40. How to make luck and exploit hidden business opportunities

Intelligence, skill, and hard work are necessary for your startup to succeed, but they are often not enough. In my experience, you need to be lucky too. In this blog, I will share some of my experiences with creating luck and opportunity to help you make and exploit them yourself.

“The corpses of companies with good ideas and execution litter the entrepreneurial landscape.”

The corpses of companies with good ideas and execution litter the entrepreneurial landscape. I know that many of my competitors were at least as smart and tireless as me. I also know just how many times luck played a pivotal role in our survival. We had many “by the skin of our teeth” escapes and miraculous opportunities that dropped in our laps. Some of these are “only over a beer” stories. But, I will tell you a few that will illustrate how you can take control of your luck to a degree. Let’s talk about how you can make your luck and exploit it when it happens.

The Subpoena - 2001

It was an ordinary day at Anonymizer, fighting technical issues, trying to bring in new customers, provide support, and generally doing whatever it took to keep the lights on. This was back when Anonymizer focused exclusively on consumer anonymity. We received a lot of subpoenas because some of our customers used our service to do bad things. Usually, these arrived by mail, email, or fax, but this day it arrived in person.

Our receptionist brought a couple of FBI agents from the local cybercrime team into our conference room. They wanted to know which of our customers had been on a particular site at a specific time. They were not happy to hear that we could not tell them that information because we designed Anonymizer to ensure that we could never know that, even in real-time.

The conversation got a bit tense as we tried to explain the nature of our business and why it was necessary for many legitimate and essential purposes. At the same time, they kept trying to pressure us to give them what they wanted.

This might not seem like a particularly lucky situation, but it was. Our meeting was the single turning point that revolutionized the company.

The Billboard - 1995

I want to stop there and look back at the founding of the company. It was 1995, and I had been creating open-source privacy tools for a few years in my spare time while working on my Ph.D. in Astrophysics. I was frustrated by my thesis and, at the same time, increasingly passionate about privacy, anonymity, and cryptography.

For months I talked about starting a business. But it could easily have stayed just talk. Nothing was pushing me to leave the comfortable academic environment and embark on an unknown journey. Until, while driving home, I saw “the billboard.”

A billboard alongside the freeway I drove every day always advertised the local shopping mall. It might be promoting a new store, a big sale, holiday shopping, or whatever. Rarely anything of interest to me. This day it just had the name of the mall with a URL at the bottom. It rocked my world.

I had been on the internet for several years, including developing our research group website (remember the web only became public in 1991). But I had never seen a URL in a billboard. It was a sign that the internet was at an inflection point, going from a small niche science network to a global communication platform. The goldrush was starting, and the window of opportunity for a business clueless astronomer would close.

The clouds parted. I saw this as a clear sign to start the company immediately.

Doubtless, many others drove by that ad and did not notice or give any thought to this new detail. Fortunately, I was watching closely for indications that the internet was mature enough to support my business concept but early enough to be able to claim territory.

I was lucky to start the business when I did. The timing was right. I was early enough to have time to learn some business skills before the competition arrived. But the luck happened because I was keeping my head up and looking for signs to tell me the right time to move.

Censorship Circumvention - 2001

A few years later, I still needed work on my business skills, so I brought in Bill as CEO. That let me focus on strategy as Chair and technology at CTO. We made a great team. One day, Bill saw a press release about a company’s contract with the Voice of America (VOA) to provide censorship circumvention to people in China.

He called the head of that group at the VOA to say that we had a much better solution, and they should re-think the contract. As it turns out, they had not signed the agreement yet and were not happy to see the early announcement. Bill convinced them to hold off until we could send in a detailed proposal.

He then swung by my office to tell me about the call and ask me to invent this better solution within the next few days. After the usual chaos, we pulled together a proposal, which they accepted, that lead to additional work and contracts lasting several years.

What were the odds that this contract was not already a done deal, or that they would be unhappy with the other company, or that we could come up with a better solution on the fly? Obviously, this was an extreme long-shot. But Bill is the kind of guy to takes lots of those shots. I have no idea how many other people he called over the years to try to make things happen. Most of the time, they did not. But when they did, it was often a significant opportunity for us. If he did not take the few minutes to try for this, we certainly would never have gotten the chance.

This is a classic example of making luck. Getting a royal flush, or in my case, rolling a natural 20, is unlikely in any single hand or roll. But if I play or roll enough, it is almost certain to happen.

They say that “luck is what happens when preparation meets opportunity.” There is truth to that, especially if we are talking about mental preparation and the perspective to look for those opportunities.

“Luck is what happens when opportunity meets the boldness to take action.”

I think that often “luck is what happens when opportunity meets the boldness to take action.” If you want luck for your startup, hunt it like a predator. Stalk the watering holes and game trails that your opportunities are likely to frequent. Watch for any sign of their presence, then pounce!

Beyond the Subpoena

So, there we were, across the table from a couple of frustrated FBI agents. They were not particularly sympathetic to my discussions of privacy, the right to anonymity, and the problems with certain totalitarian governments. They just wanted to identify and arrest this particular bad guy.

Then I asked, how did they avoid being identified as FBI when they were investigating or going undercover online? They found that conversation much more interesting. It lead to a meeting at their office where I had a chance to talk to a room of highly dubious and conspicuously armed agents about how they were being tracked and identified online.

Within a short while, that office became our first government contract. Within a couple of years, providing anonymity solutions to the US government was over 90% of our business. We found product-market fit in a way that had always eluded us in the consumer space.

Opportunity does not always, or even usually, show up addressed to you and wrapped in a nice package with a bow. Sometimes you find gold under the rock with a scorpion on it. Every interaction is a chance to try to create an opportunity. With a light hand and a bold heart, it will not seem pushy or inappropriate to the other person. To be fair, they will usually say no, but I have found a lot of my luck in very unattractive packages.

Another lesson from this is being open to change. We were focused exclusively on consumer privacy, and many of our users were explicitly worried about excessive government surveillance. It took an open mind, and a precarious business situation pushing us forward, to see that we could shift to servicing that same government without compromising our mission to serve those individuals.

The lucky opportunity you find might take you far from your original business plan.

The Takeaway

So, the point is that being smart and hardworking, with a solid plan is critical, but usually not enough. Big breaks will often come out of left field, and it is easy to miss them. I know how hard it can be to look up from the startup grind to take in the scenery, but observing and thinking outside the walls of your business can make all the difference.

Make sure you never let a lucky opportunity slip by unnoticed and untested.