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How To Spot a Breakthrough: Tips from Early Amazon Investor Nick Hanauer

109 points by waderoush 18y ago

sireat 18y ago
Interesting that despite numerous cases of success, he still believes in the big ol' bag of luck. Highly successful people usually loathe to admit the part of luck in their lives.
- ph0rque 18y ago
  "Luck is what happens when preparation meets opportunity." --Seneca
  - josefresco 18y ago
    Seneca was kind of a rebel, and quotes like that discount the instances of true luck.
    - dangoldin 18y ago
      Well you can increase your exposure to luck. Although the odds of rolling a die once and getting a 6 are 1 in 6. The odds of rolling a 6 when you roll the die 100 times are much greater.
      - maximilian 18y ago
        1-(5/6)^100=0.999999988 5.99999993 times greater in fact.
      - pixcavator 18y ago
        Yeah, instead of one lottery ticket buy ten.
        dangoldin 18y ago
        Well I'm not including the cost aspect. Each roll of the die has some cost associated with it. It's up to the individual to determine how much effort to expend to get a chance to roll the die. If lottery tickers were free then you'd get as many as you could.
- sanj 18y ago
  I've found that the people who are most successful are those that ascribe their success to good luck. And when things fail, they examine what they did wrong: externalize success, internalize failure. Those that believe that luck has "nothing to do with it" are generally endowed with a huge ego and no way to see around it. Strangely, they're also the ones most likely to blame bad luck when things go wrong: internalize success, externalize failure. The advantage to internalizing failure is that you can learn from it.
  - kirse 18y ago
    From an optimistic (and even mental health) perspective, externalizing failure and internalizing success - aka "I did the best I could but the situation did not materialize" - is much healthier than internalizing failure and blaming yourself when things go wrong. Externalizing success never gives yourself due credit when things go right, and internalizing failure always blames yourself when things go poorly. See the problem? This is not to say one should have an inflated sense of value or "don't learn from your mistakes", but it is much healthier to optimistically look at failure as not a personal thing, but something external. People who have succeeded and are confident in themselves are never afraid to look back and admit that a little bit of luck (and opportunity) was part of the equation. But by no means will they discredit their own personal influence and attribute the entire success to something external.
    - nostrademons 18y ago
      I recall a psych study on this. They found that people who externalize failure and internalize success are happier, but those who internalize failure and externalize success are more successful. And yeah, they did find the corollary that more successful people tend to be less happy. Makes perfect sense really.
      - sanj 18y ago
        I'm pretty happy. And pretty successful. Maybe I'm just lucky?
      - 18y ago
- petercooper 18y ago
  Luck is always a factor - however, I think there's definitely some upbringing and family success at play here. Nick's brother Adrian Hanauer ( http://en.wikipedia.org/wiki/Adrian_Hanauer http://en.wikipedia.org/wiki/Adrian_Hanauer ) is also a successful investor.
- wmeredith 18y ago
  "I'd rather be lucky than good." -Lefty Gomez, NY Yankees and MLB All-Star 1933 - 1939
nostrademons 18y ago
Something I'm wondering - how do you spot that "transformational" value in foresight, when the next element ("social disruption") is all about how these huge shifts in value creation are never really apparent at first glance? For example, I think that YouTube is easily a 10x improvement over things like VHS tapes. I was just hunting for the opening credits of children's shows that I watched as a kid, and I found every single one (except Voyage of the Mimi ;-)) in about 15 seconds. My dad has been searching for the songs he grew up with, in the 40s, and they're all there. It's like a vast nostalgia library. But that didn't exist until enough people started using YouTube that basically everything became available online. When I first saw YouTube, around the fall of 2005, I was basically like "What's the point?" You were limited to 10 minute clips, and it didn't have anything I wanted on it. Even when Google acquired them for $1.6B, many people say they overpaid. Heck, people still say they overpaid. And Google Video, which came out before YouTube and offered a very similar feature set, never really caught on. Nor did the zillion other video-sharing startups. Ideas? My cofounder once talked with Clayton Christiansen about this (who's done a lot of work on disruptive innovation), and he said that on a micro level, it was basically all luck. You know what doesn't work, but finding out what does is basically just a matter of trying lots and lots of ideas and letting the vast majority fail.
- maxwell 18y ago
  YouTube succeeded because it's a good brand and good enough software. If Google had just integrated video results more tightly into search, thus making it a feature rather than a distinct product, and made uploading straightforward, they might have won. They still could, actually; a lot of people I know use Google to find YouTube videos in the first place. I've noticed that whenever Google launches Google _, where _ isn't a search filter, it more often then not fails. It's the branding. I think that for a lot of people Google = web search. Google Image Search is popular because it's an easily comprehensible feature of search. Google Docs is a shit brand; if I only knew about Google search and Gmail, I'd guess it's document(ation) search. Or just a word processor. It's not immediately clear that it's a web-based office suite. A large part of Gmail's success was in creating a distinct brand; my hunch is that if it was launched as just Google Mail, it wouldn't have been nearly as successful (technical merits aside).
gruseom 18y ago
This stuff is as much better than the average advice post as this guy is more successful than the average investor.
danielhodgins 18y ago
Using the 10, 100, or even 1000X better rule leads to some interesting, dangerous thoughts about how to solve some of the world's toughest problems. Kudos to Ganauer for mentioning Qliance- a dangerous new model for treating non-catastrophic health problems that might just mortally wound the fat-cat insurance companies. Here in Canada everyone gets free health care, and Scandinavian countries are even more progressive than we are. Residents in some Scandinavian countries attend university for free. Free university and health-club-style medical for everyone!
- nazgulnarsil 18y ago
  this is a startup focused news site. we're all aiming to be one of the fat-cats one day.

109 points by waderoush 18y ago

Interesting that despite numerous cases of success, he still believes in the big ol' bag of luck. Highly successful people usually loathe to admit the part of luck in their lives.

ph0rque 18y ago
"Luck is what happens when preparation meets opportunity." --Seneca
- josefresco 18y ago
  Seneca was kind of a rebel, and quotes like that discount the instances of true luck.
  - dangoldin 18y ago
    Well you can increase your exposure to luck. Although the odds of rolling a die once and getting a 6 are 1 in 6. The odds of rolling a 6 when you roll the die 100 times are much greater.
    - maximilian 18y ago
      1-(5/6)^100=0.999999988 5.99999993 times greater in fact.
    - pixcavator 18y ago
      Yeah, instead of one lottery ticket buy ten.
      - dangoldin 18y ago
        Well I'm not including the cost aspect. Each roll of the die has some cost associated with it. It's up to the individual to determine how much effort to expend to get a chance to roll the die. If lottery tickers were free then you'd get as many as you could.
sanj 18y ago
I've found that the people who are most successful are those that ascribe their success to good luck. And when things fail, they examine what they did wrong: externalize success, internalize failure. Those that believe that luck has "nothing to do with it" are generally endowed with a huge ego and no way to see around it. Strangely, they're also the ones most likely to blame bad luck when things go wrong: internalize success, externalize failure. The advantage to internalizing failure is that you can learn from it.
- kirse 18y ago
  From an optimistic (and even mental health) perspective, externalizing failure and internalizing success - aka "I did the best I could but the situation did not materialize" - is much healthier than internalizing failure and blaming yourself when things go wrong. Externalizing success never gives yourself due credit when things go right, and internalizing failure always blames yourself when things go poorly. See the problem? This is not to say one should have an inflated sense of value or "don't learn from your mistakes", but it is much healthier to optimistically look at failure as not a personal thing, but something external. People who have succeeded and are confident in themselves are never afraid to look back and admit that a little bit of luck (and opportunity) was part of the equation. But by no means will they discredit their own personal influence and attribute the entire success to something external.
  - nostrademons 18y ago
    I recall a psych study on this. They found that people who externalize failure and internalize success are happier, but those who internalize failure and externalize success are more successful. And yeah, they did find the corollary that more successful people tend to be less happy. Makes perfect sense really.
    - sanj 18y ago
      I'm pretty happy. And pretty successful. Maybe I'm just lucky?
    - 18y ago
petercooper 18y ago
Luck is always a factor - however, I think there's definitely some upbringing and family success at play here. Nick's brother Adrian Hanauer ( http://en.wikipedia.org/wiki/Adrian_Hanauer http://en.wikipedia.org/wiki/Adrian_Hanauer ) is also a successful investor.
wmeredith 18y ago
"I'd rather be lucky than good." -Lefty Gomez, NY Yankees and MLB All-Star 1933 - 1939

nostrademons 18y ago

Something I'm wondering - how do you spot that "transformational" value in foresight, when the next element ("social disruption") is all about how these huge shifts in value creation are never really apparent at first glance? For example, I think that YouTube is easily a 10x improvement over things like VHS tapes. I was just hunting for the opening credits of children's shows that I watched as a kid, and I found every single one (except Voyage of the Mimi ;-)) in about 15 seconds. My dad has been searching for the songs he grew up with, in the 40s, and they're all there. It's like a vast nostalgia library. But that didn't exist until enough people started using YouTube that basically everything became available online. When I first saw YouTube, around the fall of 2005, I was basically like "What's the point?" You were limited to 10 minute clips, and it didn't have anything I wanted on it. Even when Google acquired them for $1.6B, many people say they overpaid. Heck, people still say they overpaid. And Google Video, which came out before YouTube and offered a very similar feature set, never really caught on. Nor did the zillion other video-sharing startups. Ideas? My cofounder once talked with Clayton Christiansen about this (who's done a lot of work on disruptive innovation), and he said that on a micro level, it was basically all luck. You know what doesn't work, but finding out what does is basically just a matter of trying lots and lots of ideas and letting the vast majority fail.

maxwell 18y ago
YouTube succeeded because it's a good brand and good enough software. If Google had just integrated video results more tightly into search, thus making it a feature rather than a distinct product, and made uploading straightforward, they might have won. They still could, actually; a lot of people I know use Google to find YouTube videos in the first place. I've noticed that whenever Google launches Google _, where _ isn't a search filter, it more often then not fails. It's the branding. I think that for a lot of people Google = web search. Google Image Search is popular because it's an easily comprehensible feature of search. Google Docs is a shit brand; if I only knew about Google search and Gmail, I'd guess it's document(ation) search. Or just a word processor. It's not immediately clear that it's a web-based office suite. A large part of Gmail's success was in creating a distinct brand; my hunch is that if it was launched as just Google Mail, it wouldn't have been nearly as successful (technical merits aside).

gruseom 18y ago

This stuff is as much better than the average advice post as this guy is more successful than the average investor.

danielhodgins 18y ago

Using the 10, 100, or even 1000X better rule leads to some interesting, dangerous thoughts about how to solve some of the world's toughest problems. Kudos to Ganauer for mentioning Qliance- a dangerous new model for treating non-catastrophic health problems that might just mortally wound the fat-cat insurance companies. Here in Canada everyone gets free health care, and Scandinavian countries are even more progressive than we are. Residents in some Scandinavian countries attend university for free. Free university and health-club-style medical for everyone!

nazgulnarsil 18y ago
this is a startup focused news site. we're all aiming to be one of the fat-cats one day.