Columbus know that the world was round, but he...thought that the diameter of the world was only three quarters as big as it really is. He also overestimated the eastward and distance to Asia and therefore by subtraction grossly underestimated the westward water distance to Asia...Given the amount of water put on board, without the Americas Columbus and all his men would have died of thirst and been unknown in our history books. Columbus goes down in history as the world's greatest explorer...because he found the completely unexpected, the Americas, and they happened to be full of gold. One moral of the story is that it is important to be smart, but that it is even more important to be lucky. But ultimately Columbus did not succeed because he was lucky. He succeeded because he made the effort to set sail in a direction never before taken despite a lot of resistance from those around him. Without that enormous effort he could not have been in the position to have a colossal piece of good luck.
As Orson Wells noted, "What is confidence? Ignorance, ignorance, sheer ignorance – you know there’s no confidence to equal it. It’s only when you know something about a profession, I think, that you’re timid or careful."
A little delusional overconfidence is surely a good thing, but this is rather paradoxical because most rational people like Robin Hanson preach that knowing The Truth is most important, and one should always be adjusting one's opinions in light of our known propensity to be overconfident (eg, most of us think we are better than average in wit, common sense, our wisdom in politics, etc.). Too much rationality can make one not take chances, because while any business plan is often predicated on a false assumption, they often put one in a situation to succeed. I think the take away is to remember that getting into something plausible that are very good at, will present a lots of unknown option value, so don't be too demanding.
Columbus also had a lot of relevant experience as an alpha producer negotiating with his capital provider. Note that portfolio managers can receive anything from a flat salary, to 50% cut of the profit, to equity ownership. It all depends on one's negotiating power, because if your story is credible, and there is alpha there, this is a free lunch and so investors should be happy to get only 50%. But of course this is all speculative, and often the man with the plan has few rich relatives. Columbus boldly asked for the following conditional upon being successful: he was to be knighted, appointed Grand Admiral and Viceroy (king's representative) of all the lands he discovered, and he would keep a tenth of all taxes levied there. Spain initially refused, so he went to France, and so Spain acceded his demands, and gave him two old ships (Columbus rented a third himself). In the end, his greed cost him, as his wild imaginings made him so unpopular that he king had his own viceroy and admiral arrested and brought home from the West Indies in chains. I suppose that all descendants of Columbus might file suit, asking for one-tenth of all American tax receipts.
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