Happy Mistakes Thanksgiving
(belatedly)
I’ve been pretty transparent that I’m primarily writing this newsletter for my own thinking processes and that it just happens to be public1. In what was definitely not meant to be an interview version of this but which 100% turned into that was a long conversation I had with Gary Fox. Gary has been quietly assembling a remarkable library of conversations with entrepreneurs and builders over the last few years and it has become a deep well of business wisdom that I regularly slurp from.
We talked about the art and science of both building and selling companies but also the privilege of long relationships in business, the applications of AI to archaeology, the nature of companies that Generation Alpha will build, second-time founders, polyphasic sleeping and cybersecurity for pensioners. Pop it on at 1.2x and go for a walk (Apple/Spotify/YouTube).
This newsletter was originally going to be called Avoiding the Traps, which is the closest thing I have to a life philosophy. But it remains the case that the most important lessons I’ve learned have come from doing the opposite and clawing my way out. I started pulling on that memory thread in a long Uber over the weekend and it ended up with this list of mistakes I’m genuinely grateful for making:
#5 Surprising investors with bad results
It is somewhere around 2010 and our social games company has just been acquired by GameStop2. For various reasons we are missing projections for the upcoming quarter and it doesn’t dawn on me that a corporate bricks and mortar retail might not understand the volatile nature of startup game development without some kind of heads-up. In a cloud service somewhere, there is an email which tells me I’ve been responsible for the biggest miss in GameStop’s corporate history.
#4 Using family metaphors for company culture
It would make for an interesting study to see if there’s any correlation between family backgrounds and the metaphors which founders choose to run their companies with (I have some theories). Family metaphors for culture can lead to an over-tolerance of underperformance. Although I think sportsball metaphors are excessively discussed in company-building, it continues to be my best suggestion for attenuating culture.
#3 Investing in partial commitments
When it comes to resource-allocation, I have been consistently burned when there is execution without full commitment. At a company level, it’s okay to test ideas but don’t roll out a strategy if the entire organisation can’t get behind it (this is why boards should be ruthless about challenging opportunity cost). Similarly as an investor, don’t invest in part-time. I’m sure there are examples of it working out, I’ve just never experienced them.
#2 Underinvesting in network
Any flavour of introverted founder will try and pick something else to work on than actively networking. While I don’t think that a founder CEO needs to be an extrovert, you need to find the hacks (dinners, events, PR, podcasts, half-formed newsletters etc.) to expand your network.
#1 Confusing sector knowledge for sector expertise
I have a theory that the cognitive bias to simplify complexity is a surprisingly common killer of market leadership positions (especially when combined with general market expansion). While I don’t think that every company needs to set up its own industry intelligence service, I’m not convinced it isn’t helpful. Simplicity will get you into a market but expertise keeps you there.
When people suggest that I write ‘maybe fuller formed thoughts’ or ‘stick to an actual topic’, I tend to respond with the DM version of tapping that first sentence with my pen.
This was considerably before GameStop became the exciting rollercoaster stock that it is today.