9 ms·

Michael Lewis: Don't Eat Fortune's Cookie

552 points by gregdetre 14y ago

drumdance 14y ago
I think this is why a lot of Hollywood actors tend to be liberal on economic issues. They may be rich and famous, but they also got the "big break" that many of their fellow actors did not get. Brad Pitt may be handsome and a good actor, but there are a lot of handsome and good actors. Only one of them got to co-star with Tom Cruise in Interview with the Vampire.
- lcargill99 14y ago
  Entertainers are liberal because narrative is a very Liberal Art. Data, myth and legend are more on the Conservative axis, although there are mighty quantities of overlap. I always enjoyed Neil Young because he was always both liberal and conservative and mostly both at the same time. Artists who truly serve the muse will be like that.
ternaryoperator 14y ago
His point is essentially the one developed at length by Malcolm Gladwell in "Outliers." Namely, that great successes are almost always dependent on a uniquely fortunate set of events that the person is able to exploit well, rather than their success being the result of genius.
- randomdata 14y ago
  If two random people were given equally fortunate sets of events in their lives, would they both exploit those events to reach the same level of success? Or could it be said that genius is recognizing those fortunate events when they come your way?
  - hpguy 14y ago
    They wouldn't, because at least gene has its role. Life events + genes + free will => destiny. The role of the first two are pretty self-evident. I'm not sure about the role of free will, if it exists.
AznHisoka 14y ago
Maybe this is why people believe in religion rather than things happening with no rhyme or reason.
nirvana 14y ago
My success and failures in life have had nothing to do with luck. I've been both lucky and unlucky at various times, but none of them have determined my level of success over the short or long term to any significant degree. At the same time I've had periods where I worked hard and was focused and passionate about what I was doing, and periods where I was not passionate, unmotivated by a crushingly poorly run organization and did not work very hard. The periods where I was focused, passionate and working hard were the more successful ones, and successful enough to carry me thru the down times as well. Luck may have put Michael Lewis at Goldman Sachs, but luck didn't determine his level of success. After all, his success comes from writing books, not being a goldman boy. Sure he wrote his first book about that period, but that book took a large amount of focus, passion and effort to create. That said, I certainly find myself occasionally jealous of people who seemingly lucked into great success. If I'd never applied myself, and thus never had success myself, I'd probably think that luck was the actual determinant of success. Edit to add: In this post I deliberately talked about my personal experiences. I didn't make a broad sweeping statement that luck doesn't determine success or failure for everybody. However, clearly people object to the political incorrectness of not supporting the ideology that argues "luck determines success, therefore the rich should be taxed to pay us! we just weren't lucky!" Note that I did not address that argument, I just talked about my experience. But because my experience is inconsistent with the distorted view of the world, it is "politically incorrect" and thus should be kept from the eyes of others, lest they be influenced, my post has been made visually unreadable. I find this anti-intellectualism distasteful.
- taybin 14y ago
  This is exactly the blindness he talked about.
- Smudge 14y ago
  The point of the speech wasn't that you shouldn't apply yourself. Your hard work, passion, and focus likely correlate with your successes. But that doesn't mean you weren't also extremely lucky to be in a position where those factors (things that you have more control over) were so able to tip your chances. Edit: Firstly, we should all be able to voice unpopular opinions without getting silenced by the crowd. I may have disagreed with your analysis, but I voted up your response nonetheless. Secondly, to respond to your edit. I think you are not quite correct in stating that your down-votes are due to the fact that "people object to the political incorrectness of not supporting the ideology that argues 'luck determines success, therefore the rich should be taxed to pay us! we just weren't lucky!'" There is a difference between those who do not apply themselves and believe success is entirely down to luck, and those who work hard and dedicate their lives to the pursuit of something more, never to achieve the kind of successes that others take for granted. It is the latter group that you are failing to acknowledge, which is perhaps why you are seeing so many down-votes. I wouldn't simply attribute it to "anti-intellectualism."
deleted 14y ago
[deleted]
naturalist 14y ago
Does anyone have a link to the experiment mentioned in this speech?
- unreal37 14y ago
  The study, "Power and the Consumption of Resources", by Ward and Keltner, is an unpublished manuscript. There's no link I can find to the actual study online, but everyone talking about social power quotes from it. http://www.forbes.com/sites/sap/2011/01/05/the-poison-of-power/ http://www.forbes.com/sites/sap/2011/01/05/the-poison-of-pow...
- ivv 14y ago
  There were five cookies, not four. The fifth cookie was left untouched, just as the norms dictate. It's the fourth cookie that the "leaders" went for. The study was done in 1998 and the original paper hasn't been published, but the researchers describe it in a later paper (2000, pdf): http://gsbapps.stanford.edu/researchpapers/library/rp1669.pdf http://gsbapps.stanford.edu/researchpapers/library/rp1669.pd...
  - unreal37 14y ago
    That's right. 5 cookies, so that someone could take the 4th cookie without feeling too guilty about taking the last one. I guess the last cookie usually went uneaten.
nostromo 14y ago
I've enjoyed two great books that discuss this: "The Drunkard's Walk: How Randomness Rules Our Lives" (http://www.nytimes.com/2008/06/08/books/review/Johnson-G-t.html http://www.nytimes.com/2008/06/08/books/review/Johnson-G-t.h...) and "Fooled by Randomness" (http://en.wikipedia.org/wiki/Fooled_by_Randomness http://en.wikipedia.org/wiki/Fooled_by_Randomness) I think people dislike talking about luck's role in our successes (but not failures) because it hints at a deterministic world view where our free will is less important than we'd like to believe.
- geekam 14y ago
  A question: I want to read those books. Which one should I start first?
  - graeme 14y ago
    Fooled By Randomness leads nicely into the Black Swan, Taleb's even better follow up book.
  - nostromo 14y ago
    The Drunkard's Walk was the better of the two in my view. I'd start there and follow up with Taleb's book if you want to read more. However, if you're really into Wall Street trading, flip the order.
- sliverstorm 14y ago
  Alternate explanation: People know they can't do anything about true luck, so they want to focus on things they might be able to do something about.
  - hjkl 14y ago
    But then do people overestimate the impact of their own influence? Would it benefit themselves/the world to come to grips with randomness?
    - 14y ago
paulorlando 14y ago
Would realizing they are lucky benefit the lucky? In the cookie experiment Lewis wrote about, the randomly appointed leader would then not take the cookie so effortlessly.
- dan-k 14y ago
  Indeed, and that might result in better relations with the other members of the group, in turn resulting in more productivity, leading to greater accomplishments and benefits later on. It's been thousands of years since short-term greed was the ideal way to do things, basically since humans organized into real civilizations, but it's hard to get people not to be greedy, so we just design our economy around it instead (i.e. capitalism).
- alxp 14y ago
  He's telling the students that they, being Ivy League graduates, will have many opportunities to exploit their positions, and is telling them to be aware of this and exercise some humility by remembering that luck has largely brought them where they are.
CUR10US 14y ago
"This isn't just false humility. It's false humility with a point." This is why I like Lewis' writing. Liar's Poker had a huge influence on me at an influential age. There's always a sense that he's playing the same game that he's writing about. And not in a George Plimpton sense. But he's often got a message to deliver that other players will not touch. The message always seems worth hearing. I interpret his reference to the Berkeley study as not one that explains "luck", but of one that explains how life is role-based. People take roles and play them, as if "all the world's a stage". It is. We are all willing to go along either as the audience or in our appointed roles. What I think Lewis means to say is that the assignment of roles, the "casting" if you will, is often arbitrary. I only wish Lewis had made this longer. There is so much more to say. Not only do people not like success explained as "luck" but they insist on success being attributed to "brilliance", "genius", "hard work", etc. In this case, when the cause of an effect is not clear, we are very quick to find one that suits our purposes.
- scott_s 14y ago
  If you want people to remember what you have to say, make your point, and get off the stage.
  - larrys 14y ago
    Similarly I've long noticed a connection between brevity and stature. In speech, writing and behavior. With sales by the way it's always important to get your ass out of dodge after getting agreement from the customer, lest they change their mind.
    - rscale 14y ago
      "Always leave them wanting more" isn't just advice for show business.
    - CUR10US 14y ago
      Getting out of dodge. Maybe this is why he was brief: His point is a potentially unpopular one. It is just a very interesting topic. One that few who are successful would dare to explore in depth. It would be interesting to hear how his brief remarks were received. Did people like what he had to say?
hjkl 14y ago
I'm surprised by how defensive people can get about their own success. It seems to me that you can never know if your success was due to your own hard work or some lucky breaks (or, more probably, a combination of both to which you'll never know the balance). It reminds me of the story about thousands of people flipping coins. Out of those thousands of people, some of them are going to flip a long string of heads. Does that mean that those people are "good" at flipping heads? Is someone who flips a string of tails "bad" at flipping heads?
- roopeshv 14y ago
  just law of large numbers at work
- paulhauggis 14y ago
  Using this logic, pretty much everything is due to luck. finish your PHD? You were lucky that you were accepted and that you had a good enough education to get into the program. "It seems to me that you can never know if your success was due to your own hard work or some lucky breaks" You may have a point. But, I'm really tried of people attributing all success to luck (and using this as an excuse as to why they aren't succeeding). It also discounts all of the hard work that someone does put into something successful. If I sit here and do absolutely nothing, I won't ever have a successful startup. This is why I know it's not mostly due to luck. Luck implies that it happens to you with no intervention..like winning the lotto.
  - hjkl 14y ago
    The argument isn't that success is due entirely to luck. It's that you'll never know how much of that success is due to luck. It may be a lot or it may be a little.
    - paulhauggis 14y ago
      But you do. If you make an iphone app and it's an overnight success, you got lucky (the non-luck part is the years of experience that it took to make the app). However, if you slowly build your user base and continue to add new features for years through many failures/successes, beyond the normal 10% or less luck in every-day life, I wouldn't consider it lucky. Again, it seems there is this trend on HN to make it seem like anyone remotely successful got "lucky". Even worse is blurring the line between luck and hard-work so you can make it seem like their accomplishments aren't as important.
sliverstorm 14y ago
Among other reasons, it is disingenuous. Was it only luck?
moistgorilla 14y ago
I had this discussion with my father today and he finally conceded to me that I am partially right (he hates being wrong). The fact that you were not born in a war torn country, the fact that you had good role models, the fact that you weren't born with a mental or physical handicap, the fact that you met your long term business partner at some random get together. Are all luck. Now that doesn't mean you should give up on all of your activities, because if you don't try at all you have a zero percent chance of success at that point. Even getting to the point where you have this work hard mindset is luck.
arnoldwh 14y ago
The point I take away is a little bit beyond just realizing that you're lucky. That's important, and the people I've met that I consider truly successful (ones I would consider as role models), generally realize this. However, I think we can take this further...the only variable that we have under our control is effort. Since luck is an outside force, you might as well maximize this one variable that's still under your control so that you have the best odds.
- ams6110 14y ago
  The old Louis Pasteur quote that sums it up is "Chance favors the prepared." A lot of what happens to us in life is a matter of chance (called luck if it's in our favor). But if you aren't ready to take advantage of it, it will come to nothing.
- Tichy 14y ago
  Effort, but on what? Simply expending effort won't get you anywhere. As the moneyball example shows, you can help luck on it's way with maths and data. Although I suppose if efficient market hypothesis is true, then even where you direct your effort must be luck.
liber8 14y ago
I think part of the problem with realistically viewing one's life through this prism is the impossibility of determining what percentage of one's success is due to luck. In a sense, literally everyone who is alive today is lucky. They are the product of an unbroken line of genetic material passed down for millions of years. Can you imagine? Not one of their thousands and thousands of ancestors managed to be killed before procreating! In another sense, everyone alive today is lucky they weren't stillborn. Lucky they weren't claimed by SIDS or whooping cough, or a cold, or any of the various childhood afflictions we've eradicated. Everyone who wakes up tomorrow is lucky they didn't get cleaned out by a bus crossing the street, or sideswiped by a drunk driver on their way home. Almost all of the "rich" people in the U.S. did not start out rich. Unquestionably, luck played a role. But how much? Who's to say that, if Michael Lewis skipped that fateful dinner, he wouldn't have gone to a frat party, met a future ballplayer, and then gone on to break the MLB steroid scandal. Or sat next to a White House intern and broken the Clinton sex scandal? or, or or. If any one of these alternate scenarios happened, he would still claim to be "lucky" to be in the right place at the right time. And, in a sense, he'd be right. But that doesn't necessarily mean he was successful because he was luckier than millions of other people around the world. Obviously someone born today in the U.S. is much "luckier" than someone born in Somalia. Someone born into an upper-class family in Germany is "luckier" than someone born into a nomadic tribe in Algeria. Does that make the "luckier" person's success more attributable to luck? (And, as a corollary, the "less lucky" person's success less attributable to luck?) Maybe, but to what extent?
- bradleyland 14y ago
  And if you recursively click the first link in Wikipedia articles, you end up at philosophy :) My point is that if you dedicate a lot of time thinking about any particular aspect of life, you end up back at the "Getting to Philosophy" problem. Your luck comes in shades of grey. At some point, the line between black and white is drawn rather arbitrarily. Would I consider myself "lucky" to be born in the US? To be born at all? Sure, why not. It's at least a statistical significance. But that stroke of luck was just the basis from which I built my relative level of success. The same is true for any starting point. The more relevant question is, does it really matter? I wouldn't say that contemplating the deeper meaning of one's own "luck" is a waste of time, but obsessing over it is foolish. While you're busy contemplating how lucky you are, the other person is busy positioning themselves to succeed.
stickfigure 14y ago
A quick parable: You sense a random opportunity, work your ass off, and turn it into a great success. False narrative #1: This success is solely due to your hard work! False narrative #2: This success is solely due to luck! I haven't read ML's books (yet) but I think this speech leans too heavily on narrative #2.
- njharman 14y ago
  It's a superlatively false narrative to image that "sense random opportunity" is the only (or even common) scenario and that "work your ass off" is its only response.
- brown9-2 14y ago
  I don't think he is saying anything is "solely" anything else. Just that it's unlikely that #1 is the full explanation.
- RobAtticus 14y ago
  I think he's intentionally focusing on the luck aspect because I think his audience (Princeton undergrads) is used to the first narrative. As sort of an outsider (I'm a graduate student here), I sometimes get the sense that a fair amount of undergrads here are a bit too self-important. Certainly there are many awesome, down-to-earth people here too, but there are also a lot of people who are caught up in the fact that they are Princeton students and that by itself perhaps makes them better than students of "lesser" schools. I think in particular, Lewis' last full paragraph should be the take away for these students. Yes, they are very gifted and they may deserve every bit of benefit that comes their way, but they should also remember that there is at least some part of that they didn't/can't control. Acknowledging and being humbled by that will go a long way in life.
  - btown 14y ago
    As a Princeton '12 who saw the speech live, I entirely agree. I'd add that this was the Baccalaureate ceremony, which was historically the part of graduation that featured an extensive sermon... in other words, a part that is designed to be humbling in every respect.
RockyMcNuts 14y ago
The power of fortune is confessed only by the miserable, for the happy impute all their success to prudence or merit. - Jonathan Swift
- RockyMcNuts 14y ago
  Tangentially related, Joseph Heller - Destiny is a good thing to accept when it's going your way. When it isn't, don't call it destiny; call it injustice, treachery, or simple bad luck. ... He was a self-made man who owed his lack of success to nobody. ... Some men are born mediocre, some men achieve mediocrity, and some men have mediocrity thrust upon them. With Major Major it had been all three. Even among men lacking all distinction he inevitably stood out as a man lacking more distinction than all the rest, and people who met him were always impressed by how unimpressive he was.
jharding 14y ago
This reminds me of a topic the guys from the TechZing podcast talk about pretty frequently, increasing your luck surface area. Jason Roberts has a short post about it on his blog that sums it up pretty well (http://www.codusoperandi.com/posts/increasing-your-luck-surface-area http://www.codusoperandi.com/posts/increasing-your-luck-surf...). This concept has resonated with me and for the past couple of months, I've started to do things with the hopes of increasing my luck surface area.
- jonny_eh 14y ago
  I came here to say this. It's important to realize the size of luck's effect on our lives, but the next step isn't just to shrug and say "oh well, I guess I wasn't lucky." There are in fact scientifically proven ways to increase one's chance for getting lucky. I highly recommend Richard Wiseman's book "The Luck Factor" which goes into this research: http://www.richardwiseman.com/books/luckfactor.html http://www.richardwiseman.com/books/luckfactor.html
gruseom 14y ago
http://news.ycombinator.com/item?id=1621845 http://news.ycombinator.com/item?id=1621845
- rudiger 14y ago
  Some businessmen feel obligated to "give back." Who says they've taken anything? Paul Graham responds, "They've taken something from chance."
  - smsm42 14y ago
    So they should give back to chance? How does one do that? It may be a nice turn of phrase, but sound like completely meaningless if one takes a minute to think about it. One should be charitable because it's human to be compassionate to your fellow human being, not because being successful automatically puts you in debt to the God of Chance, which debt should be repaid or else. And not because by being successful you stole your success from somebody else.
  - zobzu 14y ago
    It should be obvious to anyone, that when you have more wealth than 99.5% of the world, you owe the rest of the world. But not so many understand or realize that. Next time, they shall be born alone, let's see how many hours they survive. People feed you. Build stuff for you. Make your life better. And most of them, don't gain much from it. Usually, they just die younger.
    - kamaal 14y ago
      >>It should be obvious to anyone, that when you have more wealth than 99.5% of the world, you owe the rest of the world. Unless you are a king, dictator or some force of evil. Building 99.5% of the wealth in the world will mandate you to build empires of business, solve problems, provide employment to millions of people around the globe. That much doesn't happen merely by chance.
      - egonschiele 14y ago
mikecane 14y ago
And that is exactly why whenever someone wants book recommendations here, I always recommend Max Gunther's two books about luck. That.
kylebrown 14y ago
Its amazing how self-defensive some successful people can become about their socioeconomic status. An implication that luck had any more than a very minor contribution is blasphemous. Some can become outraged at the suggestion that they might own one penny that wasn't earned fair and square. Completely on their own, with no help from anybody. Not even scholarships count as help (they're earned). And for some reason, admitting that one received assistance from one's parents is taboo. Just look at the Romney campaign for a prominent example: "I could have stayed in Detroit like him and gotten pulled up in a car company," Romney said at the debate. "I went off on my own. I didn't inherit money from my parents. What I have, I earned. I worked hard, the American way."[1] 1: http://www.politifact.com/truth-o-meter/statements/2012/jan/20/mitt-romney/mitt-romney-says-he-didnt-inherit-money-his-parent/ http://www.politifact.com/truth-o-meter/statements/2012/jan/...
- MartinCron 14y ago
  Not even scholarships count as help (they're earned) And heaven forbid you count student loans as getting help, even though they are taxpayer subsidized to keep the interest rates artificially low.
- sopooneo 14y ago
  What about someone that fought their way out of endemic poverty? For me, I was fortunate my whole life and while I have worked hard for what I've achieved, it is all largely dependent on the love, encouragement, mindset, and financial help I received from my family. I have a friend, though, that is one of my personal heroes. He came from disadvantage and dysfunction. But, by some spark that frankly I still find intimidating, he started fighting his way out from early childhood. Every challenge available in high school. Ivy League. Finance. Politics. He doesn't like to visit home now, which makes me sad, but I can understand. So how much luck with him? We could argue that people like him are lucky for their innate drive and passion, but that's a tricky one.
  - zasz 14y ago
    I'd argue a lot, still. Was he born in America, or Somalia?
cdi 14y ago
Being born talented is luck in itself. Without talent there's no true achievement, success. Random fortune, lottery win at best.
confluence 14y ago
Michael Lewis meet Quora; Quora meet Michael Lewis: http://www.quora.com/Wealthy-People-and-Families/Why-dont-some-rich-people-pay-their-taxes-Is-it-just-greed http://www.quora.com/Wealthy-People-and-Families/Why-dont-so... The question I want answered is: How do you optimise for luck? I've come to the conclusion that one most work very hard on something with a scalable market value for a long period of time. You continue to do this (repeatedly if need be), until you either, in order of likelihood: a) Quit b) Die c) Get lucky How does one optimise for luck? How can one work "luckier" - not smarter (which is necessary but not sufficient for success)? Bill Gates is a very smart man, I'm sure, but I highly doubt that he was the smartest, or the hardest working at the time he founded Microsoft (many people that run/found companies are very hard working/intelligent - but most fail). If I recall correctly the founder of Digital Research and the creator of the CP/M operating system Gary Kildall (http://en.wikipedia.org/wiki/Gary_Kildall http://en.wikipedia.org/wiki/Gary_Kildall) could've become Bill Gates. Apparently Bill Gates bought a clone of CP/M for ~$50K and sold it back to IBM with a blanket license for ~$100K, whilst holding onto the rights to exclusively sell to other manufacturers without IBM's permission. The IBM PC blew up all the sales records, and quickly became the dominant PC platform. The market was soon flooded with reverse engineered copies created by manufacturers hoping to ride the IBM wave by producing clones that were cheaper. Every single one of them required an operating system that was compatible with IBM. And who had the exclusive license to sell them the software IBM used? Microsoft I just want to know how does one get lucky, if that isn't such a stupid question to ask. I have the feeling that anything up to some arbitrary limit (60K-150K a year) you can state that skill may probably have been a major component. But anything above that, and I'm pretty sure you are in very lucky territory. Does this make sense, or is everything mostly luck, and just a teensy bit of skill?
- rudiger 14y ago
  Mary Gates, Bill Gates' mother, was on the same board as John Opel, the president, chairman and CEO of I.B.M. They discussed her son's company and Mr. Opel mentioned Mrs. Gates to other I.B.M. executives. A few weeks later, I.B.M. took a chance by hiring Microsoft, then a small software company, to develop an operating system for its first personal computer. So a discussion Mary Gates had with John Opel while they were both serving on the board of United Way of America resulted in an IBM contract being placed with her son Bill's company Microsoft to create an operating system for IBM's first personal computer.
rocken7 14y ago
I had a great time reading the following group of related books. How To Beat the Dealer by Ed Thorp. You might think this is lame and outdated, but it will clue you into how bond traders think. In fact, Bill Gross of pimco was so inspired by the book that he went to Vegas and became a gambler (before pimco but OTW). That book also is the holy grail for card counting. It will up your blackjack at least, and prepare you for the next book. Liars Poker by M.Lewis Lewis actually mentions Thorp, b/c Thorp went on to become a wildly successful trader throughout the 90s: he even called out B.Madoff as a crook in the early 90s (dude knew his finance games and clearly the SEC did not), and Thorp developed a lot of arbitrage trade strategies that are common today. All of this and more as M.Lewis clues you into wallstreet cronies and big bond trading, insider talk about salmon smith barney, and just how sketchy that industry really is ... Ok now you know a few things about wallstreet and trading, now go to: The Big Short by M.Lewis Lewis again with an awesome breakdown of how/what of the credit bubble and various characters betting against that massive momentum as it builds. Really this book is about personal fortitude: having a vision as a trader and sticking to it, even when the rest of the world is betting against you, even when your vision implies the rest of the world is d0000med in an almost end-of-money kind of way :) Now move into an interesting layer of finance, which all of us Hackers will enjoy ... The Quants by S. Patterson This has the making of a great movie if only hacking were interesting on film (too bad its not really like Hugh Jackman in Swordfish!). Buffet: "beware of geeks bearing formulas" ... exactly and this book is all about the buildup of these trading systems and the people behind them, the little bill gates (relative to bank-account) characters that run those giant quant funds ... And just questions on layering probability and the feasibility of trading into this complexity. Read on ...
- Dn_Ab 14y ago
  You either forgot to add or will likely enjoy Fortune's Formula by Poundstone.
- damian2000 14y ago
  FYI there's a new book by Scott Patterson coming out next week called "Dark Pools: High-Speed Traders, A.I. Bandits, and the Threat to the Global Financial System" which looks interesting.
amirnathoo 14y ago
This really surprised me: > They entered the room bearing a plate of cookies. Four cookies. The team consisted of three people, but there were these four cookies. Every team member obviously got one cookie, but that left a fourth cookie, just sitting there. It should have been awkward. But it wasn't. With incredible consistency the person arbitrarily appointed leader of the group grabbed the fourth cookie, and ate it. Not only ate it, but ate it with gusto: lips smacking, mouth open, drool at the corners of their mouths. In the end all that was left of the extra cookie were crumbs on the leader's shirt. I regularly have shared meals with my team and friends (mostly Brits), and this would never happen.
- waterlesscloud 14y ago
  I'm very, very suspicious of this claim. In any situation I've been in like this, the leader has been almost overly gracious about sharing or outright giving to the non-leaders.
radley 14y ago
1) I don't eat the cookie, I just read the fortune. 2) You only get one fortune a day, so the 2nd would be a waste. 3) My instinct as leader would be to let the other two split it or "first come" - whichever is quickest. 4) Nevertheless, the 2nd "alpha" cookie always tastes better.
mkolodny 14y ago
PG posted an interesting speech a while ago by Richard Hamming. It was about what makes the most successful people so successful. I really like his take on luck. "I claim that luck will not cover everything. And I will cite Pasteur who said, ``Luck favors the prepared mind.'' And I think that says it the way I believe it. There is indeed an element of luck, and no, there isn't. The prepared mind sooner or later finds something important and does it. So yes, it is luck. The particular thing you do is luck, but that you do something is not." http://www.paulgraham.com/hamming.html http://www.paulgraham.com/hamming.html
chaostheory 14y ago
Luck favors the bold. She favors those who experiment and take risks. That being said those bold experimenters aren't guaranteed luck, but they have a much higher chance of it; instead of failing 9 out of 10 times, they'll only fail 8 out of ten times.
zackhall 14y ago
Am I the only one who initially read this as "Don't Eat Fortune Cookies," and didn't realize my mistake until going back to read the rest of the title? Anyhow, it was a very great and inspiring read.
Tycho 14y ago
Luck is too broad a term. I suggest that success is down to two components: alpha, and creativity. Creativity is whatever value you create with your own talents and your own hard work. Alpha is whatever opportunities come your way, which you need to seize to benefit from. Obviously some people are just born in a better position to capture/generate alpha. And also you can work at gaining a better vantage point for seeking alpha. But seizing it still takes skill (and most of it goes unrealized), and people can be rightfully proud about that (as long as they don't confuse the alpha component with the creativity component, which would be somewhat tiresome).
me_again 14y ago
A similar sentiment is expressed wonderfully tersely in Lemony Snicket's notes on Occupy Wall Street. http://occupywriters.com/works/by-lemony-snicket http://occupywriters.com/works/by-lemony-snicket There may not be a reason to share your cake. It is, after all, yours. You probably baked it yourself, in an oven of your own construction with ingredients you harvested yourself. It may be possible to keep your entire cake while explaining to any nearby hungry people just how reasonable you are.
zobzu 14y ago
I like that talk. Well written, honest and to the point. It doesn't even involve morality. It doesn't tell you not to take the cookie because, you'll take it anyway (well, most of you anyway). It just tells you not to fool yourself.
FredBrach 14y ago
I don't see any luck in the "dinner" refered in the article neither in any of the examples. All those events have been predicted by the people who fight hard for building a society where those kind of events precisely became the default instead of rapes and pillages. Btw, excelent movie.
kamaal 14y ago
I have gotten successful by being 'unlucky'. Post my 10th Standard(10th grade) I failed to secure a seat in a good college, though I had good marks. I went to a sub par college by any measure. I met some amazingly hardworking people in the college, who were just motivated like crazy to prove to the world that going bad college doesn't change anything in life. We worked hard, very hard. Studied like crazy. I can't remember if we ever slept for more than 5 hours a day the whole year. I did great in my pre university exams. During the entrance exams I got 'unlucky' again. The bus I took to the examination hall got punctured and I arrived to the hall 15 minutes late. I lost precious rank and again went into a average college. I met some great friends, we hacked in our free time. We did part time jobs in start ups. We installed modems for ISP's. I learned tons compared to other people in my age. Then again due an average college I failed to get a job in a software company straight out of college. I went to a call center. I got trained to deal with sales calls, technical support, I learned to talk in American accent, I learned to work late nights, I learned how to resolve issues quickly. My other friends went to work at top software companies here in India. I started coding in my spare time during the day and work in call center at the night. I got a job in a software company 9 months later. Again I got placed in a support project by being 'unlucky'. I started automating stuff, hacked like crazy day and night. I got a break in another unit in the company. All my other friends went to foreign onsite locations and were seeing the world. I went to work in development project. I got 'unlucky' again, I fell ill. Lost 35 kgs of weight due to a bad diagnosis of Tropical Sprue. I was put in as a back up guy for one of our client which happens to one of the largest web companies in the world today. I got back my life, and health slowly. I started working like crazy again. I did stuff with and editor and a interpreter they had never seen. They were happy, they decided to hire me full time. I happened to land in a company any guy here would dream to work. In this journey of getting and having chains of repeated back luck, I have gotten rich, got a little success and doing good by gods grace now. If I had gotten 'lucky' at any stage. I wouldn't be where I'm today. In other news, most of my friends who get tons of opportunities, chances and crazy twists of destiny in their favor are no where despite all they got today. Moral of the story I learned so far: You can't win against Karma! No way! It will get to you sooner or later. So just do the right stuff and relax.
Rhino55 14y ago
Michael Lewis is feeling what we call "Socialist Guilt" here in Berkeley. Feel free to ignore him, cookies are delicious, and if you get to eat a bunch just make sure you have some stock reply like "If God didn't want me to eat these cookies, he wouldn't have made them so delicious". Also, cookies aren't very nutritious. Just something to keep in mind as you chomp on your 17th consecutive cookie. Also, they are fairly cheap if you have the right equipment. Here is a good recipe: http://www.google.com/search?q=tool%20house%20cookies http://www.google.com/search?q=tool%20house%20cookies You're probably thinking, "What the hell is he talking about, the cookies are a metaphor for greed" but that's completely ridiculous. Cookies are delicious and greed is a psychological imbalance. They have absolutely nothing in common.
chernevik 14y ago
I will be reading Mr. Lewis' next book, and not because he's lucky.
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552 points by gregdetre 14y ago

I think this is why a lot of Hollywood actors tend to be liberal on economic issues. They may be rich and famous, but they also got the "big break" that many of their fellow actors did not get. Brad Pitt may be handsome and a good actor, but there are a lot of handsome and good actors. Only one of them got to co-star with Tom Cruise in Interview with the Vampire.

lcargill99 14y ago
Entertainers are liberal because narrative is a very Liberal Art. Data, myth and legend are more on the Conservative axis, although there are mighty quantities of overlap. I always enjoyed Neil Young because he was always both liberal and conservative and mostly both at the same time. Artists who truly serve the muse will be like that.

ternaryoperator 14y ago

His point is essentially the one developed at length by Malcolm Gladwell in "Outliers." Namely, that great successes are almost always dependent on a uniquely fortunate set of events that the person is able to exploit well, rather than their success being the result of genius.

randomdata 14y ago
If two random people were given equally fortunate sets of events in their lives, would they both exploit those events to reach the same level of success? Or could it be said that genius is recognizing those fortunate events when they come your way?
- hpguy 14y ago
  They wouldn't, because at least gene has its role. Life events + genes + free will => destiny. The role of the first two are pretty self-evident. I'm not sure about the role of free will, if it exists.

AznHisoka 14y ago

Maybe this is why people believe in religion rather than things happening with no rhyme or reason.

nirvana 14y ago

My success and failures in life have had nothing to do with luck. I've been both lucky and unlucky at various times, but none of them have determined my level of success over the short or long term to any significant degree. At the same time I've had periods where I worked hard and was focused and passionate about what I was doing, and periods where I was not passionate, unmotivated by a crushingly poorly run organization and did not work very hard. The periods where I was focused, passionate and working hard were the more successful ones, and successful enough to carry me thru the down times as well. Luck may have put Michael Lewis at Goldman Sachs, but luck didn't determine his level of success. After all, his success comes from writing books, not being a goldman boy. Sure he wrote his first book about that period, but that book took a large amount of focus, passion and effort to create. That said, I certainly find myself occasionally jealous of people who seemingly lucked into great success. If I'd never applied myself, and thus never had success myself, I'd probably think that luck was the actual determinant of success. Edit to add: In this post I deliberately talked about my personal experiences. I didn't make a broad sweeping statement that luck doesn't determine success or failure for everybody. However, clearly people object to the political incorrectness of not supporting the ideology that argues "luck determines success, therefore the rich should be taxed to pay us! we just weren't lucky!" Note that I did not address that argument, I just talked about my experience. But because my experience is inconsistent with the distorted view of the world, it is "politically incorrect" and thus should be kept from the eyes of others, lest they be influenced, my post has been made visually unreadable. I find this anti-intellectualism distasteful.

taybin 14y ago
This is exactly the blindness he talked about.
Smudge 14y ago
The point of the speech wasn't that you shouldn't apply yourself. Your hard work, passion, and focus likely correlate with your successes. But that doesn't mean you weren't also extremely lucky to be in a position where those factors (things that you have more control over) were so able to tip your chances. Edit: Firstly, we should all be able to voice unpopular opinions without getting silenced by the crowd. I may have disagreed with your analysis, but I voted up your response nonetheless. Secondly, to respond to your edit. I think you are not quite correct in stating that your down-votes are due to the fact that "people object to the political incorrectness of not supporting the ideology that argues 'luck determines success, therefore the rich should be taxed to pay us! we just weren't lucky!'" There is a difference between those who do not apply themselves and believe success is entirely down to luck, and those who work hard and dedicate their lives to the pursuit of something more, never to achieve the kind of successes that others take for granted. It is the latter group that you are failing to acknowledge, which is perhaps why you are seeing so many down-votes. I wouldn't simply attribute it to "anti-intellectualism."

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naturalist 14y ago

Does anyone have a link to the experiment mentioned in this speech?

unreal37 14y ago
The study, "Power and the Consumption of Resources", by Ward and Keltner, is an unpublished manuscript. There's no link I can find to the actual study online, but everyone talking about social power quotes from it. http://www.forbes.com/sites/sap/2011/01/05/the-poison-of-power/ http://www.forbes.com/sites/sap/2011/01/05/the-poison-of-pow...
ivv 14y ago
There were five cookies, not four. The fifth cookie was left untouched, just as the norms dictate. It's the fourth cookie that the "leaders" went for. The study was done in 1998 and the original paper hasn't been published, but the researchers describe it in a later paper (2000, pdf): http://gsbapps.stanford.edu/researchpapers/library/rp1669.pdf http://gsbapps.stanford.edu/researchpapers/library/rp1669.pd...
- unreal37 14y ago
  That's right. 5 cookies, so that someone could take the 4th cookie without feeling too guilty about taking the last one. I guess the last cookie usually went uneaten.

nostromo 14y ago

I've enjoyed two great books that discuss this: "The Drunkard's Walk: How Randomness Rules Our Lives" (http://www.nytimes.com/2008/06/08/books/review/Johnson-G-t.html http://www.nytimes.com/2008/06/08/books/review/Johnson-G-t.h...) and "Fooled by Randomness" (http://en.wikipedia.org/wiki/Fooled_by_Randomness http://en.wikipedia.org/wiki/Fooled_by_Randomness) I think people dislike talking about luck's role in our successes (but not failures) because it hints at a deterministic world view where our free will is less important than we'd like to believe.

geekam 14y ago
A question: I want to read those books. Which one should I start first?
- graeme 14y ago
  Fooled By Randomness leads nicely into the Black Swan, Taleb's even better follow up book.
- nostromo 14y ago
  The Drunkard's Walk was the better of the two in my view. I'd start there and follow up with Taleb's book if you want to read more. However, if you're really into Wall Street trading, flip the order.
sliverstorm 14y ago
Alternate explanation: People know they can't do anything about true luck, so they want to focus on things they might be able to do something about.
- hjkl 14y ago
  But then do people overestimate the impact of their own influence? Would it benefit themselves/the world to come to grips with randomness?
  - 14y ago

paulorlando 14y ago

Would realizing they are lucky benefit the lucky? In the cookie experiment Lewis wrote about, the randomly appointed leader would then not take the cookie so effortlessly.

dan-k 14y ago
Indeed, and that might result in better relations with the other members of the group, in turn resulting in more productivity, leading to greater accomplishments and benefits later on. It's been thousands of years since short-term greed was the ideal way to do things, basically since humans organized into real civilizations, but it's hard to get people not to be greedy, so we just design our economy around it instead (i.e. capitalism).
alxp 14y ago
He's telling the students that they, being Ivy League graduates, will have many opportunities to exploit their positions, and is telling them to be aware of this and exercise some humility by remembering that luck has largely brought them where they are.

CUR10US 14y ago

"This isn't just false humility. It's false humility with a point." This is why I like Lewis' writing. Liar's Poker had a huge influence on me at an influential age. There's always a sense that he's playing the same game that he's writing about. And not in a George Plimpton sense. But he's often got a message to deliver that other players will not touch. The message always seems worth hearing. I interpret his reference to the Berkeley study as not one that explains "luck", but of one that explains how life is role-based. People take roles and play them, as if "all the world's a stage". It is. We are all willing to go along either as the audience or in our appointed roles. What I think Lewis means to say is that the assignment of roles, the "casting" if you will, is often arbitrary. I only wish Lewis had made this longer. There is so much more to say. Not only do people not like success explained as "luck" but they insist on success being attributed to "brilliance", "genius", "hard work", etc. In this case, when the cause of an effect is not clear, we are very quick to find one that suits our purposes.

scott_s 14y ago
If you want people to remember what you have to say, make your point, and get off the stage.
- larrys 14y ago
  Similarly I've long noticed a connection between brevity and stature. In speech, writing and behavior. With sales by the way it's always important to get your ass out of dodge after getting agreement from the customer, lest they change their mind.
  - rscale 14y ago
    "Always leave them wanting more" isn't just advice for show business.
  - CUR10US 14y ago
    Getting out of dodge. Maybe this is why he was brief: His point is a potentially unpopular one. It is just a very interesting topic. One that few who are successful would dare to explore in depth. It would be interesting to hear how his brief remarks were received. Did people like what he had to say?

hjkl 14y ago

I'm surprised by how defensive people can get about their own success. It seems to me that you can never know if your success was due to your own hard work or some lucky breaks (or, more probably, a combination of both to which you'll never know the balance). It reminds me of the story about thousands of people flipping coins. Out of those thousands of people, some of them are going to flip a long string of heads. Does that mean that those people are "good" at flipping heads? Is someone who flips a string of tails "bad" at flipping heads?

roopeshv 14y ago
just law of large numbers at work
paulhauggis 14y ago
Using this logic, pretty much everything is due to luck. finish your PHD? You were lucky that you were accepted and that you had a good enough education to get into the program. "It seems to me that you can never know if your success was due to your own hard work or some lucky breaks" You may have a point. But, I'm really tried of people attributing all success to luck (and using this as an excuse as to why they aren't succeeding). It also discounts all of the hard work that someone does put into something successful. If I sit here and do absolutely nothing, I won't ever have a successful startup. This is why I know it's not mostly due to luck. Luck implies that it happens to you with no intervention..like winning the lotto.
- hjkl 14y ago
  The argument isn't that success is due entirely to luck. It's that you'll never know how much of that success is due to luck. It may be a lot or it may be a little.
  - paulhauggis 14y ago
    But you do. If you make an iphone app and it's an overnight success, you got lucky (the non-luck part is the years of experience that it took to make the app). However, if you slowly build your user base and continue to add new features for years through many failures/successes, beyond the normal 10% or less luck in every-day life, I wouldn't consider it lucky. Again, it seems there is this trend on HN to make it seem like anyone remotely successful got "lucky". Even worse is blurring the line between luck and hard-work so you can make it seem like their accomplishments aren't as important.

sliverstorm 14y ago

Among other reasons, it is disingenuous. Was it only luck?

moistgorilla 14y ago

I had this discussion with my father today and he finally conceded to me that I am partially right (he hates being wrong). The fact that you were not born in a war torn country, the fact that you had good role models, the fact that you weren't born with a mental or physical handicap, the fact that you met your long term business partner at some random get together. Are all luck. Now that doesn't mean you should give up on all of your activities, because if you don't try at all you have a zero percent chance of success at that point. Even getting to the point where you have this work hard mindset is luck.

arnoldwh 14y ago

The point I take away is a little bit beyond just realizing that you're lucky. That's important, and the people I've met that I consider truly successful (ones I would consider as role models), generally realize this. However, I think we can take this further...the only variable that we have under our control is effort. Since luck is an outside force, you might as well maximize this one variable that's still under your control so that you have the best odds.

ams6110 14y ago
The old Louis Pasteur quote that sums it up is "Chance favors the prepared." A lot of what happens to us in life is a matter of chance (called luck if it's in our favor). But if you aren't ready to take advantage of it, it will come to nothing.
Tichy 14y ago
Effort, but on what? Simply expending effort won't get you anywhere. As the moneyball example shows, you can help luck on it's way with maths and data. Although I suppose if efficient market hypothesis is true, then even where you direct your effort must be luck.

liber8 14y ago

I think part of the problem with realistically viewing one's life through this prism is the impossibility of determining what percentage of one's success is due to luck. In a sense, literally everyone who is alive today is lucky. They are the product of an unbroken line of genetic material passed down for millions of years. Can you imagine? Not one of their thousands and thousands of ancestors managed to be killed before procreating! In another sense, everyone alive today is lucky they weren't stillborn. Lucky they weren't claimed by SIDS or whooping cough, or a cold, or any of the various childhood afflictions we've eradicated. Everyone who wakes up tomorrow is lucky they didn't get cleaned out by a bus crossing the street, or sideswiped by a drunk driver on their way home. Almost all of the "rich" people in the U.S. did not start out rich. Unquestionably, luck played a role. But how much? Who's to say that, if Michael Lewis skipped that fateful dinner, he wouldn't have gone to a frat party, met a future ballplayer, and then gone on to break the MLB steroid scandal. Or sat next to a White House intern and broken the Clinton sex scandal? or, or or. If any one of these alternate scenarios happened, he would still claim to be "lucky" to be in the right place at the right time. And, in a sense, he'd be right. But that doesn't necessarily mean he was successful because he was luckier than millions of other people around the world. Obviously someone born today in the U.S. is much "luckier" than someone born in Somalia. Someone born into an upper-class family in Germany is "luckier" than someone born into a nomadic tribe in Algeria. Does that make the "luckier" person's success more attributable to luck? (And, as a corollary, the "less lucky" person's success less attributable to luck?) Maybe, but to what extent?

bradleyland 14y ago
And if you recursively click the first link in Wikipedia articles, you end up at philosophy :) My point is that if you dedicate a lot of time thinking about any particular aspect of life, you end up back at the "Getting to Philosophy" problem. Your luck comes in shades of grey. At some point, the line between black and white is drawn rather arbitrarily. Would I consider myself "lucky" to be born in the US? To be born at all? Sure, why not. It's at least a statistical significance. But that stroke of luck was just the basis from which I built my relative level of success. The same is true for any starting point. The more relevant question is, does it really matter? I wouldn't say that contemplating the deeper meaning of one's own "luck" is a waste of time, but obsessing over it is foolish. While you're busy contemplating how lucky you are, the other person is busy positioning themselves to succeed.

stickfigure 14y ago

A quick parable: You sense a random opportunity, work your ass off, and turn it into a great success. False narrative #1: This success is solely due to your hard work! False narrative #2: This success is solely due to luck! I haven't read ML's books (yet) but I think this speech leans too heavily on narrative #2.

njharman 14y ago
It's a superlatively false narrative to image that "sense random opportunity" is the only (or even common) scenario and that "work your ass off" is its only response.
brown9-2 14y ago
I don't think he is saying anything is "solely" anything else. Just that it's unlikely that #1 is the full explanation.
RobAtticus 14y ago
I think he's intentionally focusing on the luck aspect because I think his audience (Princeton undergrads) is used to the first narrative. As sort of an outsider (I'm a graduate student here), I sometimes get the sense that a fair amount of undergrads here are a bit too self-important. Certainly there are many awesome, down-to-earth people here too, but there are also a lot of people who are caught up in the fact that they are Princeton students and that by itself perhaps makes them better than students of "lesser" schools. I think in particular, Lewis' last full paragraph should be the take away for these students. Yes, they are very gifted and they may deserve every bit of benefit that comes their way, but they should also remember that there is at least some part of that they didn't/can't control. Acknowledging and being humbled by that will go a long way in life.
- btown 14y ago
  As a Princeton '12 who saw the speech live, I entirely agree. I'd add that this was the Baccalaureate ceremony, which was historically the part of graduation that featured an extensive sermon... in other words, a part that is designed to be humbling in every respect.

RockyMcNuts 14y ago

The power of fortune is confessed only by the miserable, for the happy impute all their success to prudence or merit. - Jonathan Swift

RockyMcNuts 14y ago
Tangentially related, Joseph Heller - Destiny is a good thing to accept when it's going your way. When it isn't, don't call it destiny; call it injustice, treachery, or simple bad luck. ... He was a self-made man who owed his lack of success to nobody. ... Some men are born mediocre, some men achieve mediocrity, and some men have mediocrity thrust upon them. With Major Major it had been all three. Even among men lacking all distinction he inevitably stood out as a man lacking more distinction than all the rest, and people who met him were always impressed by how unimpressive he was.

jharding 14y ago

This reminds me of a topic the guys from the TechZing podcast talk about pretty frequently, increasing your luck surface area. Jason Roberts has a short post about it on his blog that sums it up pretty well (http://www.codusoperandi.com/posts/increasing-your-luck-surface-area http://www.codusoperandi.com/posts/increasing-your-luck-surf...). This concept has resonated with me and for the past couple of months, I've started to do things with the hopes of increasing my luck surface area.

jonny_eh 14y ago
I came here to say this. It's important to realize the size of luck's effect on our lives, but the next step isn't just to shrug and say "oh well, I guess I wasn't lucky." There are in fact scientifically proven ways to increase one's chance for getting lucky. I highly recommend Richard Wiseman's book "The Luck Factor" which goes into this research: http://www.richardwiseman.com/books/luckfactor.html http://www.richardwiseman.com/books/luckfactor.html

gruseom 14y ago

http://news.ycombinator.com/item?id=1621845 http://news.ycombinator.com/item?id=1621845

rudiger 14y ago
Some businessmen feel obligated to "give back." Who says they've taken anything? Paul Graham responds, "They've taken something from chance."
- smsm42 14y ago
  So they should give back to chance? How does one do that? It may be a nice turn of phrase, but sound like completely meaningless if one takes a minute to think about it. One should be charitable because it's human to be compassionate to your fellow human being, not because being successful automatically puts you in debt to the God of Chance, which debt should be repaid or else. And not because by being successful you stole your success from somebody else.
- zobzu 14y ago
  It should be obvious to anyone, that when you have more wealth than 99.5% of the world, you owe the rest of the world. But not so many understand or realize that. Next time, they shall be born alone, let's see how many hours they survive. People feed you. Build stuff for you. Make your life better. And most of them, don't gain much from it. Usually, they just die younger.
  - kamaal 14y ago
    >>It should be obvious to anyone, that when you have more wealth than 99.5% of the world, you owe the rest of the world. Unless you are a king, dictator or some force of evil. Building 99.5% of the wealth in the world will mandate you to build empires of business, solve problems, provide employment to millions of people around the globe. That much doesn't happen merely by chance.
    - egonschiele 14y ago

mikecane 14y ago

And that is exactly why whenever someone wants book recommendations here, I always recommend Max Gunther's two books about luck. That.

kylebrown 14y ago

Its amazing how self-defensive some successful people can become about their socioeconomic status. An implication that luck had any more than a very minor contribution is blasphemous. Some can become outraged at the suggestion that they might own one penny that wasn't earned fair and square. Completely on their own, with no help from anybody. Not even scholarships count as help (they're earned). And for some reason, admitting that one received assistance from one's parents is taboo. Just look at the Romney campaign for a prominent example: "I could have stayed in Detroit like him and gotten pulled up in a car company," Romney said at the debate. "I went off on my own. I didn't inherit money from my parents. What I have, I earned. I worked hard, the American way."[1] 1: http://www.politifact.com/truth-o-meter/statements/2012/jan/20/mitt-romney/mitt-romney-says-he-didnt-inherit-money-his-parent/ http://www.politifact.com/truth-o-meter/statements/2012/jan/...

MartinCron 14y ago
Not even scholarships count as help (they're earned) And heaven forbid you count student loans as getting help, even though they are taxpayer subsidized to keep the interest rates artificially low.
sopooneo 14y ago
What about someone that fought their way out of endemic poverty? For me, I was fortunate my whole life and while I have worked hard for what I've achieved, it is all largely dependent on the love, encouragement, mindset, and financial help I received from my family. I have a friend, though, that is one of my personal heroes. He came from disadvantage and dysfunction. But, by some spark that frankly I still find intimidating, he started fighting his way out from early childhood. Every challenge available in high school. Ivy League. Finance. Politics. He doesn't like to visit home now, which makes me sad, but I can understand. So how much luck with him? We could argue that people like him are lucky for their innate drive and passion, but that's a tricky one.
- zasz 14y ago
  I'd argue a lot, still. Was he born in America, or Somalia?

cdi 14y ago

Being born talented is luck in itself. Without talent there's no true achievement, success. Random fortune, lottery win at best.

confluence 14y ago

Michael Lewis meet Quora; Quora meet Michael Lewis: http://www.quora.com/Wealthy-People-and-Families/Why-dont-some-rich-people-pay-their-taxes-Is-it-just-greed http://www.quora.com/Wealthy-People-and-Families/Why-dont-so... The question I want answered is: How do you optimise for luck? I've come to the conclusion that one most work very hard on something with a scalable market value for a long period of time. You continue to do this (repeatedly if need be), until you either, in order of likelihood: a) Quit b) Die c) Get lucky How does one optimise for luck? How can one work "luckier" - not smarter (which is necessary but not sufficient for success)? Bill Gates is a very smart man, I'm sure, but I highly doubt that he was the smartest, or the hardest working at the time he founded Microsoft (many people that run/found companies are very hard working/intelligent - but most fail). If I recall correctly the founder of Digital Research and the creator of the CP/M operating system Gary Kildall (http://en.wikipedia.org/wiki/Gary_Kildall http://en.wikipedia.org/wiki/Gary_Kildall) could've become Bill Gates. Apparently Bill Gates bought a clone of CP/M for ~$50K and sold it back to IBM with a blanket license for ~$100K, whilst holding onto the rights to exclusively sell to other manufacturers without IBM's permission. The IBM PC blew up all the sales records, and quickly became the dominant PC platform. The market was soon flooded with reverse engineered copies created by manufacturers hoping to ride the IBM wave by producing clones that were cheaper. Every single one of them required an operating system that was compatible with IBM. And who had the exclusive license to sell them the software IBM used? Microsoft I just want to know how does one get lucky, if that isn't such a stupid question to ask. I have the feeling that anything up to some arbitrary limit (60K-150K a year) you can state that skill may probably have been a major component. But anything above that, and I'm pretty sure you are in very lucky territory. Does this make sense, or is everything mostly luck, and just a teensy bit of skill?

rudiger 14y ago
Mary Gates, Bill Gates' mother, was on the same board as John Opel, the president, chairman and CEO of I.B.M. They discussed her son's company and Mr. Opel mentioned Mrs. Gates to other I.B.M. executives. A few weeks later, I.B.M. took a chance by hiring Microsoft, then a small software company, to develop an operating system for its first personal computer. So a discussion Mary Gates had with John Opel while they were both serving on the board of United Way of America resulted in an IBM contract being placed with her son Bill's company Microsoft to create an operating system for IBM's first personal computer.

rocken7 14y ago

I had a great time reading the following group of related books. How To Beat the Dealer by Ed Thorp. You might think this is lame and outdated, but it will clue you into how bond traders think. In fact, Bill Gross of pimco was so inspired by the book that he went to Vegas and became a gambler (before pimco but OTW). That book also is the holy grail for card counting. It will up your blackjack at least, and prepare you for the next book. Liars Poker by M.Lewis Lewis actually mentions Thorp, b/c Thorp went on to become a wildly successful trader throughout the 90s: he even called out B.Madoff as a crook in the early 90s (dude knew his finance games and clearly the SEC did not), and Thorp developed a lot of arbitrage trade strategies that are common today. All of this and more as M.Lewis clues you into wallstreet cronies and big bond trading, insider talk about salmon smith barney, and just how sketchy that industry really is ... Ok now you know a few things about wallstreet and trading, now go to: The Big Short by M.Lewis Lewis again with an awesome breakdown of how/what of the credit bubble and various characters betting against that massive momentum as it builds. Really this book is about personal fortitude: having a vision as a trader and sticking to it, even when the rest of the world is betting against you, even when your vision implies the rest of the world is d0000med in an almost end-of-money kind of way :) Now move into an interesting layer of finance, which all of us Hackers will enjoy ... The Quants by S. Patterson This has the making of a great movie if only hacking were interesting on film (too bad its not really like Hugh Jackman in Swordfish!). Buffet: "beware of geeks bearing formulas" ... exactly and this book is all about the buildup of these trading systems and the people behind them, the little bill gates (relative to bank-account) characters that run those giant quant funds ... And just questions on layering probability and the feasibility of trading into this complexity. Read on ...

Dn_Ab 14y ago
You either forgot to add or will likely enjoy Fortune's Formula by Poundstone.
damian2000 14y ago
FYI there's a new book by Scott Patterson coming out next week called "Dark Pools: High-Speed Traders, A.I. Bandits, and the Threat to the Global Financial System" which looks interesting.

amirnathoo 14y ago

This really surprised me: > They entered the room bearing a plate of cookies. Four cookies. The team consisted of three people, but there were these four cookies. Every team member obviously got one cookie, but that left a fourth cookie, just sitting there. It should have been awkward. But it wasn't. With incredible consistency the person arbitrarily appointed leader of the group grabbed the fourth cookie, and ate it. Not only ate it, but ate it with gusto: lips smacking, mouth open, drool at the corners of their mouths. In the end all that was left of the extra cookie were crumbs on the leader's shirt. I regularly have shared meals with my team and friends (mostly Brits), and this would never happen.

waterlesscloud 14y ago
I'm very, very suspicious of this claim. In any situation I've been in like this, the leader has been almost overly gracious about sharing or outright giving to the non-leaders.

radley 14y ago

1) I don't eat the cookie, I just read the fortune. 2) You only get one fortune a day, so the 2nd would be a waste. 3) My instinct as leader would be to let the other two split it or "first come" - whichever is quickest. 4) Nevertheless, the 2nd "alpha" cookie always tastes better.

mkolodny 14y ago

PG posted an interesting speech a while ago by Richard Hamming. It was about what makes the most successful people so successful. I really like his take on luck. "I claim that luck will not cover everything. And I will cite Pasteur who said, ``Luck favors the prepared mind.'' And I think that says it the way I believe it. There is indeed an element of luck, and no, there isn't. The prepared mind sooner or later finds something important and does it. So yes, it is luck. The particular thing you do is luck, but that you do something is not." http://www.paulgraham.com/hamming.html http://www.paulgraham.com/hamming.html

chaostheory 14y ago

Luck favors the bold. She favors those who experiment and take risks. That being said those bold experimenters aren't guaranteed luck, but they have a much higher chance of it; instead of failing 9 out of 10 times, they'll only fail 8 out of ten times.

zackhall 14y ago

Am I the only one who initially read this as "Don't Eat Fortune Cookies," and didn't realize my mistake until going back to read the rest of the title? Anyhow, it was a very great and inspiring read.

Tycho 14y ago

Luck is too broad a term. I suggest that success is down to two components: alpha, and creativity. Creativity is whatever value you create with your own talents and your own hard work. Alpha is whatever opportunities come your way, which you need to seize to benefit from. Obviously some people are just born in a better position to capture/generate alpha. And also you can work at gaining a better vantage point for seeking alpha. But seizing it still takes skill (and most of it goes unrealized), and people can be rightfully proud about that (as long as they don't confuse the alpha component with the creativity component, which would be somewhat tiresome).

me_again 14y ago

A similar sentiment is expressed wonderfully tersely in Lemony Snicket's notes on Occupy Wall Street. http://occupywriters.com/works/by-lemony-snicket http://occupywriters.com/works/by-lemony-snicket There may not be a reason to share your cake. It is, after all, yours. You probably baked it yourself, in an oven of your own construction with ingredients you harvested yourself. It may be possible to keep your entire cake while explaining to any nearby hungry people just how reasonable you are.

zobzu 14y ago

I like that talk. Well written, honest and to the point. It doesn't even involve morality. It doesn't tell you not to take the cookie because, you'll take it anyway (well, most of you anyway). It just tells you not to fool yourself.

FredBrach 14y ago

I don't see any luck in the "dinner" refered in the article neither in any of the examples. All those events have been predicted by the people who fight hard for building a society where those kind of events precisely became the default instead of rapes and pillages. Btw, excelent movie.

kamaal 14y ago

I have gotten successful by being 'unlucky'. Post my 10th Standard(10th grade) I failed to secure a seat in a good college, though I had good marks. I went to a sub par college by any measure. I met some amazingly hardworking people in the college, who were just motivated like crazy to prove to the world that going bad college doesn't change anything in life. We worked hard, very hard. Studied like crazy. I can't remember if we ever slept for more than 5 hours a day the whole year. I did great in my pre university exams. During the entrance exams I got 'unlucky' again. The bus I took to the examination hall got punctured and I arrived to the hall 15 minutes late. I lost precious rank and again went into a average college. I met some great friends, we hacked in our free time. We did part time jobs in start ups. We installed modems for ISP's. I learned tons compared to other people in my age. Then again due an average college I failed to get a job in a software company straight out of college. I went to a call center. I got trained to deal with sales calls, technical support, I learned to talk in American accent, I learned to work late nights, I learned how to resolve issues quickly. My other friends went to work at top software companies here in India. I started coding in my spare time during the day and work in call center at the night. I got a job in a software company 9 months later. Again I got placed in a support project by being 'unlucky'. I started automating stuff, hacked like crazy day and night. I got a break in another unit in the company. All my other friends went to foreign onsite locations and were seeing the world. I went to work in development project. I got 'unlucky' again, I fell ill. Lost 35 kgs of weight due to a bad diagnosis of Tropical Sprue. I was put in as a back up guy for one of our client which happens to one of the largest web companies in the world today. I got back my life, and health slowly. I started working like crazy again. I did stuff with and editor and a interpreter they had never seen. They were happy, they decided to hire me full time. I happened to land in a company any guy here would dream to work. In this journey of getting and having chains of repeated back luck, I have gotten rich, got a little success and doing good by gods grace now. If I had gotten 'lucky' at any stage. I wouldn't be where I'm today. In other news, most of my friends who get tons of opportunities, chances and crazy twists of destiny in their favor are no where despite all they got today. Moral of the story I learned so far: You can't win against Karma! No way! It will get to you sooner or later. So just do the right stuff and relax.

Rhino55 14y ago

Michael Lewis is feeling what we call "Socialist Guilt" here in Berkeley. Feel free to ignore him, cookies are delicious, and if you get to eat a bunch just make sure you have some stock reply like "If God didn't want me to eat these cookies, he wouldn't have made them so delicious". Also, cookies aren't very nutritious. Just something to keep in mind as you chomp on your 17th consecutive cookie. Also, they are fairly cheap if you have the right equipment. Here is a good recipe: http://www.google.com/search?q=tool%20house%20cookies http://www.google.com/search?q=tool%20house%20cookies You're probably thinking, "What the hell is he talking about, the cookies are a metaphor for greed" but that's completely ridiculous. Cookies are delicious and greed is a psychological imbalance. They have absolutely nothing in common.

chernevik 14y ago

I will be reading Mr. Lewis' next book, and not because he's lucky.

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