Luck and Entrepreneurship

Luck and Entrepreneurship

I recently wrapped up recording with Courtland Allen on the Indie Hacker's podcast and I have been thinking a bit about the interview. I feel like I left out an important aspect to our story.

On the podcast, we talked about how Wavve & Zubtitle started and how we grew our two bootstrapped SaaS companies to over 100k in MRR combined.

We talked a lot of about what we did as a team to  start and grow the business. My concern is this makes it seem like we have some magic formula to making an Indie Startup work. That definitely isn't the case so I wanted to get some thoughts out that I wish I had mentioned on the podcast.

Distilled down, there are only two single attributes that result in your Indie Hacker endeavors being a success or not: Skill and Luck.

Skill includes everything that you have control over.  

Understanding the market, positioning, feature development, marketing strategies, etc., are all examples of skills that can attribute to making it work. Obviously, the more skills the better. Pretty straightforward.

The other half of the equation is what makes predicting success very difficult: Luck.

Luck includes everything that you don't have control over. And there is a lot that you don't have control over when starting a business.

Founders that go on podcasts and write articles to share their journey do not talk about luck enough.

It's hard for us to wrap our heads around how luck plays a role in entrepreneurship. We don't like to evaluate luck in our successes because it forces us to realize that we aren't fully in control. As a result, we naturally credit our successes to skills and our failures to luck.

Here is what it looks like in Indie Entrepreneurship:

When a project becomes a "success":  "We did a great job of putting a talented team together. Our niche target audience was clearly defined. Our initial product was so lean it drove users to convert at a high rate. We nailed our positioning by talking to thousands of customers. We expertly designed word of mouth growth. blah blah blah."

When a project fails: "I think we were just too early. The market wasn't ready for our solution. Too much competition sprouted up around the same time. Plus, we just didn't have time to work on it properly because of other life events. Bad timing."

I find myself falling into this trap when I gamble on sports (a fun hobby of mine). When I win a bet, it's because I saw some statistic or trait in the team that others didn't. When I lose, it's because the refs missed a call or a player missed a shot that they normally make. I got unlucky.

The problem here is that every company/project requires or contains a different mix of skill and luck. There is no special formula that you can follow.  i.e., If you started a company in the crypto space last year, your recipe for success relied a lot more on luck (one can't control the price of Bitcoin) compared to building a more traditional B2B SaaS.

Accurately identifying how much skill vs luck that is required for a business to work is impossible. Our limited views of the world prevent us from seeing the full picture. For example, we might think a business failed because it was too early when in fact the sales process wasn't accurately identifying the right prospects.

This is why we shouldn't take things like "The ultimate guide to bootstrapping" verbatim. Every company is different and will operate on its own timeline. They are very hard to compare.

If this resonates with you, the best advice I have for you is to read Thinking In Bets: Making Smarter Decisions When You Don't Have All The Facts by Annie Duke. She is a former WOSP poker player and now translates her expertise to business owners and others that are operating in a "wicked world" (a concept from Range: Why Generalists Triumph in a Specialized World, another great read).

The main point for this short article is to give those that have failed a sense of relief. There is a good chance that the failure wasn't due to your skills. And remember that when you start your next thing, luck plays a role and you should plan & act accordingly.

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