Lucky vs. Repeatable

Luck plays such a big role in the world. But it’s hard to talk about. If I say you got lucky, I look jealous. If I tell myself that I got lucky, I feel diminished.

Maybe a better way to frame luck is by asking: what isn’t repeatable?

Lucky implies random events you could not see coming. What isn’t repeatable is different. Did Jeff Bezos get lucky creating Amazon? Not in the same way a lottery winner is lucky, of course. He was visionary and ambitious and savvy to a degree you only see a few times per century.

But could he, starting today, without any money or name recognition, create a new multi-trillion dollar business from scratch?

Maybe, but probably not. There are so many things that helped Amazon become what it is that can’t be replicated – growth of the internet, market conditions, old competitors, politics, regulations, etc. Bezos is enormously skilled in a way that is not luck. But a lot of what he did was not repeatable. Those points are not contradictory.

It’s so important to know the difference between the two when attempting to learn from someone. You want to try to emulate skills that are repeatable. Attempting to copy the parts of someone’s success that aren’t repeatable is equivalent to a 56-year-old dressing like a teenager and expecting to be cool.

There’s a law in evolution called Dollo’s Law of Irreversibility that says once a species loses a trait, it will never gain that trait back because the path that gave it the trait in the first place was so complicated that it can’t be replicated. Say an animal has horns, and then it evolves to lose its horns. The odds that it will ever evolve to regain its horns are nil, because the path that originally gave it horns was so complex – millions of years of selection under specific environmental and competitive conditions that won’t repeat in the future. You can’t call evolutionary traits luck – they came about because of very specific forces. You just can’t ever rely on those forces repeating themselves exactly as they did in the past.

A lot of things work like that.

In business and investing, you want to learn the big lessons about why things behave the way they do without assuming the past is a direct guide to the future, because it’s not – most of the details are not repeatable. History is the study of change, ironically used as a map of the future.

Jason Zweig of the Wall Street Journal once talked about what happens when you try to learn a very specific, non-repeatable lesson when a broader, very repeatable lesson is what you needed to pay attention to:

[After the dot-com crash], the lesson people learned from that was not, “I should never speculate on overvalued financial assets.” The lesson they learned was, “I should never speculate on internet stocks.” And so the same people who lost 90% or more of their money day-trading internet stocks ended up flipping homes in the mid 2000s, and getting wiped out doing that. It’s dangerous to learn narrow lessons.

The great thing when you ask, “is this repeatable?” is that you start to focus on things that you and I – ordinary lay people – have a chance of repeating ourselves.

You can learn a lot from Warren Buffett’s patience. But you can’t replicate the market environment he had in the 1950s, so be careful copying the specific strategies he used back then.

You can learn so much from John D. Rockefeller about the importance of controlling distribution. But you cannot replicate the 20th century legal system that allowed him to destroy competitors, so don’t get carried away there.

Elon Musk can teach you a lot about risk-taking and branding, but much less about competing in the auto business.

Jeff Bezos can teach you so much about management and long-term thinking, but much less about e-commerce and cloud computing.

The way to get luckier is to find what’s repeatable.