In Search of Inexperience

In a recent post, Guy Kawasaki tackles the assumption that serial entrepreneurs represent better bets than first-time entrepreneurs.  He notes:

Serial entrepreneurs cannot distinguish between causation and correlation. The root cause of earlier success may have simply been blind, dumb luck, but few people realize this and even fewer will admit. Thus, they have the hollow arrogance of people who just got lucky instead of people who have been truly tested, and arrogance is a bad thing in entrepreneurs.

Kawasaki's observations remind me of Art De Vany's careful analysis of the "curse of the superstar" in Hollywood Economics:

Surprisingly, a good part of [superstars'] success and productivity can be attributed to luck rather than talent...there is evidence of statistical self-similarity on the creative side of the business...Extreme events and risk participate in all aspects of an artist's career...The differences between the talents of kurtocrats and others may be small, but...nonlinearity can magnify small differences in talent (or luck) into extreme differences in outcomes...Once that top star status is earned, it doesn't go away easily because it is hard to disentangle performance from movie.  Causality is hard to nail down in a complex system, so when a movie is a big hit the most readily identified element, the artist, gets much of the credit.

Fundamental attribution error is pervasive.  As a general rule, we tend toward attributions based on dispositional rather than systematic characteristics.  So, one might expect it be relatively rare to find successful actors and entrepreneurs who forcefully and publicly attribute their success to luck.  However, those who invest in new ventures (artistic or otherwise) are well served to consider the curse of the superstar.