly when you travel  and you can feel strong when you train without limits.

All this gratification is good.  It provides strength to the Luck Hunter.

Before you start on your pursuit of luck journey, a journey peppered with instant gratification, be aware that current conventional wisdom pushes the idea that instant gratification is bad and delayed gratification is good.   In my against the grain style, I think they are wrong.  Instant gratification is good and delayed gratification is good.   A fulfilled life balances both.

The conventional wisdom that “instant gratification is bad and delayed gratification is good” probably finds its origins in religion. One of the central themes of my Catholic education was that lustful thoughts, swearing and sex before marriage is bad – don’t do it and wait for the ultimate of delayed gratification – entry into the pearly gates of Heaven.    There is the Hindu vow of silence, monks rising at 4am, working all day in fields and sleeping on stone floors at night.  And it seems to me that followers of Islam avoid many practices that result in instant gratification so like Catholics they  receive the ultimate gratification of being  welcomed into the kingdom of Allah.

The idea that instant gratification is bad and delayed gratification is good also appears entrenched in psychology.   A famous experiment which supports this is the “marshmallow experiment” and the subsequent follow up studies.

The “marshmallow experiment” was conducted in the 1968 by Walter Mischel then professor of psychology at Stanford University.  It has been cited and written about ad-nauseam and even getting another run last month in the New Yorker in an article called  Don’t! The secret of self-control, by Jonah Lehrer.  It is not lost on me that I am adding to the nausea but I am gratified by the fact that I am challenging it, albeit it with opinion and anecdotal evidence.

In the marshmallow experiment, a group of four-year-olds were given a marshmallow and promised another, only if they could wait 20 minutes before eating the first one. Some children could wait and others could not. The researchers then followed the progress of each child into adolescence and demonstrated that those with the ability to wait were better adjusted and more dependable (determined via surveys of their parents and teachers), and scored significantly higher on the Scholastic Aptitude Test (SAT) years later.

Jonah Lehrer also reports that the follow up study concluded that the children with the lowest delay will-power also

…struggled in stressful situations, often had trouble paying attention, and found it difficult to maintain friendships.

The experiment was initially conducted to identify the mental processes that allowed some children to delay gratification while others simply surrendered.  Then some 13 years later a questionnaire-based  follow up study of the subjects was undertaken.  The results were presented  as evidence to suggest that there exists a cause and effect link between a child’s ability to delay gratification (in eating a marshmallow) when they were four years old and their later life SAT scores, ability cope with stress and ability maintain friendships .  In other words a strong inference is made that if you can delay gratification you can be more successful in life.

In my view there are three problems with the cause and effect relationship inferred by the follow up study.

Firstly, it is not known what other characteristics the low delayers had in common at the time of the original experiment.  The ability to delay gratification was the only thing measured.  This does not make that trait the cause.   Perhaps, the “low delayers” also have a shorter temper fuses, or perhaps they are introverts, or perhaps they prefer cats over dogs.

Secondly a questionnaire of parents was one of the key survey tools used in the follow up study. Most people have between 65,000 and 85,000 thoughts per day.   These thoughts include our ideas, our emotion and the way we perceive and interpret information, visual, physical and emotional stimulation.   At this thought rate, from the time the children were asked to resist the marshmallow to the time when the children’s parents were surveyed in 1981, the parents had experienced a staggering 403 million thoughts.   These thoughts, perceptions and memories would undoubtedly play a role in how the parents answered the subjective questions about for example the state of their children’s friendships with others.

Most parents I know are all pop-psychologists, regularly practicing their craft and offering anecdotal insight and theories about their children and where they at with their life.   I am certainly one of them.  I think it’s founded upon our love for our children and our temptation to take credit for the best things about our children and justify their less desirable behaviours based on some genetic malfunction that they have inherited from their Grandfather for example.   “Jimmy was always like my father, a real wheeler-dealer.  I remember that he used to swap his dessert for his sister’s mashed potatoes, and so it makes sense that he is a Chicago commodity trader?” .

Moreover, just knowing that the follow up questionnaire was linked to the famous marshmallow experiment would give the parents a impetus to practice their pop-psychology based on what they knew about their child’s results in the original gratification test.

Finally, it is well established that SATs measures literacy and writing skills that are needed for academic success in college and have very little conclusive bearing on a person’s subsequent academic  success, “street-smarts”, emotional intelligence or general success in life.

In a 2001 speech to the American Council on Education, Richard C. Atkinson, the president of the University of California, urged dropping the SAT Reasoning Test as a college admissions requirement

“Anyone involved in education should be concerned about how overemphasis on the SAT is distorting educational priorities and practices, how the test is perceived by many as unfair, and how it can have a devastating impact on the self-esteem and aspirations of young students. There is widespread agreement that overemphasis on the SAT harms American education.”

In additional to what I perceive as problems with the cause and effect inference inferred from the “marshmallow experiment” it’s obvious that the world is riddled with very successful people who have lived successful lives whilst pursuing instant gratification as well as often bagging the elephant and enjoying delayed gratification.

John F Kennedy: After marrying Jacqueline Bouvier in 1953, a woman universally regarding as the most beautiful First Lady ever,  JFK went on a spree of “alleged’ instant gratification.   Marylyn Munroe singing “Happy Birthday, Mr. President “fuels the “alleging” along with the rampant speculation about his affairs with Mary Pinchot Meyer, Angie Dickinson, Jayne Mansfield, Marlene Dietrich, other actresses an call girls.   He’s life was also pretty successful.  I am sure JFK could have passed the SAT, he was one of the most liked men in history and undertook the most stressful job in the world with ease.

Kerry Packer: Granted the Australian television and print media mogul, multi-billionaire, and inventor of World Series Cricket would not have been able to  pass the SAT test because he was severely dyslexic. But his life in pursuit of continual instant gratification did not impact on his success in becoming a feared, powerful and very rich media and gaming deal-maker.   Packer , a heavy smoker had many mistresses and if he was not gambling at the track in Australia he was gambling on the tables in international casions.  At one time he was known as the world’s largest gambler.  In 1999 he lost almost $28 million in a three-week losing streak at London casinos and then later won $33 million at the MGM Grand Casino in Las Vegas. When he was stuck in the office in Australia he would dabble on foreign exchange bets reportedly losing $70 million in one year.  Tipping a waitresses or croupier $30,000 was not unheard of and his diet consisted of greasy hamburgers.  He reportedly flew a dietician out from California and when he found out that she wanted him to eat mong beans and other rabbit food he flew her home with her full fee and ordered another hamburger with the lot.

The Rolling Stones, arguably one of the greatest rock bands in history made friends easily, seemed to have copde well with the stress of global performing, making records and dealing with their excessive instant gratification of sex, drugs, Rock ‘n Roll .  Maybe they may have failed the  American SAT, but as I have pointed out, in 2002 the President of the University of California thinks they are a bit of crock anyway.

I am certain that the superb orator and voluminous writer, Sir Winston Churchill, could have at least passed the literary component of the SAT.  Churchill was probably the greatest war-time leader of the last two hundred years partook in a whisky and water for breakfast which he sipped throughout the day and had at the very least 250cc of whisky with his evening meal.  According to most historians it never affected his performance, but it could certainly be placed in the category of daily instant gratification along with his spendthrift ways and lack of inhibition.

From my own experience –  instant gratification is fun and long periods of deferred gratification are not so much fun.  And I know who I would rather hang-out with – people that pursue a balance of seeking instant gratification and delayed gratification.  They too are more fun.

To be sure I am advocating that a Luck Hunter should act to receive both instant gratification and delayed.  I am not advocating for a moment that Luck Hunters hang out with crack-addicts and other people who only seek out instant gratification.

Bagging the elephant can take a long time so deferred gratification is to be expected.  And it’s hard to cope with life where day in and day out you don’t experience gratification.  There is only one way around it – enjoy the journey.

Perhaps the most uttered ‘logic’ behind luck is “I was in the right place at the right time”.   It is not really uttered as ‘logic’ though, the phrase is used in a glib sense to describe a mysterious phenomenon that is a form of luck in itself.  Used in this way people are in essence saying, “I got lucky because I got lucky”.

Surprisingly it is lost on most of us that it is very easy to pursue being in the right place at the right time.  How? Visit more places more often.

If you spend 24 hours a day on your sofa sleeping and watching re-runs of Mash are you going to experience “right place at right time” moments?  Not at all likely.   But what if this coming Saturday you:

• Spend an hour reading philosophy over breakfast in a cafe you have never visited before.
• Go for a walk on the beach with your partner.
• Visit a museum you have never visited before.
• Have lunch with someone you have not seen for five years on a park bench, in a park or garden you have never been to before.
• Learn to water-ski.
• Call on Aunt Ethel and ask her to tell you a story about your mother.
• Meet with ten of your best friends for conversation over dinner at a nouveau-Japanese restaurant drinking German beers.
• Go to an amateur theater production, followed by a midnight comedy show in a smoke filled dingy bar, then two hours dancing to 80′s music infused with doof-doof beat.
• Take a different direction home.

If you take such an approach I will guarantee that you will increase the probability of being in the right place at the right time.

There are many industries whose fundamental business model is The Pursuit of Luck.  They include:

• The music publishing industry
• The book publishing industry
• Talent agents
• The film industry
• Venture capital
• Drug development

Common to all of these businesses is that they take a portfolio approach to their clients / investments and they  have a win some loose some attitude.  They all understand that no amount of planning, no amount of skill, no amount of knowledge and no amount of money enables them to predict that Lady Gaga will be a success.  None knew that Google would start with a $100,000 investment and become what it is today.  They did not see the Davinci Code coming when they first published Dan Brown and Avatar could well have bombed.

These industries have business models which enable them to step up to the plate and swing the bat.  Most of the time they miss or bunt to first base.  Sometimes they hit that ball out of the ball park.  It’s going, it’s going…its GONE!

It’s not only companies like  Red Bull GMBH and Apple Inc that can afford to do things differently, to experiment, to stage dramatic publicity stunts and to create awesome word of mouth programs.   Small boring companies can too.

K-Tec Inc, based in Orum Utah make blenders. Pretty good blenders by the looks of it, but on the excitement scale a long way from an energy drink that wires you up like 27 short black coffees or an iPad that can,…..that can…well do stuff!

It turns out that K-Tec Inc are real luck hunters.    They decided to produce a You Tube series blending stuff.  Stuff like iPhones, glow sticks, video cameras and snow skis.  To say that this odd idea is achieving results  is an understatement.  As of today the You Tube series has had over 118 million views, and I for one want to own a blender that can blend a snow ski.

Start doing odd things and elicit a different reaction from the world around you.

By Business Consultant Jason Bresnehan

Former Prime Minster of Australia, Kevin Rudd has had a bit of bad luck today.  He was knifed in Ceaser like style from the highest office in the land.

Many of the country’s political journalists are all posing the question was his back-flip on climate policy one of key catalysts to his downfall?  A  better question is “why he was following the climate change conventional wisdom clap-trap to begin with?”

There is no unequivocal evidence that climate change is man-made.  Just theories.  Regardless let’s assume that man-made climate change is real.  To eliminate the globe’s consumption and to  reduce carbon monoxide levels  we could organise the knifing (literally) of every man, woman and child living in Australia so they bled to death.   Then Australia would be responsible for lowering the world’s carbon output by 0.8%.  Actually, thats not quite true, because our rotting corpses would output carbon but given that the calculation is too difficult lets ignore it.

So there you have it.  Rudd became a victim of his own unyielding belief and promotion of a cooky conventional wisdom of the day and a policy that unequivocally would do nothing to lower global carbon output to anything more than the level of a statistical error.

If you want to get lucky live life against the grain of conventional wisdom.  Definitely don’t follow it because you will end up getting knifed.

Taking a risk is about undertaking behaviour that it is hoped will lead to a specific and foreseeable reward.  The behaviour exposes the person or an organisation to damage.  The damage could be financial (Enron), physical (driving at 260 kmh on a wet road) or emotional like loss of reputation (BP) or embarrassment (male English MP found in hotel room wearing stockings and a corset).

Pursuing luck also risks damage, because in an uncertain world it can go wrong.  However,  luck is not pursued for a specific and foreseeable reward.  Luck is pursued for an extraordinary reward, a reward that is not foreseeable.

In March 2006 the Journal of  The Institute of Risk Management published an article by John Adams, Emeritus Professor of Geography at University College London .  Here Professor Adams introduced us to the concept of Compulsive Risk Assessment Psychosis (CRAP).  CRAP is where risk mitigation managers attempt to control those areas of risk where science cannot even agree. For example man-made global warming.  Professor Adams calls this area of risk “virtual risk” or uncertainty and warns that when risk managers are trying to control or mitigate around principles that scientists cannot even agree upon, then their contact with reality is likely to be lost or highly distorted.

Psychosis: [noun] A mental disorder a severe mental disorder in which contact with reality is lost or highly distorted “psychosis”.

Initially Professor Adam’s article took the wind out of my sails.  Was the pursuit of luck a concept in which people practicing it have lost contact with reality or have a highly distorted view of reality?   Am I peddling a new psychosis?

After much consideration my personal conclusion was no – the Pursuit of Luck is not a psychosis.  The Pursuit of luck is about chasing after uncertainty and unexpected events.  It is not about controlling uncertainty like the risk managers suffering from CRAP.  Uncertainty is real –  as is chasing it, pursuing it, being comfortable with it and embracing the results that it delivers to you.

Not content with my own musings on the subject I made contact with Professor Adams via a Skype video call to London.  John is of an age you would expect a retired professor to be.  The backdrop to the video call was the quintessential academic office of bookcases stuffed full of papers, books and files. John is a very friendly and warm person with a cheeky smile that he probably inherited from his Irish Grandfather.  A Grandfather who apparently had hundreds of “harebrain schemes” throughout his life in the pursuit of luck.  John said “when he died the family discovered he owned thousands of acres of moose pasture in Canada which he had bought in the hope that one day oil would be discovered there”.

As our conversation flowed  John endearingly described me as “an individualist”.  I thought “this is probably a nice way of saying that the pursuit of luck is about as harebrained as his Grandfather’s ideas”. However, later in the converation John said:

I wouldn’t call the pursuit of luck a psychosis unless pursued to the point where contact with reality is lost or highly distorted. As you describe it, it seems an admirably sane optimistic openness  to unknown possibilities.

Phew!

I have to go now, I am heading out onto my farm to drill for oil.

Image: George McLean (Canadian, b. 1939); Untitled (Bull, Moose and Doe)

Luck is an unexpected positive outcome resulting from an unforeseeable random collision of life’s interactions.

<Image to left:  ”The Wheel of Fortune” by Edward Burne-Jones, 1875-83
Read more about the painting and it’s relationship to the Goddess of Luck  - Fortuna.