Hold the Lessons of History Loosely (Members Newsletter)

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You know that 'loose feedback loop' thing? Yeah, it applies to historical narratives as well.

This is a companion discussion topic for the original entry at https://commoncog.com/hold-the-lessons-of-history-loosely/
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Why it's important to hold lessons from history loosely.

To read it, log in or sign up for a membership plan:

This is a companion discussion topic for the original entry at https://commoncog.com/blog/hold-the-lessons-of-history-loosely/
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I thought this was a pretty good example of ‘it’s difficult to learn lessons from other people’s stories, much less your own’:

Andrew Wilkinson, who runs a successful ‘mini Berkshire Hathaway’ called Tiny Capital, wrote a viral thread a few days ago on how he lost money going after Asana:

https://twitter.com/awilkinson/status/1376985854229504007

Then, David Heinemeier Hansson wrote a response titled It’s hard to draw lessons from your own mistakes:

  1. Don’t spend more than you make. If you’re profitable, you’re free. Even if the show one day ends, you made money every year along the way, so there won’t be a black hole where your bank account once was, and you won’t be roiled by regret.
  2. Growth is not the goal. Wilkinson seems obsessed with Asana and “winning” the market. If you define your success by whether you’re beating a competitor or you’re winning some arbitrarily-defined market, you’ll be sucked into playing a game where they set the rules.
  3. Half, not half-assed. Flow spread itself thin thinking “the market” had set certain non-negotiable bars, so unless they had, say, an Android app RIGHT NOW, they’d be toast. This led to a me-too, low-quality product full of bugs. Instead of focusing on a smaller, more opinionated, more differentiated product.
  4. Under-do the competition. Wilkinson’s tale of regret is steeped in war metaphors. Bringing bigger, badder weapons to this imaginary war with Asana. Locked into a Cold War one-upping game. Of course you’re going to lose if you define your company and your product on the competition’s terms, try to copy whatever they’re doing, but don’t have half the money to do so.
  5. Don’t out-spend, out-teach. Wilkinson didn’t have anything to say and neither did Flow once they started chasing a competitor’s agenda. So instead of building an audience by being different and interesting they started losing customers by being a worse copy of a better funded competitor.

Which set of lessons are right? It’s impossible to say! Probably both, probably some.

The truth is that there are too many variables to count, and it’s really hard to say which combination of things, done differently, would’ve led to a different outcome.

Edit: it’s worth noting that Wilkinson has done very well for himself in the years after Flow. So it isn’t like he hurt himself with the episode — he’s definitely learnt a lot from it.

Edit2: And this is Twitter, so the standards for truth aren’t very high lol.

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The truth is that any binary advice will be probably useless or inaccurate since its usually non-replicable. I definitely value business advice and stories like this, but rather as an entertainment. How many people will really ran into circumstances of competing with Dustin Moskovitz on a venture model? Kudos to Andrew on what he achieved indeed, he is a true unicorn. DHH’s stance is definitely worthwhile specifically for his philosophies of running a business. Whenever there is a “binary opposite extreme” of opinion, I am closing my brain as a reflex. Business advice in general has its own limits: Why You Should Ignore Every Founder's Story About How They Started Their Company

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@kirso that was a fantastic link!

Yet another piece with this line of thinking, Morgan Housel’s The Big Lessons of the Last Year:

Financial crises keep happening, again and again. People have been making the same investing mistakes for hundreds of years. The same military blunders, over and over. The characters change but the plot rarely does.

Jason Zweig explained years ago that part of the reason the same mistakes repeat isn’t because people don’t learn their lesson; it’s because people “are too good at learning lessons, and they learn overprecise lessons.” (emphasis mine)

A good lesson from the dot-com bust was the perils of overconfidence. But the lesson most people took away was “the stock market becomes overvalued when it trades at a P/E ratio over 30.” It was hyperspecific, so many of the same investors who lost their shirts in 2002 got up and walked straight into the housing bubble, where they lost again.

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I have to link to Ava Huang’s most recent free newsletter titled Long Feedback Loops

She quotes Lui’s Tight Feedback Loops post, but provides an alternative interpretation:

I’ve been thinking about how the middle of making things often feels like incoherence. You’re far enough away from the beginning that you’ve lost the flush of newness, but you’re also very far from the end. The work feels muddied, unfinished, and possibly very bad.

So, so true.