Entrepreneurship: The Coin-Flipping Biathlon

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Entrepreneurs are participating in a coin-flipping biathlon – they just don’t know it.

I was listening to an old Marc Andreessen presentation at Y Combinator’s Startup School in 2008, and I love that he talked about Nassim Taleb’s Fooled by Randomness (see my review here).  He mentions that you could account for Warren Buffett and other highly successful investors as simply winners in a coin-flipping contest: they bring money to the table, flip coins to move forward (heads you move one, tails you lose), and eventually there are a few big winners – those who had significant runs of heads.  

I think there’s a lot of truth to that.  There’s so much that is out of one’s hands: timing, access to helpers, the general market conditions, behavior of competitors, health, etc.  But it fails to account for the other necessary conditions that don’t involve luck, e.g. showing up and working hard.  Success requires several necessary conditions, one of which is luck.

So I like to think of entrepreneurship as a coin-flipping biathlon:  

Competitors line up in heats.  They race on cross-country skis 5km to the first shooting range.  There they flip coins and anyone who gets a tails is out.  They repeat this (ski then flip) 8 times.  First one to the end wins a big pot of gold.  

And in this universe there is no just-cross-country ski race – it’s the coin-flipping-biathlon or nothing.  So you never really know who was the fastest skiier – and it doesn’t matter.  

If you listen to the winner, they will talk about how their special diet was super important, and how they got up every day at 5am work out.  Commentators will mention how they trained year-round at high-altitude, and someone else will mention their crazy devil-may-care attitude and wild outfit, and someone else will mention that they were rich and had a ski tutor since age 6, etc etc.

So what do we think of the winner?  Only 1 in 250 should make it pass 8 coin flips.  But of those who remain the fastest should win.  So you can’t won’t win if you don’t show up and train hard.  You also won’t win if you aren’t lucky.  And it’s highly likely that person who trained hardest for the skiing lost out on a coin-flip.

Next time you hear someone mention that entrepreneurship is a marathon (or a sprint) – throw out the idea that it’s really a coin-flipping biathlon, and see what they think.

About brendansterne

Director of Innovation Labs, Indeed.com
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