Foolish And Focused
Taking Risks And Being Focused, Sometimes, Are At Odds. Both Are Required To Build a Great Company
At Friday office hours recently, an up and coming leader at our company asked me what I thought was a provocative question.
Do you feel we take enough risk at Bonobos?
I’m not sure why.
It was an excellent question. On the one hand, we’ve taken some “good” risks — those that have paid off. On the other, there are risks taken that were not successful in the traditional sense, and seem to have cost us valuable capital, energy, and mindshare.
Risks that look like good bets in retrospect:
- Making a better fitting pair of men’s pants
- Launching on the web, creating the 1st ever digitally-native vertical brand
- Co-locating customer service — the Ninjas — at our NYC HQ
- Developing clothing stores without clothing stock — the Guideshops
- Experimenting with 3rd party brands to discover what men want
- Taking a vertical-only brand into wholesale at Nordstrom
We have taken other risks that we have pivoted away from in time:
- Opening a tech office in Cali — trying to operate bicoastally
- Building three different brands, before collapsing back to one
- Launching the wrong second product — swim — before doing shirts
- Hiring a professional CEO and reversing course 90 days later
The day we spun out our women’s brand AYR I wrote a triumphal note to our shareholders. I am paraphrasing, but it went along these lines:
Look at us, we are focused now! We’ve learned women’s is hard and we have more to prove in men’s. We have learned one brand is easier to make than two, let alone three. We have learned we didn’t have the luxury to launch another brand when our core business was still cash flow negative. It cost us valuable capital and mindshare that could have been applied to the core business.
Many shareholders wrote to me cheering this line of thinking on. They congratulated me for the focus, and implied the obvious: let’s not do that again. Let’s not get distracted.
On a pragmatic level, they were 100% right.
I agreed with their thinking that night, and I still do.
It reminded me of what a wise man once told me. Andy Rachleff is one of our first two angel investors. He has made a career of making non-consensus bets as a cofounder of Benchmark Capital, and now the founding CEO of Wealthfront. There is not a better venture capitalist, entrepreneur and angel investor in Silicon Valley. He once said:
I know a lot of companies that failed due to lack of focus. I can’t think of one that failed because they were too focused.
The reason that Andy is wise, though, is that he was later able to offer a competing perspective to his above point — to provide nuance to the important and necessary platitude that focus is paramount. Andy provided that counterpoint when he called me the day we spun out AYR. It was one of those conversations where you remember exactly where you were when you had it. I was at an airport terminal, pacing:
Andy R: I hope you don’t take away from this experience that AYR was a mistake.
Andy D: What do you mean? While I’m happy it now lives on, it was a major distraction.
Andy R: But you don’t know if it might have worked permanently.
Andy D: [pause, silence, thinking fast and slow]
Andy R: Selling other brands was a good experiment. So were Guideshops. So was Nordstrom. So was developing shirts. So was trying to build a technology platform business inside your company. So was starting AYR. Not all of them ‘worked.’ But the point is you have to keep trying stuff. You have to keep taking risks. As Steve Jobs said, stay foolish. Keep doing stuff like AYR. Just because it didn’t work inside your four walls doesn’t meant that the spirit of doing things like it shouldn’t continue.
My cup overflowed.
The reason for my gratitude was his words were an antidote to the self-loathing I had been harboring. I felt like I had made a mistake by going multibrand, and I felt guilty for the distraction I had created.
Seeing it Andy’s way made me feel better. It reminded me of why I built a company to begin with: to take risks, to challenge the status quo, and to innovate. It also framed my “mistake” in the context of other bets that had borne fruit.
It takes Andy’s intelligence and insightfulness to live on both sides of the coin — to be able to argue the merits from opposing perspectives.
Taking risks and being focused, sometimes, are at odds. Both are required to build a great company.
How do you find the balance?
When it comes to taking a risk, is there such a thing as a mistake?
Take the morbid extreme: a drunk driver that kills an innocent civilian has made, definitively, an unrecoverable mistake. The lesson is not worth the price to either party.
Or on a less important level, back in the world of companies: imagine a risk taken that sinks the enterprise, a risk that need not have been taken that destroyed the company’s focus.
Was that risk taken a mistake because it proved fatal to the enterprise?
I think we can say yes.
The question becomes: as long as the risk taken is not company threatening and causes minimal harm, is there such a thing as a “mistake” of experimentation inside a company?
How do we measure the learnings that hang in the balance? How do we take stock of those insights against the distraction caused?
How do we measure a risk not taken against the magic of what might have unfolded?
How will we ever know what we didn’t learn?
How do we think about risk spiritually?
We do not talk enough about spirit in business, yet it is what moves employees, customers, and shareholders alike.
It is a conundrum: risk at odds with focus, while innovation and the company’s soul hanging in the balance.
While definitive answers are elusive, the line of inquiry is fascinating. It gets at two of the great questions in life:
Does everything happen for a reason, or not?
Do we make the future, or do we receive it?
Those are probably too big of questions to contemplate here, though we probably can answer is the question that began this all:
However much risk we are taking, we can and probably should take more.
I wrote about this once before in an essay called The Risk Not Taken.
You don’t have to read it. But you do have to do this for me:
Here is to the innovation in front of us that we have not yet seen.
Here is to the focus required to scale little bets into bigger wins.
Here is to the knowledge that both focus and foolishness are required if we are to make something truly great.