December 17, 1903 dawned cold and windy at Kill Devil Hills in the Outer Banks of North Carolina. The temperature was not much above freezing and the wind blowing at over 20 mph.
After years of work, frustration, progress, and setbacks, all of it in almost complete obscurity, Wilbur and Orville Wright felt like they were close to unlocking the mystery of human flight. Although the conditions were not ideal they decided to press forward with another attempt.
Only five people had turned out to watch. In the words of Orville, most of the locals were unwilling to face the “rigors of a cold December wind in order to see, as they no doubt thought, another flying machine not fly.”
Except this time would be different.
At exactly 10:35 in the morning the flying machine, with Orville at the controls, headed slowly down the improvised wood and metal track the brothers had constructed. The ground was slightly slanted and Wilbur ran along beside the plane pushing up the lower wing. When the plane reached the end of the track it rose slowly and unsteadily into the air.
One of the locals who had shown up, John T. Daniels, a crew member at the Kill Devil Hills U.S Life-Saving Station, was standing 30 feet from the end of the track next to a camera Orville had positioned on a tripod. He had instructed Daniels to squeeze the bulb activating the shutter when the flyer reached that point. Thus the first photograph Daniels ever took became one of the most famous photos in history.
Wright Brothers First Flight – December 17, 1903
Orville’s first flight lasted only 12 seconds, and covered only 120 feet, but flight it was. By the end of the day Wilbur had completed a flight of 59 seconds covering a little over half a mile.
After thousands of years of dreaming about flight humans had finally overcome gravity in a self-powered heavier-than-air machine. The world would never again be the same.
Why Wilbur and Orville?
The obvious question is, how did Wilbur and Orville Wright, two humble bicycle mechanics from Dayton, Ohio succeed when so many before them had failed?
The truth is, they had no business being the first to fly. Neither of them had graduated from high school, much less college. They didn’t have any technical training and they were not engineers or scientists. In addition, they worked almost completely alone.
Finally, they didn’t have any outside funding, and their own funds were extremely limited. To make a living and fund their unique “hobby” they had to keep their business repairing and manufacturing bicycles going the entire time they were developing their flying machine. This left them only limited time in the evenings and weekends, and a month or two every autumn when the bicycle business slowed down, to work on their “side hustle.”
Just nine days prior to the Wright brother’s success a huge effort to fly led by Samuel Langley had failed spectacularly. Langley’s project had cost $70,000, much of it taxpayer money. It is estimated that the Wrights spent a total of $1,000 on their quest to fly, all of it their own money.
But succeed they did.
The brothers faced many obstacles but they did have a few things going for them. First, although they didn’t have much formal education they grew up in a house where books were plentiful and reading was strongly encouraged, and both brothers took full advantage of this happy circumstance. In addition, they were mechanical geniuses. They could repair anything and build whatever they could imagine.
Another of their advantages was expressed perfectly by John T. Daniels, the same gentleman who took the famous photo of their first flight. Daniels wasn’t impressed with the brothers when they first showed up in Kill Devil Hills, recalling, “We couldn’t help thinking they were just a pair of poor nuts. They’d stand on the beach for hours at a time just looking at the gulls flying, soaring, dipping.”
Daniels feelings soon changed. The Outer Banks around the turn of the century were primitive and isolated. There was no electricity, plumbing, or other modern conveniences. It took extreme effort just to survive and hard work was recognized and respected. The locals soon noticed that the Wright brothers were self-sufficient and resourceful. Daniels later said that Wilbur and Orville were:
“Two of the workingest boys [ever seen] and when they worked, they worked….It wasn’t luck that made them fly; it was hard work and common sense; they put their whole heart and soul and all their energy into an idea and they had faith.”
The Wright Brothers and Risk
Wilbur and Orville were well-read, mechanically gifted, and hard-working but I think the biggest reason they succeeded where others failed was their thorough understanding of the relationship between risk and reward.
The role of an aviation pioneer is inherently risky and several people had died trying to fly in the years prior to the Wright brothers’ success. We can learn a lot about risk management by looking at how Wilbur and Orville controlled risk in an extremely perilous endeavor and gained the ultimate reward.
Following are several lessons we can learn about risk management from the Wright brothers and how we can apply those lessons to investing:
You’ve Got to Have Faith
By the time Wilbur and Orville Wright started trying to unlock the secrets of flight people had been dreaming about flying, and trying to make those dreams reality, for thousands of years. In the years before the Wrights took their shot some of the greatest thinkers of the time, including Alexander Graham Bell and Thomas Edison, were studying and experimenting with human flight. None of them had succeeded.
Recounting this record of failure the Washington Post reported, “It is a fact that man can’t fly.”
Casting further doubt on the prospects for human flight, Rear Admiral George W. Melville, Chief Engineer of the United States Navy, wrote, “A calm survey of certain natural phenomena leads the engineer to pronounce all confident prophesies for future success as wholly unwarranted, if not absurd.”
The Wright brothers didn’t share this skepticism.
On May 30, 1899 Wilbur Wright wrote a letter addressed to the Smithsonian Institution announcing his intention to study human flight. At the time the simple two-page letter from an obscure bicycle mechanic in Dayton Ohio would have seemed unimportant but in retrospect it is one of the most important letters in history.
After describing how, as a young boy, he had created several flying toys, Wilbur states:
“My observations since then have only convinced me more firmly that human flight is possible and practicable.”
Wilbur believed not only that humans would someday fly, but that Orville and he would be the ones to make it happen. It was this faith that launched them on their quest and pushed them to take the risks that would make what many thought impossible a reality.
Investing Lessons: Investing is also an act of faith. Faith in the continued progress of mankind, faith in a better future for yourself, and faith that you can design and stick to a plan that will allow you to reach your goals. Like the Wright brothers, we live in a period of skepticism and negativity. To create a better future for yourself you have to ignore all the negativity and believe in yourself. You’ve got to have faith!
Live to Fly Another Day
Wilbur’s letter to the Smithsonian continued:
“I am about to begin a systematic study of the subject [of human flight] in preparation for practical work to which I expect to devote what time I can spare from my regular business. I wish to obtain such papers as the Smithsonian Institution has published on this subject, and if possible a list of other works in print in the English language.”
Wilbur summarized his request, simply stating, “I wish to avail myself of all that is already known.”
Wilbur was careful with words and his choice of the word “systematic” was perfect. Before beginning “practical work” the brothers learned all they could from others. They also spent countless hours studying gliding and soaring birds, knowing that the shape and movements of their wings contained valuable information.
Only after learning all they could did the brothers design and build their first glider. But where would be the best place to test it?
They needed steady wind and after inquiring of the National Weather Bureau they settled on Kitty Hawk, an isolated outpost in the Outer Banks of North Carolina.
Wilbur and Orville’s father, Milton Wright, was understandably concerned for the safety of his sons as they prepared to start the “practical work” of learning to fly. In an effort to calm his father’s fears Wilbur assured him they would be careful. He told him they didn’t plan on flying far off the ground, and if they did have a mishap the soft, deep sand would cushion the impact.
Wilbur summarized his philosophy on risk, stating:
“The man who wishes to keep at the problem [of learning how to fly] long enough to really learn anything positively must not take dangerous risks. Carelessness and overconfidence are usually more dangerous than deliberately accepted risks.”
The Wright brothers weren’t out for fame, glory, or thrills. They were trying to learn how to fly and they understood that taking too much risk would not only be dangerous, but counterproductive.
In his wonderful book The Wright Brothers, which is where I got the historical information about Wilbur and Orville, historian David McCullough summarized the brothers’ attitude towards risk, stating:
“As time would show, caution and attention to detail were to be the rule for the brothers. They would take risks when necessary, but they were no daredevils out to perform stunts and they never would be.”
They understood that to solve the mystery of human flight they could only take risks that would allow them to live to fly – or at least try to fly – another day.
Investing Lessons: “Carelessness and overconfidence” are also mortal enemies of investors, and should be avoided at all costs. Risks that you take – and you will have to take risks – should be “deliberately accepted” after learning at least the basics of investing. Fortunately, you are not trying to do something that has never been done before, and you can learn the basics of investing fairly quickly and easily. If you wish to reach your financial goals only take risks that will allow you to live to invest another day.
Get Off the Fence
In September of 1901 Wilbur Wright gave a speech to the Western Society of Engineers in Chicago. In the speech Wilbur held up a single sheet of paper, held it parallel to the floor, and let it drop. Describing the paper’s erratic movements as it fell Wilbur noted that the paper refused to “settle steadily down as a staid, sensible piece of paper ought to do, but it insists on contravening every recognized rule of decorum, turning over and darting hither and thither in the most erratic manner, much after the style of the untrained horse.”
Wilbur than compared learning how to fly to learning how to ride a wild horse, noting there were two possible ways to learn:
“One is to get on him and learn by actual practice how each motion and trick may be best met; the other is to sit on a fence and watch the beast a while, and then retire to the house and at leisure figure out the best way of overcoming his jumps and kicks. The latter system is the safest, but the former, on the whole, turns out the larger proportion of good riders.”
Wilbur and Orville eventually concluded that the only way they could learn how to fly was to spend as much time as they could performing practical experiments. Sitting on the fence watching birds and thinking was much safer but wouldn’t give them the experience they needed to solve the problems. While they would always try to control the risks as much as possible they were ultimately successful because they got off the fence and “deliberately accepted” a certain amount of risk. They learned from each failure until they ultimately succeeded.
Investing Lessons: As with flying the only real way to learn how to invest is by investing. You can only learn so much by reading and watching others invest. To reach your financial goals you are going to have to get off the fence, take some “deliberately accepted” risks, and start investing.
After You Win the Game, Stop Playing
Wilbur and Orville knew firsthand how dangerous flying could be. Both of them had been involved in numerous accidents in developing and improving their “flyers” and on September 17, 1908, during a flying demonstration at Fort Myer, near Washington DC, Orville had been the pilot during the first ever fatal airplane crash.
Orville’s passenger that day was Air Force Lieutenant Thomas Selfridge. During the flight the plane suffered catastrophic failure of both its power and control systems causing the plane to plummet to the earth in front of thousands of horrified spectators. Selfridge was declared dead shortly after the crash and Orville suffered serious injuries that he never fully recovered from.
The Wrights had set out in 1899 to prove that human flight was “possible and practicable.” Having accomplished their goal the brothers simply stopped flying.
Wilbur’s final flight was in June of 1911, less than 8 years after his first flight. After this he elected to devote his time to the business side of flying and left the dangerous job of piloting to others. Wilbur died tragically early on May 30, 1912 of typhoid fever. He was only 45 years old.
Orville continued to fly for several more years, surviving at least one more crash and several close calls. Orville’s final flight was in 1918, when he was 46 years old. Orville died on January 30, 1948, at the age of 77.
Neither of the brothers felt the need to learn how to fly each new type of plane that was invented. They never would be test pilots or daredevils. A few years after accomplishing their momentous goal of being the first humans to fly the Wright brothers simply stopped flying. Their place in history was secured. They had already won the game.
Investing Lessons: Neurologist, investor, and best-selling author William Bernstein wrote:
“…once the game has been won by accumulating enough safe assets to retire on, it makes little sense to keep playing it…”
The strategy necessary to become financially independent is different than the strategy needed to protect and preserve what you have accumulated. After you have reached your goals you need to re-evaluate your strategy, which for most people means reducing risk. Like the Wright brothers, if you are fortunate enough to win a risky game the smartest move is sometimes to quit playing.
After reading David McCullough’s excellent book on the Wright brothers it was clear to me that one of the major reasons they succeeded where so many others failed is because they had such a thorough understanding of risk and reward. Those that failed were mostly daredevils with little knowledge or scientists unwilling to take the risks of actually trying to fly. The Wright brothers succeeded because they balanced the need for knowledge with the willingness to take deliberate, controlled, but very real risks.
A successful investor must do the exact same thing and the story of the Wright brothers’ successful effort to fly teaches us some important lessons on how to achieve this balance. Applying these lessons will give you a good chance of getting your investments to take flight and eventually soar. Buckle your seat belts and prepare for takeoff!