Nassim Taleb Illustrates Fooled By Randomness With Elon Musk

Elon Musk and Fooled by Randomness

Nassim Taleb says that Elon Musk typifies his belief in the fooled by randomness theory. Taleb made the assertion in a Twitter post that he sent on June 7, 2022.

Taleb, who is a probability, philosophy and mathematics expert, wrote that the success of Elon Musk proves the theory that people could be successful as a result of ‘wild luck’.

Expertise Versus Extreme Luck

Taleb said that this is in contrast to what he defines as wild success, which is the consequence of “reckless betting and extreme luck”. He further highlighted that the latter is the opposite of wisdom and could be defined as extreme folly.

The post says:

“Elon Musk illustrates my #FooledbyRandomness point: solid financial success is largely the result of skills, hard work, and wisdom. But wild success (in the far tail) is more likely to be the result of reckless betting, extreme luck, & the opposite of wisdom: folly.”

He said that getting to the tail of a probability distribution involves increasing the scale rather than raising the expectation.

Is He Thrice Lucky?

The issue with the viewpoint according to Laspol is that Musk has done it with Zip2, Paypal, Tesla, SpaceX. He wondered how someone could be lucky all the time according to the fooled by randomness theory. He proposed that it could be something else.

“You can be lucky once at one point in time but this seems to be something else. My take is that besides his risk tolerance and brilliance his key differentiator is his endurance.”

Survivorship Bias

Ryan Lambert, founder at Pandex, expressed the same view when he highlighted that Musk has been successful in building different companies. To this, he responded,

“If 1000 people flip a coin 10 times in a row, there is a decent chance one of them will flip 10 heads in a row. Your frame is “could Elon musk be this lucky” when it should be “could 1 of 8 billion people be this lucky”.”

Pradesh Yadav, a personal finance investor said that Musk could indeed have been lucky thrice. He called this survivor-ship bias, adding that to be sure one has been lucky thrice, they needed to play the “all or nothing” three consecutive times and as such should be classified as reckless.


Author: Kamma

Kamma is passionate about the prospects of blockchain and the freedom cryptocurrencies afford people across borders. He holds small amounts of bitcoin and tether.

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