On a recent flight, I was thinking back about my life and some of the key decisions I made and got right. I realised it has been about 4-5. Picking IIT over going to the US for undergrad (1984). Getting married to Bhavana (1992). Selling IndiaWorld to Sify (1999). Recruiting a professional CEO for Netcore (2007). Creating Niti Digital in 2011 for the 2014 elections campaign. Returning to Netcore full-time in 2019 after realising that my Nayi Disha initiative was not working. That’s six in the past 40 years. I concluded that I had got one big decision right every decade or so – I termed them “decadal decisions”. These are big life-changing calls that we make which we should get right for a step-function jump in our happiness and satisfaction index. The accuracy of these decisions renders the errors inconsequential.
I mentioned this to a friend, and he suggested I read Morgan Housel’s Tails, You Win.
Long tails drive everything. They dominate business, investing, sports, politics, products, careers, everything. Rule of thumb: Anything that is huge, profitable, famous, or influential is the result of a tail event. Another rule of thumb: Most of our attention goes to things that are huge, profitable, famous, or influential. And when most of what you pay attention to is the result of a tail, you underestimate how rare and powerful they really are.
Warren Buffett once said he’s owned 400 to 500 stocks during his life and made most of his money on 10 of them. Charlie Munger followed up: “If you remove just a few of Berkshire’s top investments, its long-term track record is pretty average.”
A takeaway from that is that no matter what you’re doing, you should be comfortable with a lot of stuff not working. It’s normal. This is true for companies, which need to learn how to fail well. It’s true for investors, who need to understand both the normal tail mechanics of diversification and the importance of time horizon, since long-term returns accrue in bunches. And it’s important to realize that jobs and even entire careers might take a few attempts before you find a winning groove. That’s how these things work.
My life is an example of “tails” and a lot of things not working. I have failed 30 times as an entrepreneur, and only succeeded twice (IndiaWorld and Netcore). Three, if I count Niti Digital as a political entrepreneur. That’s one success for every decade as an entrepreneur. And when I look ahead, if the pattern holds true, I can hope for another two big successes in my next 20 years. Which means I should be giving some thought to what I want to accomplish going forward. What I also do is try many things without fear of failure – which also increases the odds of a few things working out well.
Try this exercise: look back at your life. Which were the decisions that worked out well? There will be many which didn’t, but focus on the ones that did, the ones that were transformative. Then, think back to how you made the decisions and how you can increase the odds of future success.
