Success is iterative. Typically those who are branded as most successful iterated through many, many bad ideas before they came to most successful good idea they could find.
You can liken investing to life in the following way:
Those who invest heavily in startups, book publishing and movies are looking for that one hit that “returns the fund” so to speak. It’s the proverbial flash-in-the-pan or one-hit-wonders that are either blockbusters or NYT bestsellers that investors on the early side of the bell curve crave. You have the funds (often invested in by many LPs
Success in such endeavors requires trial, error, rinse and repeat. It’s about trying multiple ideas (often many at the same time), poking holes and trying anew.
On the other side of the spectrum are more risk-averse weighted portfolio investors who do not take the time to iterate on ideas or try new things. They are those who tend to have the majority of their portfolio in bonds and then the remaining minority stake in equities of some type. They typically have 10% or less of their overall allocation in high-risk early-stage investments. Such investors are often looked at as a bit more prudish, but they are those who understand that risk has a price.
One of the bigger differences between these two different investment buckets is a component of control. Those who tend to iterate are the entrepreneurs themselves. Those who invest in them are not overallocating resources to said individuals, but like to take small bets with a smaller weighted component of their overall portfolio. However, there are those who individually do invest in the riskier ideas, but who invest more than money. They often invest alongside such founders or visionaries, placing them in positions of control. This allows them to be there to make strategic investments relative to both how their invested capital was allocated as well as the direction of the next iteration.
There are certainly those who are ill-suited for iterating, they are also terrible at execution side. Success is more than just iteration of good ideas. Success requires focus. It means iterating on ideas, poking holes at them, trying to destroy them. If they are not destroyed at the end, then they are worthy of pursuit. Once in pursuit, such a project is often chased at the exclusion of just about everything else. This is where value is created. It goes back to a previous statement I have made before:
Focus creates wealth and diversification preserves it.
The saying holds true: when you see a man on a mountain, he didn’t just fall there. It is also true that such a man also likely tripped and fell many a time on his way up the slope. Many of the articles I write have no semblance of order and are simply my means of creating more ideas, but they eventually assist me in getting to a conclusive thought that leads to execution, which is perhaps the most important of all.
It is best to kill the bad ideas early and often, but never stop iterating. While we do not typically work as much on the startup side, we see a great deal of such opportunities. Often the best startup founders are not only great executors, they are also very keen at applying iterative and creative processes to the operations and execution side of the business.
Ideas build upon ideas in a chain. As the chain grows, it requires more iteration. That is the creativity of entrepreneurship.
In fact, this article is likely one of those bad ideas, but it will hopefully lead to something more in the future.
