[In part 1, I introduced my equation for success: S=EP(R+T) + 1000/L. Or in words: Success = EffortPassion * (Risk + Talent) + 1000/Luck. I explained the role of Luck. Now in Part 2 I discuss the middle term: (Risk + Talent).]
Risk + Talent.
Together these variables are as important as anything else in the equation. But, interestingly, you Don't need large quantities of one or the other to succeed. Certainly it helps, but it's not mandatory.
Risk.
Most successful people are risk takers. you've heard the expression it takes money to make money. In business that?s true. Where does startup capital come from? Since most entrepreneurs Don't begin wealthy it's usually borrowed.
Capital is needed at every step in the growth process. To go from a startup to a small business takes cash. From small to medium, same thing, magnified. And to get big requires huge capital investment. Generally it takes more money to get to the next level than a company makes in profit. So to get there you borrow. Starry-eyed entrepreneurs often glaze over the fact that borrowed money must be paid back, with interest. What if your profitability falters? Do you have a fallback position? Borrowed money is risky.
An excellent example of someone who probably wouldn?t have made it without taking huge risk is Walt Disney. He started in animation at precisely the right time in the history of film. It was a new industry in the early 1900s and Walt was prescient enough to grasp moving pictures? mass appeal. He was driven by the belief that animated film would become an art form in its own right, though few in that day agreed. He spent his first 20 years toiling in poverty, producing some of the best animation of the time. The problem was that everything was hand drawn - hugely labor intensive and expensive. Good animators were a novelty, difficult to come by. And the market for cartoons was small ? most theaters showed them as shorts prior to the main feature. Walt lived from paycheck to paycheck, paying off loans to qualify for new ones. When he decided to create Snow White in the ?30?s he estimated its cost at around $1 million. Banks backed him until expenses approached $3 million. Had it not been for a hungry fledgling bank, Bank of America, willing to loan Walt enough money to finish the project, Snow White would have likely taken Disney down. If Snow White flopped, Walt would have failed under the burden of insurmountable debt. But instead Snow White became an international phenomenon, propelling Disney on to greater things.
What's your appetite for risk? Are you willing to risk it all ? your business, your home, your possessions? If yes, you enhance your chances for success. If no, it'll be tougher to get there - but not impossible. It just takes longer. Elevating to the next level, not using someone else?s money, requires that you use your own. Meaning: 1) What profits you earn are all folded back into the venture; 2) Those profits do not become extra income for you; 3) Since those profits are likely modest, the amount you fold back will be modest too, which will limit your growth.
Talent.
Let?s say you're conservative and Don't relish borrowed money and risk. Can you still succeed? Yes, of course. But you?d better be talented. My use of the word talent here is broad. It includes
* Vision. Can you foresee which ventures have the potential for success? Who will be a good partner or employee? What profession you will still love 30 years from now?
* Memory capacity. Can you'remember and recite facts or critical information? Do you learn from history ? your own and others? ? so that you Don't repeat mistakes?
* Intelligence. Do you absorb new concepts well? Are you a problem solver? Are you just plain smart?
* Ability to perform. Do you have the physical gifts required of your job? Are you better at it than most? Is the quality of your finished product top tier?
* People skills. How well do you work with others? Can you lead?
* Integrity. Are you absolutely, 100% truthful at all times? Are your actions always honorable?
* Work ethic. Do you work long and hard, or are you lazy?
Some of the above talents are God-given and others are choices. Successful people exploit their natural talents and strive to continually improve the others.
One thing my talent list doesn?t include is formal education. Many very successful people did not possess college degrees when they made it big: Walt Disney, Milton Hershey, Bill Gates, Oprah Winfrey, Les Schwab, Mark Twain, Howard Hughes, the list is long. Education has seemingly little to do with talent, intelligence, or success. And in fact, I believe it can be counter-productive. American colleges are very good at teaching a vocation, preparing one to enter the work force and do a job. But They are terrible at teaching the principles of success.
For example, I possess three engineering degrees from three separate colleges. In the nine years it took to earn those, not once did I take a business or marketing class. Nor was I encouraged to do so. Now, many years later as an entrepreneur and businessman, that fact staggers me. We all strive for success: the act of continually bettering our lot in life. That betterment has nothing to do with math or physics but everything to do with economics and business principles. Why is the path to wealth and success such a tightly-kept secret among our colleges and universities? Do they think that a bachelor degree gets you there? A bachelor degree can get you a job. A job does not equal success.
Steve Martin, the entertainer, provides an excellent example of success via a lot of talent and not so much risk nor a college degree. As a teenager he worked atDisneylanddoing magic tricks, balloon animals, and some stand up comedy. He continued with stand up as he attended junior college then pursued a philosophy degree atLong BeachStateand UCLA. He never graduated but did incorporate some philosophy principles in his act. He learned to play banjo. Each skill he acquired he used in his stand up routine. After years of grinding it out in small clubs he got a few breaks (read, Luck) to write for and appear on TV shows: Sonny andCher, Merv Griffin, and ultimately Johnny Carson. He thought he?d finally broken through but after half-dozen appearances onCarson, his career was still flatlined. He became disillusioned with TV and went on the road with his stand up act. Crisscrossing the country, he played at colleges and clubs, making enough money to live but not much more. Even though he had TV exposure, he was not a headliner ? his was an opening act for more famous entertainers. He put an arbitrary time limit on himself: either make it big by age 30 or get a real job. He noticed that opening acts got virtually no press, reviews were strictly for headliners. With his self-imposed deadline looming large, and basically broke, he made a critical decision: he would only headline ? no more opening acts. This boom-or-bust ultimatum was the pivotal decision that propelled him to stardom. His first headline gig in Florida earned such rave reviews in the Miami Herald that he was able to leverage them to spots in bigger venues, Saturday Night Live, and ultimately to become the biggest standup concert draw in history. Film, plays, albums, and books followed.
For 14 years Steve worked his way up the ladder, never going seriously in debt. If at any time he failed, he would not have been bankrupt, rather, he would probably have finished school and gotten a job. It was talent and persistence, in the end, that won'the day.
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