From the February 2012 issue of Entrepreneur

Heads or Tails?After I sold my company last year, I was swarmed with folks looking for me to jump to the next thing. I was amazed at the doors that opened thanks to the small victory of having my first startup acquired. I thought back to two months earlier, when I was just another dreamer with a huge credit card bill. I was the same person, with the same probability of success, but nobody wanted to chat with me about opportunities then.

The world of venture capital is obsessed with winners. Former CEOs are recycled into new positions at new companies. Profitable VC groups raise new and bigger funds. The successful CEOs hobnob with the successful VCs, and the cycle continues. But should it? I didn't acquire many new skills in the two months between being completely broke and decently flush; someone just bought my company. In truth, luck and timing had a lot to do with it.

It occurred to me that distinguishing between probability and talent is a talent in itself. Consider the following example: Eight people are backed up to the edge of a cliff, and each flips a coin three times. Heads means a step forward; tails, a step back, or utter failure. By straight probability, half the field falls off the cliff after the first flip. On the second flip, two will advance another step and two will return to the start, likely terrified to flip again knowing that the cliff is behind them once more. On the final flip, probability dictates that one will fall off the cliff, two will end up a step ahead and one will be in quite an enviable position--two full steps ahead of the nearest competitors and three ahead of the start point.

Just as I didn't experience substantive change in my two months from debt to solvency, the standout in the example had the same odds as everyone else but ended up ahead.

Probability alone would allow some people to succeed time after time. Being able to distinguish among people with talent and people just filling probability's quota is not easy. It is arguable that those who have failed bring just as much, if not more, to the table but must work much harder to get another chance. Perhaps that is why many of the greatest entrepreneurs have racked up multiple failures as well.

Nearly every investment prospectus ends with the statement, "Past performance is no guarantee of future results." Yet the entrepreneurial world ignores this maxim time after time. Clearly, not every business situation is a coin flip. But in any situation that involves luck, as those with startups and investing inevitably do, there will be people who are truly exceptional and those who are just bucking the odds. If you find you're being perceived as the former, remember you may be only one step in front of that cliff.