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Entrepreneurship is a game of Poker



It would be a mistake to think of the returns to entrepreneurship as predictably stemming from just showing up and taking a spin at the wheel of startup roulette. Instead, entrepreneurship is more like poker: a game where even the best players cannot predictably win over a single night, but measurable differences predict that some will earn much more than others on average. By paying attention to predictors of entrepreneurial success (whether good news or bad), you can better tell whether you have a winning hand or should walk away for a different game. And even if the known predictors don’t bear on your own situation, knowing about these predictors can dispel the “lottery illusion”, and can let you know that success is not magic, and that it is worth investing in skill, hard work, strategy, and an understanding of the game.

Let’s take a look at some of those predictors…

Does your invention make business sense?

In Canada, the university of Waterloo is something of an “MIT of the north,” an engineering-intensive school where many students create innovative technologies and sometimes go on to build successful businesses out of them, most famously Mike Lazaridis the creator of the BlackBerry. To help would-be inventors from Waterloo and elsewhere, the government offers an Innovator’s Assistance Program (IAP) to evaluate innovations and their potential for commercialization (e.g. by patenting and licensing, creating a business to sell the technology, etc). Since a huge number of innovators have used the program and outcomes of participants are tracked, a number of academic studies have used this dataset, and found that the program did impressively well in predicting inventor success. This was highlighted in Daniel Kahneman’s recent book “Thinking, Fast and Slow.”

The program assigned numerical scores for a number of categories (market demand, existing competition, difficulty of manufacturing, etc) and combined them to form letter grades from A to E. In a sample of over a thousand inventions, the 2% of inventions with the highest grade were commercialized more than half the time, while the 15% with the lowest grade were never commercialized. Inventions with B and C grades were commercialized about four times as often as D grade inventions (a majority of the total), and 2.7 times as often considering only inventors who continued work after learning their grade.

Overall Rating

Sample Total

Percent of all

Percentage that continue

Number commercial

Percent commercial







A – recommended for







B – may go forward, but

need to collect more data






C – recommended to go

forward, returns likely







D – doubtful, further

development not







E – strongly recommended

to stop further







Weighted Average





Aside from the surprisingly high predictive power of the test (and the high success rate of “A” grade inventions), one thing that stands out is the overconfidence of those receiving the lowest grades: almost half of those with “E” grades persevere in attempting to commercialize their inventions, even though every single one fails. Kahnemann uses this dataset to highlight unrealistic entrepreneurial optimism, even as it displays the accuracy of the “Critical Factors Assessment” test, a simplified version of which is available for free online. If you can update on negative as well as positive information, you will be ahead of the game.

Past start-up success predicts future start-up success

One of the most damning facts about the investment management industry is that, for the vast majority of funds, past returns have almost no correlation with future returns. In other words, most of the skilled professionals in that industry are doing no better than chance for their investors, and worse than that after their fees are taken into account. How does the situation compare for startup entrepreneurs?

One attempt to tackle this question comes from a 2006 paper by Gompers, Kovner, Lerner, and Schwartzstein (2006). They use data on companies receiving venture capital funding between 1975 and 2000, and contrast entrepreneurs receiving venture capital funding for the first time, with serial entrepreneurs who had received venture investments in previous startups. They then measure “success” by whether the firm had made an initial public offering by 2003. Their raw data show that while 25.3% of first-time VC-backed entrepreneurs reach a successful IPO, 29.0% of the serial entrepreneurs do on their second try, and serial entrepreneurs who succeeded the first time are substantially more likely to succeed the second time than serial entrepreneurs who failed first.

When the authors go on to match firms, based on variables such as firm age, they compare the chance of IPO for a firm with typical characteristics on these axes, save for the past experience of the entrepreneur. The chance of IPO 30% with a previously successful (VC-backed) entrepreneur, 20% with one who has previously failed, and 18% with a first-time entrepreneur. The paper also finds that performance differences between experienced and inexperienced venture capitalists are greatest with respect to first-time entrepreneurs and first-time-failed entrepreneurs, but small with respect to entrepreneurs who have previously succeeded, i.e. that expert VCs have some skill in identifying “diamonds in the rough.” (The fact that it is possible to develop such skill indicates that there are identifiable differences between success-prone and failure-prone startups.)

If those numbers seem low for companies that have already received VC funding, you’re right: they don’t include companies that were acquired rather than conducting an IPO; see the Woodward and Hall paper I discussed in my last post on entrepreneurship for do-gooders, for more inclusive numbers (with first-time founding teams exiting with at least $1 million a third of the time). the authors claim that including acquisitions would give results “qualitatively similar” to the aggregate results, so readers would do well to assume the effect sizes are at least somewhat smaller (given researchers’ tendencies to present data in the most interesting light).

Tips from the right tail: how smart is Bill Gates?

Physicist and polymath Steve Hsu offers another angle on predictors of entrepreneurial success: look at the very most extreme examples of entrepreneurial success and note their deviations from the norm. In that post he works his way down the first three slots of the 2009 Forbes magazine list of the world’s richest people, finding Bill Gates, Warren Buffett, and Carlos Slim, and considers strong evidence that they are easily in the top 1%, and perhaps much higher:

Bill Gates scored 1580 on the pre-1995 SAT. His IQ is clearly >> 145 and possibly as high as 160 or so.

Warren Buffett graduated high school at 16 ranked in the top 5 percent of his class despite devoting substantial effort to entrepreneurial activities. Most people who know him well refer to him as brilliant, that folksy quote above notwithstanding. I would suggest the evidence is strong that his IQ is above 135, perhaps higher than 145.

Carlos Slim studied engineering and taught linear programming while still an undergraduate at UNAM, the top university in Mexico. He reportedly discovered the use of compound interest at age 10. I would suggest his IQ is also at least 135.

So it would appear that the three richest men in the world all have IQs that are higher than 90 percent or even 99 percent of the > 120 IQ population. (Relative to the general population they are all likely in the 99th or even 99.9th percentile.) The probability of this happening in the Igon Model (on which cognitive ability above the 90th percentile has little impact on entrepreneurial success) is less than 1 in 1000; (i.e. intelligence matters, even at the high end.)

Other demographic statistics from Forbes’ various “Richest X” lists can help shed light on the importance of education, parental success, and other indicators.

Eyes of the Incubators

Many venture capitalists invest relatively late in the lifecycle of a startup, after it has proven itself in a number of ways. But tech incubators like YCombinator and TechStars invest in numerous very early-stage software/web startups, enough to gain significant expertise, and one that tentatively appears to be confirmed in the results of their investments, which seem comparable to those of funds with later investment schedules. The choices of these organizations can give interesting information for prospective altruist entrepreneurs.

This article examines the Linkedin social network profiles of entrepreneurs backed by these incubators to determine the courses they studied and the universities they attended. About 50% studied Computer Science, 14% Engineering, 4% Physics, 3% math, with almost all the remainder taking social science or humanities degrees. Around 27% attended what the authors described as “top schools” in the U.S., meaning members of the Ivy League, Stanford, and the Massachusetts Institute of Technology. However, this is understates the representation of selective academic programs, since it excludes a number of universities known similarly high-quality student bodies or excellence in computer science, e.g. Caltech, Swarthmore and other top liberal arts colleges, and Carnegie Mellon.

One can also consult the public statements of the incubators, although obviously such statements are biased by the need to conceal business secrets of the selection process, and the desire to encourage entrepreneurs to apply to their programs. For instance, in this interview Ycombinator founder Paul Graham discusses (in addition to high intelligence and skill as a hacker) determination and aggressiveness. If one can arrange a private and frank discussion with such an investor, that will give feedback which is hard to beat for accuracy.

Value of Information

Someone considering entrepreneurship as a way to do good has reason to care about the expected value of their income, including the chances of big success. Taking into account factors like the output of the CFA test for inventors, the results of psychometric tests, past track records, and the (honest) estimates of skilled venture capitalists can multiply or divide the expected value of that course by several fold. That’s reason enough to go out of your way to gather such info, both about yourself and your prospective start-up, when weighing it as a career and as a way to do good.


About the Author

This article was written by Carl Shulman of 80,000 hours. 80,000 Hours is a web platform that is dedicated to helping as many people as possible lead high-impact careers.They do this by providing career advice for talented young people who want to have a social impact. see more.


“When Adam Draper does Crypto Standup, Singapore listens”



I live and work in Singapore and Santa Monica. Yes, I am blessed. However, my life has been by design, I think of what I want and so I make my life choices and make them happen in my life. Hence the bi-continent living and that comes with bi-continent and now global community living, being and ecosystems building. So I am now never surprised when one part of my world meets another.

I went to Wavemaker Partners venture capital event this evening, keen to meet Adam Draper, who is one of the many great presenters at Crypto Invest Summit, April 30- May 2 in Los Angeles.

Since I actively support leaders who are building scalable, sustainable businesses and movements for the betterment of many; of course I am learning about Blockchain and Cryptocurrency. I had been keen to report on the Crypto Invest Summit as I would be back in May to LA for my PhD programme. I was in communications with the organizers. However, I am being awarded an award at the Women Economic Forum in Delhi that same week and could not be physically present.

Still I wanted to report on the event, somehow.

I wanted to listen to the speakers and support some of the speakers who are already friends and experts I rely on for greater insights on cryptocurrency. I like learning and sharing with the greater audience, I have in Asia what I am learning from the US and vice versa. So I feel I had my chance tonight to do a bit of that.

I could not help but smile as Adam Draper shed light into his world of investing in more than 85 crypto related products because he was such a breath of fresh air to the last few Blockchain and Financial conferences I have been reporting on; especially here in Asia.

He just says it like it is.

He kept stopping the audience when they said Blockchain and he said, “You know you really mean cryptocurrency.”  He hit the nail on the head because I have seen so clearly how this phrase had been said in Singapore time and again – “I am not into cryptocurrency but I believe in Blockchain.”

When he said how there was an incongruity as he sat across bankers who personally invested in cryptocurrency and when faced with an inbound of requests from their clients on the same investment; are tied by regulations and are unable to respond.

Here’s some of his best lines. If you don’t laugh or “ah-ha” the way I did, you probably just had to be there. The truth is funny because it calls out for something we all see but sometimes just do not want to admit.

There is a growing understanding of the underlying thematics that the cryptocurrency world has been experiencing as the interface between centralize; de-centralize and personal autonomy becomes more and more apparent and lines get drawn.

Adam Says:

1) The newest phenomenon is that some of the ICO founders are now just so rich from their ICOs that they really don’t need to work on the project they asked for money for.

2) For the crypto-world, money doesn’t matter anymore!
They need talent

It’s so founder friendly now.

3) What Bitcoin made us ask is “What is money?”

The next question is “What is government and governance?”

He highlighted if an entrepreneur is looking for a problem to solve., then the entrepreneur is always looking for horrible industries with poor services and high costs. So yes – Governments are those horrible industries and they need to be disrupted.

4)  Any company who comes to an investor and leads with how much ICO has raised; is a red flag. Leave immediately and go read a Harry Potter book instead.
If they are leading with value and not the problem they are solving. Beware. (read more here

5) If you are going to invest in where the brains are. It’s in crypto.

6) Philosophically, Coinbase is against ethos of what Bitcoin and the cryptocurrency movement is trying to do. However to do such a move from fiat to digital currency, there would need a way to do that. So Coinbase acts like a browser does for internet. One day there will be no need to cash in or out as everyone is already there on digital. Cryptocurrency is the exchange of value. His advice and we know his bias as he is invested in  Coinhako; is to hold onto an exchange for 3-5 years since onboarding of all users to the new digital currency will take some time.

Adam met with many banks and government bodies on his trip to Singapore – I hope they got his truths.

I ended the night by thanking Adam for making me laugh. He reminded me of how much I miss LA.

Want more of this?

If you are in LA on April 30 – May 2.



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Callum Connects

Adrian Reid, Founder of Enlightened Stock Trading



Adrian Reid escaped the rat race and became a knowledgeable trader. He now shares his trading knowledge and empowers others to take control of their stocks.

What’s your story?
After working 12-16 hour days in the corporate world for many years I had a moment of realisation on the 1 hour bus ride to work. It was here at this moment in time, I realised that I felt trapped, desperate and isolated. Trapped in a job I hated, and a life I had not designed. I had long been interested in investing, but I made the decision at that point to become the best trader I could possibly be and escape the rat race.
My dream was to be free; free of the 9 to 5, the commute, the stress and the exhaustion. I threw myself into my stock trading research and study and emerged 3 months later with the trading rules that would ultimately buy me my freedom. I am now retired from the corporate world, I trade full time and share my knowledge with other aspiring traders through my online education program which puts them in control and empowers them to take control and accountability for their trading results.

What excites you most about your industry?
So many people are trapped in jobs they don’t like or are feeling immense financial pressure in their life. Trading education is typically done extremely badly today because of the conflicts of interest in the industry. Fund managers want to hold onto your money forever; brokers want you to trade more frequently; forex brokers want you to use more leverage. Why? Because that is how they make their money.
By teaching traders how to develop and test their own stock trading systems I am able to empower them to find trading rules which fit their own personality, objectives and lifestyle. This is the only way for new traders to be successful. This process transforms people’s financial future, their relationship with money and wealth and gives them hope. I love that!

What’s your connection to Asia?
I recently spent 3 years living in Singapore which I absolutely loved. This put me in a good position to observe the other Asian markets. As a stock trader I am interested in many markets and economies around the world, however the Asian markets have some of the best potential for trading profits. I have traded stocks in Hong Kong, Shanghai and Tokyo and I have developed trading systems that work in many other Asian markets as well.

Favourite city in Asia for business and why?
My favourite city is Singapore. After living in Singapore for 3 years my family fell in love with the city. Life is great in Singapore for the whole family and the pro-business and investing policies of the government make it a wonderful place to build your financial future as well.

What’s the best piece of advice you ever received?
On a personal front: Find something you love, throw all your energy and passion into it.
On the wealth front: Spend less than you earn and invest the difference. Take control of your finances and always accept 100% responsibility for your investment decisions.

Who inspires you?
My wife Stephanie inspires me. Her commitment to everything she does, her compassion, her insights into people and her ability to uplift those around her, make me want to be a better person.

What have you just learnt recently that blew you away?
No matter what we think we know, there will always be a different perspective that can change our opinion. In my own trading, I continually find that the truths I cling to are not absolute and they can be misleading if held onto dogmatically. Striking a balance between taking a stance and knowing when to change that stance based on new information is critical in all areas of life.

If you had your time again, what would you do differently?
I would have taken more action earlier on. My fear of mistakes (which still limits me on occasions, like most people) has always proven to be baseless. Playing small to avoid the embarrassment or pain of mistakes is very limiting and I would have taken more action earlier, if I had my time again.

How do you unwind?
To unwind I like to read, meditate, run and ride my mountain bike in the forest.

Favourite Asian destination for relaxation? Why?
I just love the small island resort at Batu Batu. It is beautiful, isolated, quiet and surrounded by clean water, full of sealife. After a week at the resort I felt like a different person.

Everyone in business should read this book:
The Pyramid Principle by Barbara Minto. This book teaches the art of clear and structured communication. My time working as a business strategy consultant gave me a great appreciation for the importance of communication in business. Clear and effective communication can solve a myriad of challenges in your business and professional life, and as a strong communicator your employment prospects, business relationships, team performance and family life are all dramatically improved.

Shameless plug for your business:
Enlightened Stock Trading ( is the only stock market trading education business that empowers you, as an individual trader. It shows you how to design and test your own unique stock trading system that fits YOUR Personality, Objectives and Lifestyle. We have no conflicts of interest and we are focused on teaching you how to trade stocks profitably in a way that fits your life.
After working through the Enlightened Stock Trader Certification Program you will find yourself confident and empowered with your own battle tested trading system and trading plan to guide you through the markets.

How can people connect with you?
Email me directly at [email protected] or through my Facebook Page (

Twitter handle?

This interview is part of the ‘Callum Connect’ series of more than 500 interviews

Callum Laing is an entrepreneur and investor based in Singapore. He has previously started, built and sold half a dozen businesses and is now a Partner at Unity-Group Private Equity and Co-Founder of The Marketing Group PLC. He is the author two best selling books ‘Progressive Partnerships’ and ‘Agglomerate’.

Connect with Callum here:
Download free copies of his books here:

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