The Four Laws of Success and Probability

Of course I believe in luck.  How otherwise to explain the success of those you dislike?  – Jean Cocteau, French writer and artist

The most important questions of life are, for the most part, really only problems of probability.  – Pierre-Simon Maquis de Laplace, French mathematician & pioneer in the field of statistics

Meeting Phil

Shortly after moving into my dorm room my freshman year of college there was a knock at the door.  I opened it to the friendly face of a fellow freshman, but as welcoming as the face was what really caught my attention was what he had in his hands. 

In one hand he held a large hunting knife and in the other a deer leg, with the hoof and some fur still attached.  He looked at me, smiled, and asked, “Do you want a piece of deer jerky?” 

Seeing the confused look on my face, after an awkward pause he added, “Just tryin’ to be neighborly.” 

Not wanting to be un-neighborly, I reluctantly accepted and he carved off a piece of jerky and handed it to me.  He then introduced himself as Phil, from North Platte, Nebraska.  I introduced myself and after a little small talk Phil said goodbye and headed down the hallway. 

As I closed my door Phil was already knocking on the next door down the hall and I could hear him say to the bewildered occupant, “Do you want a piece of deer jerky?”

If someone tried this today it would probably lead to a full campus lockdown, a raid by a SWAT team, and PETA protests but in the early 1980s we didn’t take things quite so seriously.  We saw it for what it was: an interesting, though unorthodox, way for Phil to meet his new neighbors. 

Backgammon

A couple days later I opened the door to another knock and was once again greeted by Phil’s smiling face, this time without the knife and the deer leg.  Instead he was carrying what looked like a miniature brief case.  In the same friendly voice as before, Phil asked, “Do you want to play some backgammon?” 

Looking almost as confused as during our first meeting, I stammered, “Back what?”  Phil explained that backgammon was a board-game, and that if I didn’t know how to play he would gladly teach me.  Not having any better offers I accepted Phil’s invitation and we went back to his room.

Backgammon is not just a board game, but perhaps the oldest board game in the world.  It has been played in some form for thousands of years, and the current version has been around for at least several hundred. 

The game is played by two players who take turns moving their checkers around the board based on rolls of two dice.  The player who removes all of his checkers from the board first is the winner. 

Phil walked me through three or four games until I felt I understood the basic rules fairly well.  The game didn’t seem too complicated, and while there was obviously some strategy involved it seemed to me like the determining factor in winning and losing was the luck of the roll.    

After finishing a game that I won (what are the odds?) Phil casually asked me if I wanted to put some money on the next game.  I consider myself a fairly quick learner, and as lucky as the next guy, so I agreed.  Several games later, with my pride wounded and my wallet empty, I slinked out of Phil’s room back to my own.

Luck or Probability?

Later I was in the room of another new friend, Curly, a lanky, shy, funny young man from the Bay Area with a head of curly blond hair.  I told Curly how Phil had taken my money, and how I couldn’t understand how Phil got so lucky.  It seemed like every time he needed a roll, he got it.

Curly looked at me, smirked, and said, “Do you really want to know?”  When I assured him I did he walked over to his desk, opened up a drawer, took out a well-worn paperback, and handed it to me.  The book was called Backgammon for Blood.  He told me it contained the answer to my question, and that I could borrow it but he needed it back.    

I should have been studying for my actual college classes, but instead I went back to my room and devoured Backgammon for Blood.  What I discovered is that luck had very little to do with Phil beating me.  Instead, it was all about probability. 

The book explained how every possible combination from the roll of two dice has a probability associated with it, and if you understand the probabilities better than your opponent, and use this knowledge in your game strategy, you greatly increase your chances of winning.  This won’t guarantee victory, but it will tilt the odds in your favor. 

It appeared I had two choices: either quit playing backgammon or study the probabilities.  I chose to study the probabilities and thus enjoyed countless hours of fun over the next several years.  It is now over 30 years later and we still talk about some of our epic battles when we get together.    

The Four Laws of Success and Probability

I have since discovered that, like backgammon, life is also a game of probability.  You can’t guarantee success in life, but by doing certain things you greatly increase your chances.

Although it has taken me a lifetime to understand the implications of this concept, on that night long ago when Phil taught me to play backgammon and Curly helped me solve the mystery of Phil’s “luck” I started to piece together four basic laws about success and probability.  They are as follows:

• Success is about probability, not luck – Almost no one is successful in life due to good luck. Although it might appear like that from the outside, a closer look almost always reveals that successful people succeed because they consistently do things that increase their odds of success. This is good news because it means that you, not Lady Luck, has control over your success or failure.
• Before playing the game, learn the odds – The laws governing success are available for anyone to learn. Just as I was able to study and learn the laws of probability governing success in backgammon, you can learn the behaviors and habits that govern success in life. There are no guarantees, but understanding the odds will greatly increase your chances. Not knowing the odds almost guarantees failure.     
• If you understand the odds, and they are in your favor, play the game as often, and for as long, as you can – Phil knew the odds of beating me in backgammon were strongly in his favor. Therefore, he would have played for as long as I was willing. Discover areas in your life where the odds are in your favor and use a similar strategy. This has implications in choosing what talents to develop, what to study in school, what occupation to go into, what to invest in, and in many other areas.   
• If you understand the odds, and they are not in your favor, avoid the game – If it is impossible to avoid the game, play with great caution. Seth Godin summarized this law when he stated, “If the game is designed for you to lose, don’t play the game. Play a different game.” Life offers lots of choices. Concentrate on areas where the odds are in your favor and avoid those where you are likely to lose.

These 4 laws of success and probability have lots of applications in personal finance, which I will discuss in future posts, but their usefulness extends far beyond finance into just about every area of your life.  Learn and apply them and you will soon start realizing how universally useful they are.   

I Got a Real Bargain

You might be wondering what became of Phil and Curly.  Curly (now bald) is the chief traffic engineer in Las Vegas.  He uses his understanding of probability to keep traffic flowing by day and to play competitive backgammon tournaments at night. 

Phil used hard work and his knowledge of probability to become a successful executive in the insurance industry.  I assume he introduces himself to new clients without a hunting knife and a deer leg. 

As for me, I consider the lessons I learned about luck, probability, and success while learning to play backgammon among the most important things I learned in college.  Although I wasn’t feeling much gratitude towards Phil on the night he taught me how to play I have since realized that was probably the cheapest way I could have learned those lessons.  So 34 years later it’s time to acknowledge what a bargain I got.  Thanks, Phil!