Luck and skill 2

More on luck and skill, by way of Michael Mauboussin. I would urge anyone interested in this to visit Michael Mauboussin's book website (link) for The Success Equation and play with the simulations. In particular, play the tennis simulation: a 51% chance of winning each point in a game translates to a 63% chance of winning the game. Of course it is an oversimplification, as winning points on your serve is different than on your opponent's serve, but let's take the overall average. Now, go watch Roger Federer's amazing Dartmouth commencement speech: link (and the inspiring life lessons). Roger may have read Michael's book.

This calculation applies not to one-off risk taking but to repeated plays. That's how tennis or baseball differ from, say, football (American or soccer). And the same can be said of investing vs entrepreneurship: the skilled win over time in investing, the lucky big-risk takers win in entrepreneurship.