Get Lucky By Knowing Your Industry and Knowing Yourself

Over the past few weeks I’ve had a several conversations with my friends about risk, finding the right place for your personality, and how to get in early on emerging trends. I thought I’d share some of my thoughts in this post.

What is Risk?

Let’s talk about risk first. What most people view as “risky” is merely something that conflicts with conventional advice. But conventional wisdom isn’t always the best way. When you first look at some of the most successful people, you might think–hey they just took a risk and got lucky. But if you look deeper, as Malcolm Gladwell did in The Sure Thing, you see that what appears to be risky can actually be extraordinarily safe. Risk isn’t reduced by copying everyone else. It’s reduced by having all the right information, and understanding all of its implications.

Most Outsiders Don’t Have All The Information

Many years ago, I first heard that my brother in law decided to enter into the mobile games industry. I was worried that it was an unusually risky move. There was no established career path, and the industry could fall apart at any moment.

I was wrong to worry. The mobile game industry is experiencing explosive growth. My brother in law got in at the right time, and through hard work, savvy, and recognizing broader trends, is now killing it in the industry. Just crushing it. The other day he explained his reasoning. “As someone who worked in the creative industry, I could see that this was where the world was headed, even though most people couldn’t.”

It’s always safer to join the edge of a growing industry (at the frontier, as Peter Thiel called it) than the middle of a stagnant industry. More jobs are being created, and it’s easier to find a niche you can dominate. The problem is, most people don’t have the same information industry insiders do. So they give you generic advice, like “Take the safe path and go to law school.” Going into law today can be more risky than most people realize.

How Well Do You Know Yourself?

Setting aside macro industry trends, a lot of success comes from finding the right place where someone with your particular set of traits can thrive. This is something you’ve got to figure out yourself. I’m reminded of this story from The Millionaire Mind by Thomas Stanley.

The story was about a salesman who struggled with sales. He always struggled to make his numbers because he didn’t have the same fearlessness as successful salesmen. It was tempting to say “well, that dude is not suited for sales.” But that would be wrong.

The salesman went from job to job and sold different types of products. He realized that the more expensive the product, the more the nature of the sales process changed. Selling cheap one-off items required an aggressive in-your face personality. But selling extremely expensive million-dollar orders required a consultative, soft-sell approach.

After years of job hopping, the salesman ended up at a job where he was selling multi million-dollar orders. And he thrived at it. He earned a million dollar commission check. All because he found a place where he had a big competitive advantage. Before, he got stressed about selling small items. But now, he was calm, cool, and comfortable selling gigantic deals. It was because his personality was a perfect fit for selling large deals.

You could imagine what outsiders would have told him early on in his sales career. “You can’t sell five light bulbs to that small business, so how on earth are you expected to sell five million light bulbs to Home Depot?” But outsiders don’t realize that sales at the higher levels look nothing like sales at the lower levels.

You have to choose the right place for your specific personality.

Safe Plays Can Be Risky

My favorite illustration of this principle is Nassim Taleb’s Turkey Problem he describes in The Black Swan. According to Taleb:

Consider a turkey that is fed every day … Every single feeding will firm up the bird’s belief that it is the general rule of life to be fed every day by friendly members of the human race “looking out for its best interests,” as a politician would say. On the afternoon of the Wednesday before Thanksgiving, something unexpected will happen to the turkey.

How susceptible are you to a massive lurking danger? Nobody knows. You can tell yourself “well it’s never happened before” but that’s probably not going to protect you from unprecedented disasters. Just ask the turkey.

Safe plays feel comfortable. But comfort just hides hidden dangers. Seth Godin provides a great explanation about what makes comfort different from safety:

 

Consider the safe play of being a practicing dentist. In general you will make good money. But even dentists aren’t safe from catastrophe. Like that dentist who had to shut down his business after the story about how he shot and killed an endangered lion went viral. (I believe he ended up re-opening the practice later but the practice will no longer be the same.)

The moral here isn’t that you shouldn’t take the conventional path. Or that you shouldn’t be a dentist. Or that you shouldn’t take photos of yourself hunting. The true lesson is that catastrophe can strike without warning. People who take the “risky path” are aware of both obvious and hidden dangers in a way that people taking the “safe path” aren’t.

What Should I Do?

There’s no real answer here. It’s too difficult to give advice to you–with all of your unique strengths and weaknesses operating in a particular industry–that won’t be too generic. You have to think about things independently. What are you good at? What are you bad at? Where is there a growing opportunity in your industry? These are the things that you’ve got to focus on.

If you’re interested in reading more about my thoughts on risk and luck, check out my series on Why You Should Take More Risks in Life.

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