The Superstar Effect: What Happens In A Winner Takes All World

When Michael Jordan came out of the University of North Carolina, he was selected by the Chicago Bulls as the 3rd overall pick in the 1984 NBA Draft. Top draft picks typically go on to have respectable careers, but no one could have imagined what this junior out of college would do.

Six NBA championships, 5 MVPs, and 2 Olympic gold medals later, Michael Jordan has definitely made his case. ESPN named him the greatest North American athlete of all time. The Jordan line of shoes recorded over $1 billion in sales in the last quarter of 2019. There’s even a 10-part miniseries on Netflix chronicling his career.

Michael Jordan’s fame isn’t surprising. What’s surprising is that we know so little about the other basketball stars of that era, especially since it was the time when the NBA started appearing on television screens. Fans might be able to name every member of the star-studded 1992 Olympic Dream Team. But ask anyone else, and they would only be able to tell you that Jordan was on that team.

Winner Takes All – And Then Some

This phenomenon is probably best described as a winner-takes-all effect. Jordan may have been the best basketball player during his time – and possibly of all time – but his peers weren’t slouches either. Yet when you look at how fame and fortune has been distributed within the basketball world, it’s easy to forget that everyone in the NBA is in the 99.99th percentile of all players.

It goes beyond basketball. Superstars in every field reap disproportionately larger rewards than their slightly less talented peers. The economist Sherwin Rosen even published a paper titled The Economics of Superstars to mathematically demonstrate and explain the effect. The intuition is simple – if I only need one product or service, I might as well get the best, assuming all else is equal. Second place doesn’t count for much.

The inequality doesn’t stop there. Once the winner gains an initial advantage, additional advantages are likely to accrue because he is now in a better position to compete for limited resources once again.

In the world of publishing, well-known authors are more likely to reach a book deal with a publisher than unknown writers. Because these authors have experienced commercial success already, publishing houses can be sure that there is an audience for their work. It also means that marketing resources tend to be concentrated around a few authors. This is why we have a few authors who have been on the bestsellers list multiple times and many starving writers.

We don’t need to look far to find other examples. The Amazon rainforest is home to approximately 16,000 different species of plants, but just 1.4% of tree species account for 50% of all trees in the area. Credit is usually given to researchers who are the most senior and prominent, even if all the work is done by a graduate student. Consumers spend most of their time on Facebook, Twitter, and Instagram, even when there are hundreds of social networking sites out there.

The Gospel of Matthew provides that “For to every one who has will more be given, and he will have abundance; but from him who has not, even what he has will be taken away.” This is why the phenomenon of accumulated advantage as been described as the Matthew Effect. This is why we have virtuous and vicious cycles. In society, things tend to go extremely well or extremely badly.

A few lessons stand out.

1. It pays to focus on one thing. 

Episode 5 of The Last Dance takes a look at how Jordan transcended sports and became a global cultural icon. In his interview with ESPN, Jordan had this to say:

“My game was my biggest endorsement. What I did on the basketball court, my dedication to the game, led to all this other stuff. Believe me, if I was averaging two points, three rebounds, I wouldn’t have signed anything with anybody. So, my game did all my talking.”

Shoe deals. Endorsements. Even the opportunity to play professional baseball at 31 years old. These were some of the doors that being the best basketball player opened.

Not all of us can be like Mike. But all of us can focus on just one thing. Being a generalist has its own advantages, especially when it comes to reducing our downside, but nothing creates opportunities quite like expertise in a specific field. The counterintuitive lesson is that if you walk down a path far enough, you eventually reach a crossroads which lets you go wherever you want.

2. If you can’t be the best, be different.

You probably already know that it pays to be the best at something. Here’s what you might not know – it doesn’t matter what that something is.

Most students struggle with college admissions. They take on an overwhelming workload to and try to maximise every waking hour to get the grades they need. The idea is to convince college admission officers at Ivy League universities that they are the brightest and can best contribute to the university.

This strategy works only if you become class valedictorian. The more likely outcome, however, is burnout. In his book, How To Be A High School Superstar, Cal Newport suggests that students would be better off by focusing on extracurricular activities or self-initiated projects. The key insight is that being the best matters so much that it doesn’t matter even if the field is not crowded, competitive or well-known. This is the Superstar Effect – just being the best at something makes you disproportionately impressive to the outside world.

Newport’s finding isn’t useful only to high school seniors because it is essentially a lesson in marketing. It’s easier to make quantitative comparisons than qualitative ones.

Yuri Gagarin was the first human to venture into outer space, but we remember Neil Armstrong for being the first person to walk on the moon. Similarly, Raymonde de Laroche was the first woman to fly an aircraft solo but we remember Amelia Earhart for being the first female aviator to fly across the Atlantic Ocean.

History is a peculiar thing. In this case, it abides by Al Ries and Jack Trout’s lesson in in The 22 Immutable Laws of Marketing: “If you can’t be the best, change the category in which you are judged.”

3. Playing the right game is just as important as being a good player.

Not all fields are the same.

We know that winners keep winning because people want to be associated with winners, and losers keep losing because there is no incentive to back them. But not all fields have the same feedback loops. Certain fields are more unequal than others because it’s easier to spot who the winners and losers are.

Sports is the most obvious example. American sports leagues don’t award prizes to teams who finish second. Silver and bronze medals are available in certain events, but that’s as good as it gets. There is only room for three on the podium.

Fields such as entertainment and art have only slightly weaker feedback loops. You’d think that these fields are less competitive because there is no concept of winning and losing, yet the bloodbath continues. We listen to music and watch TV not only because they make us feel good, but also because we want to be connected with popular culture. John Doe isn’t going to get any attention when there’s a new film that has Robert Downey Jr delivering zingers.

Context matters. No one came close to Jordan when he played basketball. As a baseball player, he looked very much human. Sports Illustrated called him an embarrassment. Fortunately for Chicagoans, Jordan returned to basketball and delivered the city three more NBA titles.

4. Dumb luck explains more than we think.

Advantages don’t discriminate. They accrue according to the incentives of any given field, even when people haven’t done anything to earn them.

Malcolm Gladwell details in Outliers how elite Canadian hockey players are disproportionately more likely to be born in January, February, or March. The reason? Kids are categorised by the year they’re born, and those who are born earlier have an advantage in size and motor skill development than the others. Someone born on 31st December has to compete against another person born on 1st January, notwithstanding that they are almost a year apart in age. And as these kids fare better in games, they receive more training and opportunities. We know how the story ends.

Being born in the right country can be the most important lottery to win. Just as important might be the household you were born into and your physical attributes.

Or you might have been given an opportunity that you know you didn’t deserve. All you did was accidentally being at the right place at the right time, and with the right person.

None of us these things are within our control, but their impact on our lives is far bigger than we can imagine. Pure dumb luck.

5. Edges are found everywhere.

Because advantages accrue to one winner, and that one winner takes everything, small improvements can slowly add up to alter outcomes.

Marginal gains matter. One workout doesn’t make you an athlete. Neither does an hour on Duolingo make you fluent in French. But a single act can set off a chain reaction of other habits or create opportunities that would otherwise not have existed. The difficult part is doing something without the assurance that it will actually pay off.

In the movie Any Given Sunday, Al Pacino delivers a speech to his team before they play their last football game. He has these words for them:

“The inches we need are everywhere around us. They are in every break of the game, every minute, every second.”

Same goes for advantages in life.