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Doubtfully a popular opinion, but I'll throw it out there anyway. In finance it's common to assume the winners (aka. those that float to the top of hedge funds, investment banks, etc) are worth observing as a result of their apparent success, however it's considered prudent to ignore the winners and instead observe what the losers have done, as few intelligent people in that sector believe a consistent winner is little more than someone who has had a good run of luck.

Following from that, if pg wasn't a "winner" there is very little to differentiate him from what 1,000,000 others have tried and failed. Circumstance and context are a frighteningly arbitrary decider, and therefore I don't think this question is particularly meaningful.

[edit: this is not to suggest that dumb luck alone is enough to create a success, it's just that intelligence and tact alone are often not enough to create success either]




Regardless of the applicability to pg, I think this is a smart conversation. When evaluating hypotheses, we have a cognitive bias in favor of past success, when past failure might be the more informative signal. Planet Money did an interesting podcast with the author of this book:

http://www.amazon.com/Adapt-Success-Always-Starts-Failure/dp...

discussing just such a hypothesis:

http://www.npr.org/blogs/money/2012/09/04/160555540/episode-...


Just ordered the book, thanks!


Y-combinator has had a long run of successes, far beyond what could reasonably be attributable to luck.


[deleted]


"The same was said of Berkshire Hathaway for the majority of its run under Warren Buffet, a success that has recently begun to wane."

Where do you get the "success that has recently started to wane"? Berkshire Hathaway has continued to outperform the market, check 5 and 10 year charts here for example: http://www.fool.com/quote/NYSE/berkshire-hathaway-inc/BRK-A/....

Obviously they haven't had the same level of outsized successes, simply because BRK has grown much bigger, and it's harder to get good returns on larger amounts of capital. But there's no way you can conclude from Berkshire Hathaway's performance that it was just luck after all.

Also, see cs702's comment about how Warren Buffett identified 7 investors in 1984, all of whom went on to outperform the market: http://news.ycombinator.com/item?id=4476166


Seems just before you replied I deleted the parent comment, due to it stretching my analogy a bit too far, and into realms I'm far from authoritative in (or comfortable debating :).


YC is an investor, putting money into lots of startups. As a result, it benefits from the law of large numbers (https://en.wikipedia.org/wiki/Law_of_large_numbers), so luck isn't as big a factor as it is for individual startup founders.


I do believe there's a pg essay on this very topic.


http://paulgraham.com/wealth.html

"The other catch is that the payoff is only on average proportionate to your productivity. There is, as I said before, a large random multiplier in the success of any company. So in practice the deal is not that you're 30 times as productive and get paid 30 times as much. It is that you're 30 times as productive, and get paid between zero and a thousand times as much. If the mean is 30x, the median is probably zero. Most startups tank, and not just the dogfood portals we all heard about during the Internet Bubble. It's common for a startup to be developing a genuinely good product, take slightly too long to do it, run out of money, and have to shut down."


http://www.paulgraham.com/really.html

  With two such random linkages in the path between startups and money, 
  it shouldn't be surprising that luck is a big factor in deals. 
  And yet a lot of founders are surprised by it.


Do you have a link?


http://www.paulgraham.com/really.html #16

It's not on this topic but it definitely hits on it


Thanks!


The reason it is considered prudent (by some) in finance to not invest in the latest success story is that you want to buy low and sell high. Once a fund is a success, it is hard to do that.




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