Did Elon Musk Just Get Lucky? Science (and a Little Math) Says to Some Degree, Yes

A writer friend recently pitched me an idea for a book with the working title The Billionaire Mindset: How Elon Musk Became One of the Richest People in the World.

Even though he’s since abandoned the project, it seemed like a decent idea. Plenty of people want to be rich. Plenty of people want to be super rich. Plus, Musk isn’t shy about giving business advice, some of which I’ve written about. Like his “algorithm,” a five-step process for improving just about anything. Like his use of first principles to solve problems. Like walking out of meetings if you don’t feel you add value. (That one I don’t agree with; seems more like career suicide than smart time management.)

But that doesn’t mean adopting Musk’s perspectives, strategies, approaches, etc. will produce the same results — especially if you want to be super rich — if only because a substantial degree of luck is involved. In general terms, a study published in Advances in Complex Systems found that luck plays an outsize role in success and that we often mistakenly assign exceptional merit “to people who, at the end of the day, could have been simply luckier than others.”

Then consider Musk. It took SpaceX six years to successfully launch a rocket, and 10 years to actually turn a profit. The first three launches failed, and Musk had to scramble to find the money to launch a fourth. Had the fourth launch not been successful, “We wouldn’t be able to get any new funding for Tesla,” he told biographer Walter Isaacson. “People would be like, ‘Look at that guy whose rocket company failed. He’s a loser.’ “

Since that launch didn’t fail, Musk isn’t a “loser.” He’s an entrepreneurial archetype, if only due to survivor bias. (You don’t hear about all the people who shot for the moon and missed.)

Now say you want to join Musk in the billionaire ranks. If you start a small business and you’re adaptable, hardworking, outgoing, pay attention to detail, etc., you can certainly make a decent living. Millions of small business owners do just that.

But if instead of, say, opening a bike shop or two, you plan to disrupt the global bike shop business — which you’ll need to do if you want to become super rich — you’ll need to bet big, because seeking extreme outcomes requires a very different approach from seeking average outcomes.

As Nate Silver says of a hypothetical poker tournament in his new book On the Edge, a “prudent” gambler who starts with 60,000 chips and goes all-in 20 percent of the time over six hands (there are a couple more variables, but let’s keep it simple) winds up with an average of 62,500 chips. A “degen” gambler who goes all-in 100 percent of the time (again, there are a couple more variables) winds up with an average of 44,000 chips.

Clearly, being prudent is better than being degen, especially if holding on to what you have is important to you.

But that will also make you average. While the degen approach is more likely to bankrupt you, the degen approach is also much more likely to make you filthy rich. A prudent gambler has a 1 in 4 billion chance of finishing with the maximum chips possible. A degen — all-in, all the time — has a 1 in 15,000 chance of finishing with the maximum chips possible.

And then there’s this: A “skilled degen” (someone with Musk-ian poker abilities?) has a 1 in 1,400 chance of finishing with the maximum chips possible.

While degens of either form are much more likely to go broke, they’re also much more likely to hit it big. At the end of the tournament, all the players at the top of the leaderboard — they may not have won the maximum possible, but some will have won millions — will have used a degen strategy.

As Silver writes:

Is this my way of saying that the richest founders in the world are just degenerate gamblers who just got lucky?

No, I’m not saying that. I think they’re highly skilled degenerate gamblers who got lucky.

Skilled degens end up broke about 75 percent of the time. But they’re about five times more likely than regular degens to finish with at least a million chips, and eleven times more likely to finish with the maximum possible.

Almost by definition, the people at the very top of any leaderboard are both lucky and good.

Sounds like Musk to me. He certainly has outstanding engineering skills. A nearly insane work ethic. A remarkable ability to surround himself with talented people and inspire them to strive to achieve extremely ambitious goals.

Musk is the real entrepreneurial deal.

Yet he also surely got lucky; one faulty part on that fourth SpaceX launch and Tesla may not be Tesla. (And X might still be Twitter.)

As for you? Say you work incredibly hard and develop a one-in-a-million talent, skill, and ability. You are also the real entrepreneurial deal. But still: Since there are 8 billion people in the world, that means 8,000 people have one-in-a-million talent, skill, and ability.

So if your goal is to be one of the richest people in the world, you’ll have to be willing to apply that talent. You’ll have to be willing to bet big, not small.

And you’ll have to get at least a little lucky.