The Two Siblings You Can’t Ignore 2/6
The Psychology of Money, Part 2 : Luck & Risk
We ended Part 1 by realizing that no one is crazy—we just see the world through different lenses shaped by our experiences. Now, we must face an uncomfortable question that challenges our ego and our understanding of success:
Is success just luck?
When we look at figures like Jeff Bezos, Bill Gates, or Elon Musk, we often build shrines to their genius. We analyze their morning routines, their reading habits, and their management styles, hoping to replicate their wealth. But in doing so, we often ignore the invisible force that played a massive role in their journey.
In this second part of our deep dive into Morgan Housel’s The Psychology of Money, we are confronting the twin forces that guide every financial outcome: Luck and Risk.
Can You See the Opportunity?
Imagine a vast, empty desert. In Saudi Arabia, we have the “Empty Quarter” (Rub’ al Khali)—a massive stretch of sand with almost nothing in it. Now, imagine someone decides to open a retail store right in the middle of it.
You’d call them crazy. Who would shop there? There is no traffic, no people, no market.
But in the 1990s, when Jeff Bezos launched Amazon, the internet was essentially a digital Empty Quarter. Most people saw a novelty, not a marketplace. Opening a bookstore online seemed as “crazy” as setting up shop in the desert.
Bezos wasn’t just smart; he was lucky to see a future that others couldn’t, and he was lucky to be in the right place at the right time to capitalize on the birth of e-commerce.
Being “first” matters. If you start a YouTube channel today, you are fighting millions of creators. If you started in 2010, you were fighting a handful. The effort might be the same, but the result is vastly different because of when you started.
This doesn’t mean hard work doesn’t matter. Bezos worked incredibly hard. But hard work applied in 1994 yielded a trillion-dollar company. Hard work applied in 2024 might just yield a decent living. That gap? That’s luck.
The Bill Gates Equation: One in a Million
Let’s look at the math of luck through the story of Bill Gates.
Gates is brilliant. He is hardworking. But he was also the beneficiary of a statistical miracle.
In 1968, Gates attended Lakeside School in Seattle.
Lakeside was one of the only high schools in the world that had a computer.
Most university graduates hadn’t even touched a computer yet.
Housel breaks down the numbers:
There were roughly 303 million high-school-age people in the world in 1968.
Only 18 million lived in the US.
Only 270,000 lived in Washington state.
Only 100,000 lived in the Seattle area.
Only 300 attended Lakeside School.
Bill Gates had a roughly one in a million chance of being a student at a school with a computer. Without Lakeside, there is no Microsoft. Gates himself has said, “If there had been no Lakeside, there would have been no Microsoft.”
This is luck. It’s the accidental circumstance that gives your hard work leverage.
