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On Monday I attended the latest YNOT event with David McMahon, a founder of Fone Zone, one of the largest retailers of mobile phones (cell phones) in Australia. David’s presentation was good, while he offered no revelations for me he certainly reiterated a lot of what the business textbooks teach and showed that he has applied these principles to his business as it has grown. There was one interesting part early on in his speech that sparked the idea for this article about luck in entrepreneurship.
David and his partner came from a mobile phone B2B (Business to Business) background and had jobs as sales agents for mobile products before portable phones became mainstream consumables for the masses. Consequently he had a strong familiarity with the marketplace (yet ironically not a great understanding of the phones themselves) and decided to start up his own enterprise selling phones. Initially he planned to open one shop and be content with that, but things went a little bit crazier than planned and today Fone Zone is forecasted to make over $150M this year with hundreds of shops around Oz.
As I listened to David’s story it became apparent that he was truly in the right place at the right time. He was involved enough in the mobile phone industry to want to start up his own store which he stated was more from a desire for freedom – financial freedom and independence. He was an innovator in the industry in two significant ways; he started selling the phone plan or service rather than the phone itself, and he saw that the future for the industry was in B2C (Business to Consumer) and that having retail outlets selling direct to the public was were things were heading.
Fone Zone was the first retailer of mobile phones to open up shop in a shopping center starting a trend that now sees Australian shopping malls littered with competing mobile phone retailers. Fone Zone’s success was built on David’s two early innovations and while there are many factors (differentiation strategy being the most important) that have kept the business competitive in what is now a saturated marketplace, I believe it was because of David being in the in the right place at the start of the mobile phone boom that accounted for his success.
So was he lucky to be there at the start of an industry boom? To a certain degree for sure, you could say he was Ã¢â‚¬Å“luckyÃ¢â‚¬Â to be starting a business at the early stages of the formation of a new industry. His first shop sold so many phones he had to go to other shops and buy their phones at retail to meet demand. You don’t hear stories like that for most new businesses but often you hear them from the background of the extremely successful entrepreneurs. They just seem to get it very, very right and demand explodes. But is that luck?
I believe luck plays a role in business but when you start talking about luck in entrepreneurship I don’t think you can ever attribute too much credit for success to fortune’s wheel. When a person becomes an entrepreneur by deciding to start a business they are acting on an opportunity that they believe will satisfy a need both for consumers (a product or service) and themselves (independence, wealth, fame). How much success they have can be attributed to being lucky Ã¢â‚¬â€œ starting the right business at the right time Ã¢â‚¬â€œ however the owner would not start a business if they didn’t believe an opportunity to create something profitable isn’t there. That’s not luck, it’s common sense smarts.
Luck means that a variable is random and the outcome just happens to be positive purely by chance. Successful entrepreneurs aren’t successful because they rolled dice; they made a lot of careful and calculated decisions, and had enough motivation to take action at a point in time. They saw opportunity, the chance to be Ã¢â‚¬Å“luckyÃ¢â‚¬Â and decided to go for it given they had the skills to make it happen.
David was not successful because lady luck smiled on Fone Zone, his business boomed because David was opportunistic at the right time. Most failed businesses flop because the owner was opportunistic at the wrong time or in the wrong place. An entrepreneur creates their own luck by making choices that lead to actions and those that make the right choices at the right time earn their successes.