I love growth. I love risk. However, I have not always carefully calibrated the risks I’ve taken to manage the costs associated with those risks.
Whenever we had a new product idea that I liked, I would invest in that product idea without an associated financial plan. I might be feeling comfortable with our profits and cashflow enough to “run an experiment.”
This made it difficult for me to declare failure when the experiment didn’t work out. I wanted the new idea to work out so much that I’d throw more money and time at it.
Without the financial discipline to run a controlled experiment, I lost a lot of money. These were “hope” experiments.
What’s worse is that some of the experiments worked out! One time, we invested in an entirely new product offering and we “guessed right”. Our investment in the new idea paid huge dividends. The problem of course is that I was rewarded for an experiment without financial discipline and (like any good lab animal) I did it again and again.
Animals (us humans included) react to unpredictable rewards. (See Pavlov’s dogs). I was being rewarded with periodic successes and was willing to live with the unsuccessful experiments.
Create your financial guardrails. Know when to declare a win and when to declare a loss so you can kill off your investment, regardless of how passionate you might be about it.
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