The Best Way to Succeed is to Not Die

I enjoy reading stories about people who fail miserably in life. Maybe I’m a horrible person and it makes me feel better about myself, I don’t know. More importantly, I learn more from reading about the losers than the winners.

mistakes demotivator

In amateur tennis, 80% of the points are lost. Meaning a player gets nothing but net or hits the ball out of the park or… whatever, I don’t play tennis. You beat an amateur by screwing up less than the other guy. You beat an expert by first not screwing up, then executing expert moves.

The same is true for wrestling, chess, and investing.

And companies. The best way to build a successful startup is to not make a suicidal mistake.

Runaway success stories don’t teach you how to avoid amateur mistakes. They present expert moves in singular threads that happened to avoid fatal flaws. In telling the tale of Apple, it’s easy to focus on Jobs’ brilliant design, but then overlook the part where Apple *doesn’t* blow all its cash on marketing.

Besides, one data point is an anomaly; two is a coincidence; three is a trend. Go find three successful companies that followed the same formula. You won’t. But it’s easy to find multiple companies that followed each other to failure.

And then look at all the companies that became wildly successful, only to wither away. Groupon. Yahoo. Dell. Sun. Blockbuster. Kodak. And so on. One sure way to fail: Rely on the same successful technique forever.

Once we’re past the point of not doing things wrong, only then is it possible to start thinking about doing things like an expert.

You Are Not Your Mistakes

Warren Buffett spinning a basketball

At Berkshire Hathaway Inc’s annual meeting this past weekend, Warren Buffett invited short-seller Doug Kass* of SeaBreeze Partners to join his panel in a Q&A session. Kass is rooting for Berkshire to go under, and Buffett wanted Kass to query the company in front of all its shareholders.

What kind of CEO does that?? That’s like Obama inviting Rand Paul to give a response at the State of the Union address.

Jason Zweig calls it inviting doubt [1], but Buffett does not doubt himself. Buffett knows his process inside and out. It’s his investment decisions that he wants to doubt.

It is important to separate yourself from your decisions.

While it is possible to fully know yourself and your process, it is impossible to know everything about an investment, as that would require knowing the future. Even if you have a perfect system, errors will still happen due to the fact that the system is operating on incomplete information. Minimize the incompleteness of the information by encouraging criticism.

This encompasses Ray Dalio’s Fundamental Principle of Truth: An accurate understanding of reality is the essential foundation for producing good outcomes [2].

It also leads to another key Principle – Do not feel bad about your mistakes. Mistakes happen as a result of incomplete information. You are not your mistakes. Feeling bad about mistakes prevents you from learning from them.

Even Doug Kass knows this – he worships Buffett (It’s actually Berkshire’s investors that he doubts [3]).

*Interesting fact: Long-Term Capital Management was also short Berkshire. Kass is in good company.

1. A Lesson From Buffett: Doubt Yourself –

2. Principles, by Ray Dalio — written as a management handbook, but the lessons apply to everything in life.

3. Kass Katch: 11 Reasons to Short Berkshire –TheStreet, from 2008, but not much has changed.

Be Wrong as Fast as You Can

Pixar’s in-house theory is: Be wrong as fast as you can. Mistakes are an inevitable part of the creative process, so get right down to it and start making them. Even great ideas are wrecked on the road to fruition and then have to be painstakingly reconstructed.

Early concept drawing of Woody and Buzz
Early concept drawing of Woody and Buzz

Be Wrong as Fast as You Can –NY Times