How to Create Your Own Luck

[This was a guest post I did for TechCrunch this weekend]:

I’m in even worse trouble now. A few weeks ago I had to speak at Barry Ritholz’s conference but that turned out to be “only” a panel. It was a great panel but I knew I would only have ten minutes of time so not need to prepare much although even then I was worried. [Click above link for video, including my panel].

Now I’m speaking for ONE HOUR at Defrag in Boulder, Colorado next week on November 9 and I’m terrified. For one thing, all of the other speakers are smarter than me. Right before me is Roger Ehrenberg speaking about “big data”. I’m not even sure what “big data” is so right off he’s smarter than me. Then Paul Kedrosky is speaking later in the afternoon about god knows what. Paul has an excellent blog obsessed with everyone from economics to weather data. So despite my expertise in speaking I’m finding I’m a bit nervous.

I could open up with the same line I used on Barry’s panel, “When I was walking over here I had an erection. Not so easy for a 43 year old without any stimulation whatsoever.” This might not be the exact crowd for it.

Technically, the title of my talk is “Success is a Sexually Contagious Disease” but I only gave them that title because it sounded neat and it was the title of a blog post I then published. But I have no idea if that’s what I’m going to talk about or if that’s something people will be interested in.

The conference itself is about entrepreneurship.  But I always am plagued that I’ve gotten somewhat lucky on this issue. My first company happened during the internet boom and I happened to be one of the few people around (at the time) who knew how to make a website. The second company I had, where Yasser Arafat was an investor, went down in flames in the Bust. The third company I sold was a venture firm. We were only sold because our top investor was so disgusted with us he wanted to buy out our ten year contract. And the third company I sold was, which I sold to that I already had a great relationship with. Another company that I made a decent living off was trading for hedge funds and then starting a fund of hedge funds. Everything else I did (about 16 other attempts at businesses) failed.

So I guess right now I can see if it was luck or if I learned some lessons.

1) Luck is similar to “being at the right place at the right time”. So you can easily position yourself there. We know that the right place for right now is somewhere in social media. There are still many niches (plumbers, diamond wholesalers, etc) that aren’t properly using social media correctly. The big agencies are ignoring them and they are too small and focused to understand how to use direct marketing via social media. If I were starting a business right now I’d either do lead generation via social media for a small but focused niche (diamond wholesalers, small restaurants, etc) or I’d provide financing/lending for companies that are doing this and have established records of turning profits on money spent. I know several companies doing the above but it’s an incredibly wide open, gaping hole in the industry.

If I were a banker I’d look to buying companies all over the country in this space and then bringing the combined entity public in the IPO boom that’s about to start happening.

2) My venture firm being sold I learned one thing: have at least one partner who is a great negotiator. “Be bad” and someone will be willing to buy you usually doesn’t work. I was lucky there. Although, I will say, I had good, professional partners that knew how to negotiate very well. The one guy’s main technique was to act like we always had alternatives when we never did. And he would ignore the other party for a day or so while they got desperate. It’s a gutsy way to negotiate but it worked. Here’s part of the reason it didn’t work out for me as a big VC.

3) The mental health facility I sold I learned some very important things. Quantity, persistence,  and story-telling. You need to hit everyone and then call everyone back twice. We must’ve made 30 calls and then 30 follow-ups to make sure we spoke with the right person. And then with each person we pushed to have a phone call with the company. Then once we had a potential buyer on the phone we had to make sure we told at least three different stories: how the company doing (and was going to do ), the reasons why growth was a LOCK, and the reasons why management was incredible. Then we got the deal done.Which was a story unto itself.

4) Stockpickr, as I mentioned before was a matter of being both proactive, and having friends in the right places. But it also was a matter of vigilance. I had a particular passion about how a financial community could develop with NO NEWS. I hate the news. It also was a matter of nourishing relationships built up over a five year period of non-stop work in the financial media space.

So here’s how you “Create your luck”:

A) As Wayne Gretzky says, “skate to where the puck is going”. Don’t start a soft drink company competing against Coca-Cola. Start a company in a fast growing industry that has a wide-gaping hole in it. It’s not hard to identify those industries and holes.

B) If you can’t create the company in that space, can you arrange financing for companies in that space through some of the techniques roughly described above. This still allows you to leverage in the growth of the sector.

C) Learn how to negotiate.

D) Quantity. You’re never going to win if you depend on one potential buyer or one potential customer. The first time I tried to sell my company, Reset, I tried to sell it to HBO. I had only one potential buyer. No good and it didn’t work out. But that god because the next time I tried I made sure I had ten potential buyers. Ever since then I almost get a reflux reaction in my stomach when I realize I’m back down to the one buyer-one customer model, which is never good.

E) Persistence. When we were selling the mental health facility there was one time we got a wrong number when we called a public company. We got switched to the wrong person in the company repeatedly. My business partner, Dan, kept calling until he finally convinced the operator she was connecting him to the wrong person. This was one of only 30 companies he was calling so he could’ve just left a message and given up. Instead he got her one the phone eventually and she was the one who coughed up $41.5 million in cash, three times the closest other offer.

F) Story-telling. Everyone is a little boy or girl at heart. We all want to sit on the floor and bounce a ball and watch Saturday morning cartoons. A story has a beginning, middle, and end. Make sure your story is down pat when you are talking with anyone about your idea, your company, your self (on a date, for instance). It doesn’t have to be so “planned”. But make sure you are constantly improving your storytelling abilities. For instance, before I gave a talk last week in Arizona I watched 30 minutes of Ellen Degeneres and Jon Stewart. Comedians are excellent story-tellers with perfect timing.

G) Nourish relationships. The size of your network increases your luck exponentially. But relationships take Time to nourish. When I wrote here two weeks ago about “the 9 Skills for Becoming a Super Connector” I mentioned that I forgot what “Time” was for one my list. Now I know: over time relationships get nourished. A simple connection becomes a friend, becomes family, becomes someone who actively wants you to succeed. That takes weeks/months/years to happen. Important to note: expressing gratitude across your network is the surest way to strengthen it.

H) Passion. Luck will ALWAYS follow your passion. Warren Buffett was, of course, extremely luck that his passion was investing in 1950. But almost every passion can be used to make money if you have all of the above. Even if your passion is just “how do I meet the love of my life” and you apply all of the above you will “get lucky”, so to speak, and find success at your endeavor.

I’ve had a lot of bad things happen to me in the course of being an entrepreneur. And sometimes I get down about it and it’s hard to pull myself away from the nightmare alley where the light at the end just becomes a fire that pushes me back. But when I do get to the end of the nightmare, and I apply the above, luck comes shining through and I can see again.


  • JamesforPres.

    I agree with being proactive. My new website could benefit someone like the new york times. How can i partner up with a big company like that? Basically my website is a niche classifieds site which i would like for my listings to be transferred onto their website, this getting me big traffic, and bringing their target market some new content they would like to see.

    Could you give any suggestions on how to plan a strategic partnership when you are the startup trying to partner with a big legitimate company, it would be really appreciated.

    thank you.

  • James, don’t worry about the conference. Just read this post and tell some stories. Great stuff!

  • RAK

    Any great books on negotiating? I know it is an area where I’m severely lacking. Btw, your site has been a GREAT source of inspiration for a while now, thanks!

    • RAK

      Well, I can see you linked to a great source already. Thanks!

  • SME

    I am interested to hear what tools you suggest to find those industries and holes that you mentioned. Great post!

  • An hour? Who speaks for an hour? The bigger question is who listens for an hour?

    I suggest at 30 minutes you make everyone stand up and do “head shoulders knees and toes” – this will wake them up, make them laugh, and they will be able to listen longer. 

    (plus it will kill some time.)
    Good luck. You’ll do great!

  • Very nice and informative post. Keep up the good work. Please remember that i m waiting for your next awesome post.

  • Mike

    I am a plumber and own a small one man plumbing business. It’s hard to follow your advice, very hard. I know your advice is spot on but for some reason I have a hard time stepping to the edge of honesty. My blog is new and I keep finding myself wanting to stay in the box and I hate it. I would love to just write a blog post like you do. I would love to be able to write a blog post and tell people flat out that this “brand” of faucet is a complete piece of sh$$. I guess I’m scared. Fear is a powerful thing. I always think the customers just want me to be normal like everybody else and just “smile and wave” like the penguins from the movie Madagascar. What’s acceptable in the market place for a service based business? Is it possible I can be too honest?

    If anybody here, not just James, could offer some advice I would appreciate it. 90% of my business is word of mouth. 10% of my customers come in from typical advertising. All the problems and low profit margins come from the 10% because they are total strangers. When the 90% call me it’s word of mouth and those customers are a sure bet…..they know me, they trust me.

    Business for me is good. But I have to ask everybody; How does a business like mine fit into this new world of social media and blogging?

    I don’t want to have a typical website where I have flashy garbage that says “Trust me, I’m the best, hurry up and call”. That’s not me. That’s crap. So I ask again, what do people like me who just want to be honest and help people make real decisions do? 

    I agree with 100% of everything you say about luck. Your right, it’s allowed me to have a good business for many years. But…..It’s getting increasingly difficult to have an “old school” type of business in this environment where everybody pays a web company for a website full of marketing crap that has $1,000 of dollars in SEO done to it. I can spend the money on SEO, money is not a problem. My problem is the fake stuff, that’s not me.

    Honesty? Luck? Hell yeah James, I’m with on this all the way. Just having a hard time knowing where I fit in this crazy fake world.

    By the way James. Thanks for being you. I come visit your blog daily because it’s the only honest website I can find. You speak from the heart, I wish more people would do that. Imagine what a world we would have!


    • Hi Mike – I know that feeling, I have been breaking the barriers myself lately – (however I am on a break from writing currently)

      I would love to know which faucets are crap.  That’s valuable information.   Plus your experience gives credibility to your opinion.  There’s nothing worse then installing a crappy faucet, it fails and the next plumber tells the homeowner it was installed wrong – or he should never have sold you that crap faucet….

      My advice: Be honest and start small. First start a blog in word-press, handy tips, a bit about your self,  and things people don’t know about plumbing.

      Get a twitter account and tweet about your posts on your blog. # tag your geographic area in all your tweets. And create a Facebook page for your business.

      Then buy your chosen domain name from Network Solutions( special pricing there yesterday was 6.99 per year for the domain name). You can buy it directly from wordpress also costs more( i think)

      There are plenty of web-site building templates that could be used – or get a free-lance programing student to build your site. 

      Personally I like simple sites, that are easy to follow. I don’t care for a bunch of flash, or pop-ups. Good luck.

      • Mike

        Thanks 736hundred. I do have a website, twitter, and a Facebook page. I just didn’t want to post it on his site website without permission. I like your advice, I really appreciate it. I’m trying to wrap my fingers around doing this without offending anybody. Maybe I should let certain people be offended, maybe I’m thinking of this the wrong way. If people only knew how bad some products were they would be shocked. For the life of me though, I can’t figure out my delivery.

        • I think the only way to offend someone is to insult them personally – but a product is a ” thing.”

          Delivery: be brutally honest first draft even use bad words.  Sleep on it.  Next Day sift through what you wrote, and find the core truth…and still write the core truth, but frame it in the context of helping someone make a better decision or spending their money more wisely – something to that effect.

          I don’t know. I think you are closer than you think. :)

          • Mike

            Hey, you are not gonna believe this!!!

            5 minutes ago I received my first phone call from a person who called me by finding me online. I asked him how he found me and he said “google”. He then said he read my article on a cheap Chinese made valve that did $7,000 worth of damage on a home and said he loved it.

            The funny thing is that was my first article I wrote after being inspired by James Altucher. It was late at night and i just wanted to tell people what happens when you think you’re saving $2 on a cheap valve. My writing sucks. I was afraid to write it but wrote it anyhow. Time will improve my writing once I find my comfort zone I suppose.

            This is a really big deal for me. The honesty of James and people like you and the other JA fans on this site has supercharged me as a business owner.

            Thanks to everybody!!!!!!


          • Mike, thats great. And I’m glad everyone was able to respond. Let us now how it goes! Sounds like you should write even more posts now.

          • Just judging by your comments on this blog, your writing doesn’t suck at all. It’s really good.

    • Chris Youra

      “My problem is the fake stuff, that’s not me.”

      I think James has proven that you can be as honest as you want- as long as you are not malicious. Personally I’d LOVE to see a plumber have a ‘crappy product of the week’ section on their website and I want them to tell me that if I spend x amount more it’ll last 5x longer.

      • Mike

        Thanks Chris. James has proven that well, you’re right! James Altucher has been such a blessing to me and my thinking on business. I feel inspired by him, I’m just having a hard time transferring that thinking to my business but I feel I’m getting close.

        Your idea of “crappy product of the week” is absolutely awesome!!! It’s brilliant Chris!!!! Maybe even where I do a video with a sledge hammer and a saw and demolish a crappy faucet in front of the camera. Geez, you guys really have me thinking now. 


        • Chris Youra

          You wouldn’t even have to go that far– just bring a digicam and start documenting all of the malfunctioning product you find.

          A database of some sort would be great too.. I bet the results would be very interesting if we had every plumber contributing to something similar. ;)

          • Mike

            Chris, when you say database are you talking about a place where people can go like “consumer reports” and see first hand the results of a failed product. Then have the products organized etc?


          • Chris Youra

            I guess it would be something like that– but more or less real world reports on non-appliance items like that cheap valve that will undoubtedly flood your kitchen at some point.

            Honestly, I was just thinking out loud about how to incorporate some sort of social media with honest information (as a method of lead generation). The more reviews from (not about) a plumber in my area and I’d know he’d be my go-to guy if I needed work done.

            From my perspective a review site like Angie’s list is nice to have, but completely subjective. Ask yourself this: before going out to dinner would you rather read a review on Yelp (knowing that it could have been written by a 17 year-old girl after a bad date) or flip through a book actually written by the executive chef?

            I think that is the perspective you need to take, and one that will resonate with potential customers. It’s not going to offend anyone if you’re right (or just speak from experience).

    • I will share my opinion in reply to your post, and also propose an idea for your consideration:

      1. You are the expert, and people like myself are more than happy to pay good money to know your honest and experienced opinion; whether good, bad, or indifferent.  I would suggest that you never run from giving a negative appraisal of a product, BUT I think you should always include a good alternative.  A dentist friend of mine used to say, “Inform before you perform”; meaning, give them the Yugo, Chevrolet, and Mercedes options to consider (and all the ramifications of each).

      2. I think one potential way for “on location” professional services (whether plumbing, AC repair, etc.) to leverage new social media is maybe geo-location services.  This is just a rough idea off the top of my head as I type this, but maybe there could be a way to make your customer base (or “followers’) aware of when you are on a service call nearby; and maybe they could engage your services at the last minute.  Again, I’m not sure how to fully-bake this idea; but would love to know if you (or James) have any ideas.

    • Anand Ghurye

      Dear Mike ,
      The area where I stay lacks plumbers , electricians and masons especially for small repair jobs . The repair jobs individually may not be much but collectively add up . The artisans only want to come in for big jobs . If reliable service is available via calling on phone , many may join in . For example you may want to take annual contract whereby one time you fix everything that needs fixing and any small job comes along you do not charge for the same .Think about it .

  • Good job. All of them are

  • Brent Hoag

    One hour is only ten 6 minute stories; no problem.  You should link the Defrag site in your post. 

    Fortunately, the snow storm missed us and it should be sunny.  Eldorado Canyon is near the Omni, which is a neat hiking and climbing destination; I don’t know if the ice climbers are out there yet.  Enjoy your stay. 

  • Riskette

    I thought about this yesterday, but thought it might be too late …you need to have the audience spend part of the hour playing a game: the name of the conf. Is ‘defrag’ so during each ‘turn’ every one must change seats until they find someone they have something in common with. Repeat for n turns. A excercise in building connections.

    • That’s actually a great idea for a conference. The thing with this one is, I think everybody “makes apps” or does something tech-ish so they only will have to change seats once. Maybe if I narrowed that down a bit more though and made it more specific..

    • ….I retired from the US Department of Defense,…and spent a coupe of decades managing, and teaching folks to manage businesses on military installations around the world..

      …In conference settings, especially if you are trying to “team-build”,..or want to develop the interaction skills of the attendees,…you must hold a competitive, blood-pumping little scavenger hunt!

      …It warms up the  whole group,…and,…if the participants are slightly tipsy, while you send them out in table-teams or some other productive, subdivided group,… with a tight list of items, and a cut-throat set of time frames and incentives to be first to turn your list in,…or being the first group to do so, but…not wanting to wait for all team members to return, or deciding to sell out their team mates still out searching for an assigned item,…? It is a hilarious team building experience,… and a great equalizer for different levels of authority and positional power attending the same conference..Regards,RJ O’GuilloryAuthor-Webster Groves-The Life of an insane

  • Your point about networking, how does that tie in with Dunbar’s number?

  • Cindyluwho

    I was planning on attending that conference in Boulder in attempt to create some of my own luck….until I found out how much it cost to attend. I live about 90 minutes away up in the mountains.I thought it would’ve be great for someone like me who is attempting to start a business. However, I keep stalling. How does one ever get ahead in the world if they never have 2 dimes to rub together. My nightmare has persisted for 3 years and I am getting sick of being burned by the fire. It is hard to find that drive everyday when you see nothing happening.

    Good Luck Today…..I am sure you will kick ass!! You may not be the smartest one there. But I bet you will be the most real and entertaining.

  • damn…goood….stufff…my man.

  • Damnedchou

    but how to learn to negociate.. i think ” how to become a great negotiator ” is a terrific subject to write about.

  • It’s time to comment. I found your site through another blog. I’ve been working my way through your archives. It’s refreshing to read an honest writer in the self development field. Too many of them have no idea what challenges I face. Sometimes their advice feels like they are mocking me. That’s ok. I just laugh. Wish them luck. I hope they never taste the struggles I have brought upon myself.

    Your voice resonates. I have failed at more then one business. Still working on that. I have failed at family. Three daughters. Three women. Three very different relationships (still with the third mom, and our beautiful 5 week old baby girl). I have failed at so many other things. It’s true. Most things just don’t work out.

    I’ve been blessed to have a curious nature. I practice meditation, gratitude, and always strive to inspire those around me.

    Enough about me. I just wanted to thank you for sharing your work. I have debated with myself over buying your new book. That was until I read over and over again how you stress honesty and gratitude. I just bought the kindle version.

    Good luck in all your endeavors.


  • It’s not hard to identify those industries and holes.

    How do we do that?

  • Very well written and love the ‘personal’ stories!

  • joe

    I really enjoyed the article and found it to be very interesting. I’m a new business owner and have been doing a lot of research on lead development and the best strategies. I recently started using a great resource that has truly been helpful with exclusive leads,