What personality trait do Mark Zuckerberg and 1381 German millionaires all owe their success to?

I never thought I would answer (or even ask) that question before now.  

But then, last week, Scott announced his bold and exciting decision to move on from his role leading product, design, and strategy at Adobe in order to begin a new adventure as a partner at Academy Award winning production company, A24.

(I’m sure you’ll join me in wishing Scott good luck, congratulations, and our express interest in an Action Digest red carpet meet up! :-))

Scott’s move got me thinking about the patterns that define the career arcs of successful individuals. How do they explain their thought processes when it comes to taking on new bets? How do they weigh the risks and rewards of daring opportunities? How do they recognize and commit to paths that hold the most potential?

This inquiry surfaced the following five, timeless, principles that may prove useful for navigating your own landscape of possibilities and growth.

Read on at your own risk…

1. One of the most common failures of able people is a lack of nerve

George Stigler, who won the Nobel Prize for changing the way economists think about government regulation and competition, was once asked what holds back otherwise talented people from achieving their potential.

“I’d say one of the most common failures of able people is a lack of nerve,” Stigler responded. “They’ll play safe games. They’ll take whatever the literature’s doing and add a little bit to it. In our field, for example, we study duopoly, which is a situation in which there are two sellers. Why not try three and see what that does? So there’s a safe game to play, [but] in innovation, you have to play a less safe game, if it’s going to be interesting, it’s not predictable that it’ll go well.”

Huh… so Stigler believes that we must “play a less safe game” in order to fulfill our potential?

That’s definitely not the advice my career counsellor gave me. 

Is Stigler onto something here with his “unsafe games” or is this just reckless advice?

German millionaires offer some clues…

2. High rewards go hand in hand with high risk

In 2022, German researchers published a study in one of the world’s most respected scientific journals, Nature, that explored the personality profiles of German millionaires.

They analyzed the personality data of “the rich”—1381 individuals with a net wealth of over €1,000,000 (including five individuals who had wealth upward of €100,000,000), and ran a comparison with “the non-rich”—around 20,000 people who had a net wealth of between €0 and €800,000.

(Press F to pay respects to the person with €799,999 labelled as “non-rich”)

They found that, on average, millionaires tended to be more open, sociable, and hardworking than the general population, but there was one trait that stood out as twice as strong as any other:

Risk tolerance.

It turns out that millionaires are much more comfortable taking risks than non-millionaires. Or, as Stigler would put it, playing unsafe games. 

Well, no wonder, you might think—they’re millionaires! It’s easy to take risks when you have a net wealth that comprises seven figures or more.

But the researchers dissected the data even further to reveal a more interesting takeaway. 

When they split the millionaires into those who were “self-made” and those who “inherited” their wealth, they found that the vast majority of the risk tolerance was being driven by the self-made millionaires.

In fact, when they drilled in deeper on just the self-made millionaires, the researchers reported that “the more individuals had a self-made, risk-tolerant personality, the higher their wealth.” 

In other words, the richer a self-made millionaire was, the higher their risk tolerance was likely to be. Germany’s richest self-made millionaires love playing Stigler’s unsafe games.

This is still just a correlation of course.

Does becoming more comfortable with taking risks make you more likely to become a self-made millionaire? Or does becoming a self-made millionaire make you more comfortable with risk, an effect only exacerbated by the amount of money you make?

If I had to guess, I would say both of those things are probably true.

But if you think about what the most successful people actually do in order to become successful in the first place (and often thereby rich), it becomes clearer which direction of causality is most likely to have the greatest impact…

3. Those who do new and useful things are awarded the pioneer’s premium

Consider for a moment what Coco Chanel, Apple, and the Chicago Bulls, have in common.

For one thing, whether it’s the little black dress, the iPhone, or the triangle offense, they all produced successful innovations. 

It may sound obvious but the people at the pinnacle of their field get there by doing new things that have never been done before.

We recently published a list of 40 principles that the world’s greatest creatives share in common, and all of them, without exception, are celebrated because they did something new. 

In fact, for an idea to be considered truly creative, in just strictly scientific terms, it must be both “new” and “useful”—so you could argue that newness is 50% of creativity. 

But what does newness have to do with risk and outsized success?

Well, as far as risk goes, if you’re doing something new then you have much less evidence to tell you whether it will work or not in advance.

The more new an idea is, the more uncertainty there is about whether it’s possible or useful. There is always a meaningful chance that your new idea will fail, and the effort, time, and resources you invest will go to zero.

That’s a risk! 

So in order to do the kind of new things that all of the world’s greatest creatives are celebrated for, you must be comfortable taking swings on new ideas that have never been tried. 

Creativity is an inherently unsafe game.

But here’s why some people believe it’s worth rolling the dice: if you do manage to pull off the holy grail of producing something that is both new and useful then you capture a disproportionate amount of the value.

That’s because, for a while, you’re the sole owner of your useful creation. After all, it’s brand new. It usually takes a while for everyone else to catch on and catch up, and in the meantime, you, your team, or your organization can get all of the early credit, spoils, money, and attention. 

If you master the ability to produce new and useful things on an ongoing basis then you can be a leader in your industry for years or even decades to come.

We are coining the term, “the pioneer premium,” to define this effect. 

People who produce new and useful things tend to capture a disproportionate share of the value generated by their innovation, a pioneer’s premium. 

Pioneers have the opportunity to earn the highest premium possible from their creation because, as an idea becomes less new, it’s no longer as big of a risk, so competitors flock to it, and the value gets diluted.

Here’s how this all shakes out:

The most valuable things are new → new things are unsafe → doing unsafe things requires risk tolerance → therefore the people who make the most valuable things must be comfortable with risk.

Stigler: 1 - Career counsellor: 0

But there’s an important caveat here. 

While earning the pioneer premium requires you to be comfortable with taking risks, this doesn’t mean you should be reckless. 

In fact, it means the exact opposite…

4. Play unsafe games that look dangerous to others but feel safe to you

Richard Branson’s pastimes (transatlantic speedboating, long-distance hot air ballooning, jumping off casino roofs, etc) are about as extreme as his business ventures (deep sea exploration, space travel, banking, etc).

Branson’s track record makes it easy to assume that he has little regard for risk, but in reality, his comfort with it stems from a profound respect for risk and a relentless effort to minimize it.

“Over the years, my colleagues and I have developed quite a reputation for risk-taking,” Branson admits. “It’s true that we have been fearless about taking on new businesses, sectors and challenges even when the self-proclaimed experts told us that we didn’t know what we were about and would be lambs to the slaughter. But while, to all appearances, we do have an unusually high tolerance for risk, our actions always spring from another principle: always protect the downside.” 

Branson applied this principle during one of his earliest and riskiest ventures when he founded Virgin Atlantic in 1984.

One of the riskiest parts about starting an airline company is the enormous up front investment required, one of the most expensive items being—an airplane! So when Branson was negotiating the purchase of Virgin’s first plane from Boeing, he got creative with the terms of the deal.

As Branson writes, “I set myself one condition in our negotiations with Boeing, I stipulated that we could hand the plane back at the end of the first twelve months if the business wasn’t working. I was prepared to take the risk but, if it didn’t work out, I wasn’t going to let it bring everything else crashing down. My colleagues at Virgin Records would still have their jobs and a company to run!”

This clause guaranteed Branson would be able to get a sizable chunk of his investment back if things didn’t work out. 

When Branson made the decision to invest $450 million into his space company, he already had “five hundred wannabe astronauts” who “put down more than $50 million in deposits,” a signal that the venture wasn’t as risky as it may have seemed.

The thing that emboldens successful risk takers is the work they do up front to protect themselves. This could mean choosing an unsafe game where you have an especially strong strength or skillset, choosing an unsafe game where you know something that nobody else does, or putting measures in place like Branson to mitigate your downside.

We must play unsafe games to maximize our potential but we should not do so recklessly. We must always work to skew the odds in our favor, prioritize unsafe games that we are uniquely equipped to win, and protect ourselves from the repercussions of losing.

Our goal should be to play unsafe games that look dangerous to others but that feel safe to us.

We need to share one final word of caution before we part, however, for there is one risk so dangerous that it should be avoided at all costs…

5. The safe games of today are the unsafe games of tomorrow

Mark Zuckerberg was once asked to reveal the best piece of advice that investor, Peter Thiel, ever gave him.

“Peter was the person who told me this really pithy quote,” Zuckerberg recalls, “that, ‘in a world that’s changing so quickly, the biggest risk you can take is not taking any risk.’ And I really think that that is true. Whenever you get yourself into a position where you have to make some big shift in direction or do something, there are always people who are going to point to the downside risks of that decision—and locally they may be right. For any given decision you make, there’s upside and downside. But in aggregate, if you are stagnant and you don’t make those changes, then I think you’re guaranteed to fail and not catch up. So to some degree, I think it’s really right that, over time, the biggest risk you can take is to not take any risks.”

The greatest risk of all is assuming that safe games stay safe forever.

It’s only a matter of time before the winds of change turn the safe games of today into the unsafe games of tomorrow.

Embracing at least some amount of risk and learning to work with it is the safest path in the long run.

Tying these threads together

If you’re in the business of maximizing your potential then you must learn to become comfortable with risk.

That’s because the most valuable things tend to be both new and useful and creating new things is an unsafe game.

The counterintuitive part is that one of the best ways to become comfortable with risk is to become smart about the risks you choose and the work you do to mitigate them.

In the long run, this is in fact one of the safest games you can play, because learning to work with risk is much safer than trying to avoid it.

We’ll leave you with this…

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