Success is 90% luck. So how do you build a successful startup? (w/ Mike Grossman)

**Mike Grossman** (0:00)
That's actually probably the worst luck I've ever had in a 30-year career.

**Yaniv Bernstein** (0:04)
Positive update, positive update, positive update, positive update. We're shutting down.

**Mike Grossman** (0:08)
It's not just rolling dice. I mean, you have to actually apply yourself. The whole team has to apply itself, but it doesn't mean that you're gonna succeed at the end.

**Yaniv Bernstein** (0:15)
The best batters in baseball, two and three times, they strike out. Everybody admires their skill. If you're not a really great batter, then you're gonna strike out every time.
You're listening to The Startup Podcast.

**Mike Grossman** (0:31)
This is an educational episode.

**Yaniv Bernstein** (0:34)
Hi, I'm Yaniv Bernstein.

**Mike Grossman** (0:36)
I'm Mike Grossman.

**Yaniv Bernstein** (0:37)
The founder story usually goes something like this.
Do the right things and the outcome will follow. Build the right product, hire well, work hard and you'll get there. It's clean, it's motivating, and it's how nearly every accelerator and most VC pitches frame the work.
But it's not really true.
Today's guest has run no fewer than six different venture-backed companies, and he argues that most of what determines whether your company makes it isn't in your hands. A Senate vote can kill you overnight. A pandemic can close your IPO window. A market can be five years away from caring. Luck, both good and bad, plays a huge role that it is important to acknowledge. So if the outcomes aren't yours to control, what does a founder actually do when the world punches you in the mouth? Mike Grossman has been CEO of six venture-funded Silicon Valley companies. Across the six, he tried 18 different business models. Twelve of those failed.
Five required layoffs. Three lived in persistent existential crisis. Only one of those companies cracked 50 million in annual revenue. But all six were eventually acquired. Mike's story isn't the clean unicorn story. He's lived the experience that far more founders live and yet gets told far less often. Mike has just written a book all about this. It's fascinating. It's called Failure Is An Option. I can't wait to learn from Mike's experience.
Mike, welcome to The Startup Podcast.

**Mike Grossman** (1:59)
Thanks, Annie. It's great to be here.

**Yaniv Bernstein** (2:02)
Now, one of your key premises is that the outcomes don't really belong to you. The founder myth has this causation backwards. That the effort doesn't determine outcome. That timing and luck often dominate.
Talk us through how you came to believe that principle and what we're to make of it.

**Mike Grossman** (2:19)
I didn't start with that principle. I assumed that what you put in would necessarily indicate what the outcome would be when I started in all of this. But I've had too many experiences where the outcome has ended up being unexpected. I had one situation where a company after a lot of difficulty was finally growing at a very rapid rate, and then the government legislated our business model out of existence. We had no control over that. We were doing a very good job. Things were going well, but we had some bad luck and ended up happening. We were basically put out of business. I've had the opposite experience where a company was doing pretty well, was about to go public, then COVID hit, and then it wasn't able to go public. When it looked like there was no exit possibility, along came a company out of the blue and paid us a very significant amount of money.
I've found that these types of entrepreneurial companies are enormously unpredictable. How well they do has as much to do with timing and luck as anything else. If you don't do a good job, if you don't work hard, you can't do well.
I will say that's clear. But just because you work hard and you have a team that works hard, and you're tremendously committed, doesn't mean that the outcome will be good.

**Yaniv Bernstein** (3:41)
Yeah. A long time ago, Mike, we've just crossed the 300 episode mark of this podcast. But very early on, we did an episode based on a book by Annie Duke called Thinking in Bets. Annie Duke was a professional poker player who started to talk about how you apply some of the principles from poker to life and to business more generally.
One of the things I really took away from that was this concept that in poker is very common called resulting, which is this psychological phenomenon of attributing your result, the outcome, purely to your skill in both directions.
If you win a hand, that means you played it well. If you lose a hand, that means you played it badly. Both of those things can be wrong. You can play a hand really badly, get lucky, and win. You can play a hand perfectly, get unlucky, and lose. So the best poker players always try to separate the result, the outcome, which has a large element of luck in it, from that core skill. The way you measure whether a poker player is skillful is, over the long term, on average, do they do well. But in any given hand, luck plays a huge part.