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Train your luck and risk capacity

January 2025

Having just sailed through the boom and the bust of the latest tech bubble, I noticed how much luck played a dominant role: there was no strong correlation between the skills of friends who achieved life-changing outcomes and those who didn’t. The surprise was even more acute given that these events were only a few months apart. While we find comfort in believing that hard work and perseverance breed success, we also refer to luck to explain it. Interestingly enough, this tendency aligns popular belief with brilliant minds. So, a question comes to mind: is getting lucky worth trying, or is it better to focus on reducing our luck dependency?

In truth, to succeed in ambitious and outlier endeavors, luck and skills are both needed. But we might initially reject luck dependencies. This might be due to our society teaching us that “work hard and be smart” will be sufficient. Or because, it is hard to accept that our most important life objectives – the ones we want to risk the least and control the most – depend on luck. The “paradox of skills” explains this and how high-payout endeavors depend the most on luck. In fact, those are often highly competitive, and the difference between players’ skills becomes negligible. Therefore, other factors besides skills interfere in deciding the outcomes. Realizing this helps to appreciate the role of luck as a feature and not a bug in the system and the importance of training luck as much as training skills. 

I got curious and I started looking for “luck coaches”. Our society has many frameworks and experts to train skills but, there are no proven gurus, shortcuts, or ready-made programs to train our luck. We might then need to create our own tailored plan. “Do it yourself” is always an exciting way to start. Today, my approach to training luck has three levels: (1) Be unique with a spike and choose the right market. (2) Increase your risk-taking longevity. Make it easy to keep trying until you succeed. (3) Increase your risk capacity and tollerance. Continue to take bigger risks for bolder endeavors and bigger rewards. 

First, (1) be different and specialized with unique insights and secrets. Don’t be the smartest. Be the only one. Then, find an exciting market or opportunity where your unique profile can fit and thrive. Selecting markets or opportunities is an arduous task. Maybe because we enjoy following crowds — universities and business schools are good at initiating this. Or because we easily fall in love with opportunities we have a superficial understanding of. Ultimately, “it is much more important to work on the right thing than it is to work hard. Most people, even the most talented of us, waste most of their time, even decades, on stuff that doesn’t matter” (Sam Altman). To note that, this crucial and high-impact concept is often ignored.

The second level is about (2) enlarging your longevity in taking risks. Make it easy to keep taking risks over time. The probability of success is unfairly low when seeking outlier outcomes. So longevity in trying until succeeding is key. To achieve that, build a cushion or “insurance” to remove financial and emotional concerns. This will help to persevere when taking risks for longer periods. The size of this insurance varies for each individual. I believe a minimum level, to continue taking risks, is having assets to generate the needed passive income at retirement. To achieve this wealth, prioritize owning equity or stock options over a good salary. Owning real estate can serve well if it is leveraged and generates positive cash flow.

Sadly, many qualified individuals stop taking risks. They might have eroded their insurance level or fallen victim to mental traps. A common misconception is that only the young should take risks. A more provocative one is that the “second chance” is just a myth. And, often a few key failures can cause irreparable damages with no way back. On the contrary, risks and “second chances” are available at any age. As long as there is an adequate “insurance level” to allow us to keep taking risks. If this was eroded from previous risky endeavors, take some time to rebuild it. It can take years but will enable you to take risks again. Repeat the cycle and keep trying until succeeding.

The last level is about (3) expanding your risk capacity to achieve bigger, more meaningful results. While we continue to take risks and keep trying, we need to think about taking bigger risks. Especially, once we have our needed insurance level, gained some victories, and our performance is finally at its peak – and skills and luck can finally profiting us the most. Unfortunately, many of us stop here. This raises the question. Why do we stop taking bigger risks once our personal “insurance” is secured? Maybe it’s a desire or need to slow down ahead to a well-earned retirement. Or, it’s our experience with its lack of naivete. It makes us see the challenges ahead and question if they are worth pursuing. We tend to find many fair and easy-to-accept reasons to stop growing and taking larger risks, which is unfortunate. So let’s track this tendency by frequently asking ourselves: am I taking enough risk?

A small final thought. As we train our luck and take risks, let’s appreciate the surprises from randomness. Often, the best opportunities arise spontaneously and survive independently, much like a natural selection process. These random events are often the most rewarding and they never stop surprising us. So, let’s appreciate randomness while training our luck for greater and bolder endeavors.

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