I was surprised by how many times luck was mentioned as an important factor in startups in the first three interviews I did.
1. Loop Pay / Samsung Pay Benefited From a Lucky Exit – Every time you use Samsung Pay you are using a technology developed by a company, Loop, in which several Walnut* members invested. In the interview with Michael Mark (Episode 1), Michael describes how Loop, despite having an outstanding founder, Will Graylin, and a great technology, almost became a victim of Apple’s push into the payment space. It was through sheer luck that the company managed to be acquired by Samsung. Michael makes the further point that founders are frequently reluctant to consider the effect of randomness in the success or failure of their startup. They like to believe that they are in control of their destiny, which is clearly not always the case.
2. Netegrity’s Sale to CA Suffered Bad Luck – Netegrity, was a software security company that Walnut* members helped get on the path to success. The company had been the best performing stock on the NASDAQ for five years, but shortly before it was to be acquired by Computer Associates it suffered one quarter of bad results and ended up being bought at a price well off its peak; something like 1/3 of the peak price. Despite this unlucky turn, Ralph Wagner (Episode 2) relates that he and other Walnut* members made very handsome profits on the sale.
3. Right Skills, Right Time, Right Market – Ben Littauer (Episode 3) tells that when he started his company he was very lucky to have had the skills needed to build a product that was in much demand among enterprise clients in the days before public email. Through a simple procedure he was able to make messages sent in internal corporate computer networks much more reliable. The product created so much value for the users that Ben Littauer never had to raise investor capital to get the company off the ground. Ben says that he would never have been able to build the business but for the skills and understanding of the communications market he had the good luck to acquire while working at the storied technology company BBN.
* Walnut refers to Walnut Venture Associates, a group of angel investors located in the Boston area. You can find out more about Walnut here.