There is a wonderfully interesting piece in the Sunday L.A. Times about the random core of the movie business. The article synthesizes useful material from information cascades, Kahneman & Tversky, Arthur De Vany's work, and Hollywood lore to show that most of what is called success in Hollywood is more like dumb luck:
But if picking films is like randomly tossing darts, why do some people hit the bull's-eye more often than others? For the same reason that in a group of apes tossing darts, some apes will do better than others. The answer has nothing to do with skill. Even random events occur in clusters and streaks.
Imagine this game: We line up 20,000 moviegoers who, one by one, flip a coin. If the coin lands heads, they see "X-Men"; if the coin lands tails, it's "The Da Vinci Code." Since the coin has an equal chance of coming up either way, you might think that in this experimental box-office war each film should be in the lead about 10,000 times. But the mathematics of randomness says otherwise: The most probable number of lead changes is zero, and it is 88 times more probable that one of the two films will lead through all 20,000 customers than that each film leads 10,000 times.
How long until people come to same realization about the venture business? Pace my "no-one knows anything" comment about venture capital practices in an PE Week Wire column earlier this week, I'm increasingly convinced that most of what we call success in venture capital is a combination of a few very rare people with a good gut, and a bunch of others who got lucky once or twice and are now deemed to have had skill.