Fail Big
“If you owe the bank $100, that is your problem. If you owe the bank $100 Million, that’s the bank’s problem.” – John Paul Getty

On wall street there is a common series of humor. If you make a mistake and lose a couple million you get fired. But if you REALLY screw up and lose a few hundred million you also get fired and then get rehired by someone else with a promotion. Think of it as the financial world equivalent of the Peter Principle – “failing upwards”.

Examples abound. The opening quote comes from an icon of American Business. Love the man or hate him, he certainly had a grasp on the reality of our modern economy. It used to refer most spectacularly to Donald Trump’s bankruptcy and debt renegotiations with his bankers in the early 90’s when the Savings and Loan bust almost toppled his Real Estate Empire. The banks could not afford to foreclose on his properties and were forced to negotiate payment terms or they themselves would have had to write off their loan losses and face a liquidity event. Few remember that tasty story because it lost some impact after the Federal bank bailout in 2008 (Although in that case the government made a hefty profit on their activity).

I could list dozens of examples from money management and bank traders, but “This ain’t that kind of movie, bruv.” At least not today. (That would be a fun one though – maybe best saved for war stories over a few cocktails).

Here’s a fun headline though…

Adam Neuman – of WeWork fame got a $350 million investment from a member of the royalty of the startup world.
A Couple of fun quotes from the article:
“The investment is the largest individual check Andreessen Horowitz has ever written in a round of funding to a company.”

“Mr. Neumann is planning to make a sizable personal investment in the firm in the form of cash and real estate assets*.”

*Nice to know Mr. Neuman is self-dealing by buying properties and selling them to a company he controls. That’s a nice gig if you can get it … moving on.

If you haven’t watched “WeCrashed” on Apple TV, I recommend it. Granted it is a mini series, not a documentary but it still tells the incredible story in all of its glory. Maybe I’ll also unpack the difference between a Real Estate investment and a Tech investment at some point. Suffice to say, many, many smart investors looked at WeWork’s valuations and laughed, but plenty of others hung their skepticism on a tree branch and happily jumped naked into that capital pool. This would be like Elizabeth Holmes of Theranos getting a massive check to start a new Diagnostics company.

America, the land of the free and the home of the sociopathic entrepreneur.

It is also both a brilliant compliment and remonstration of the American Capitalist economy. The criticism is obvious. Only in America could people fail that aggressively, even get caught in a con, and get massively rewarded. On the other hand I’ve seen the alternatives; and for all of our sakes, and the health of the American Economy, craziness included, we are far better.

I lived in London for a couple years working at a hedge fund. Those Limeys HATE to fail. Not because they are super competitive. It is because they feel shame and lose standing in the community. Do you know what happens in that environment? Less entrepreneurship, more fear, less innovation, more slowly moving capital and less economic growth. British investors LOVE American startups because the crazy Americans have no fear – we just go out and do it. There is just something in the water, maybe the fluoride? Plane crashes? Build another plane. Software idea doesnt work? Pivot and create Uber.

Do you remember the old Apple commercial from the 90’s? Not the sledgehammer through big brother, the other one…

“Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They’re not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them. About the only thing you can’t do is ignore them. Because they change things. They push the human race forward. And while some may see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do.”

Watch It Here

Funny bit of trivia I found while googling for the quote. Turns out Steve Jobs HATED this poem, didn’t write it and only came around when the ad got great reviews. Which is why Richard Dreyfuss was the original narrator.

This is the spirit of fail big, and also why big failures are acceptable in the USA. Failing big means you bet big, it means you really went out there and TRIED. While this time it didn’t work, maybe next time it will. So while I happen to think it’s crazy where the failure was tied to bizarre character or trust, I also wouldn’t want it any other way.

If you are going to fail – fail big. If you are going to dream, dream big. And if you succeed, you’ll succeed big. I’ll close with one of my other favorite quotes:

“Far better is it to dare mighty things, to win glorious triumphs, even though checkered by failure … than to rank with those poor spirits who neither enjoy nor suffer much, because they live in a gray twilight that knows not victory nor defeat.” – Teddy Roosevelt

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