Keep mistakes small and fix them quickly

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

1. 25:00

   And you said something that terrified me unintentionally, that most of the entrepreneurs and founders that you've known were never taken out by competition, that they sabotaged themselves. Can you say a little bit about that? Yeah, I mean, I think you could make the argument that they made mistakes along the way that, you know, were fatal and, you know, ultimately, you know, the companies didn't succeed.

2. 25:35

   But it's all of their own doing, right? You have to make the right choices in order to continue on and survive and ultimately thrive. What do you think are some of the causes of mistakes? You have obviously smart, talented, competitive people, right? Charlie Munger has this great line where it's like intelligent people are taken up by three things, ladies, liquor, and leverage. So, like, have you seen any common, like, causes for somebody to sabotage themselves or to not live up to what they should have?

3. 26:07

   Charlie's right about those three things. You know, we stay away from those. Yeah. I sort of go back to understanding things and curiosity, and it's like you've got to know why something is working or not working. And if you're in the middle of a super competitive endeavor and you don't really completely understand what's going on, well, you're going to make mistakes, right? And so when I look at the competitors that are no longer around, yeah, they had either overzealously expanded or made design errors or they failed to understand the competitive landscape.

4. 27:11

   I mean, there's lots of ways to fail, right? You have a great example of one in the book with Adam Osborne, where he had a very successful—I think the Osborne one was relatively successful, right? Yeah. Okay. Yeah. And he's like, all right, now we're coming with Osborne 2. It's even new and improved, and it's great. And you make the point. It's just like, yeah, maybe, but it didn't ship in time. And so now you just made this big announcement where, like, we have this great new product.

5. 27:35

   It's even better than one. What are you telling to the market? The Osborne effect. I don't think people talk about it so much anymore. But back then, the Osborne effect was a thing where you introduce a new product that's better than your first product, and nobody buys your first product anymore, and you're out of business. And so, you know, yeah, don't want to do that. So go make some mistakes nobody's ever made before.

6. 28:00

   Try to make them in small increments, fix your mistakes as fast as you find them, and you actually want to make mistakes. You just want to make them small and, you know, iterate and fix them quickly. I mean, one of the things when you're creating a new business in an area that has never been done or with some new technology, new business model, there's no playbook. There's no, like, book you can read.

7. 28:29

   It says, here's how you do it, right? And if you hire the people from the adjacent, you know, industry companies and ask them to go do it, well, they're just going to go do what they were doing before, right? And so that's not going to work. So you need a lot of creativity and you need to sort of intuit your way to the answer by experimenting. It's like, okay, here's a theory that we think will work.

8. 28:58

   Let's try it, right? And, you know, does it work? Great. Okay, let's do 2x that. Okay, let's do 10x that. Let's do 100x that. Does it work? Okay, let's stop, you know, restart, come up with another theory, and just keep experimenting until you find the answer.