Elizabeth Swaney participated in the 2018 Winter Olympics in freestyle skiing. She skied straight without performing any tricks that the sport is known for. And she came in dead last. That’s not the surprising part however. The surprising part is that she had never won any skiing competition in her whole life, and yet she qualified for the Olympics!
How can one qualify for the Olympics without winning any competition at all?
Swaney did one thing better than anyone else. She showed up. She attended all of the qualifying events in the two years before the Olympics. All of them. She didn’t miss a single one. And in all of the events, she skied straight, never falling down.
Many of the contestants would do tricks and swirls and jumps in the air to show their skills. And many of them would inadvertently fall. Swaney never fell once. And that’s how, she outperformed her more skilled colleagues and got enough points to qualify for the Olympics without winning any competition. Because she never failed.
A billionaire gets an epiphany
Billionaire investor Howard Marks tells us about the epiphany he had in 1990. He met an investor friend of his who was talking about his performance in the market in the past 14 years. This investor had never performed above the top 27th percentile of the market in any of the given years. And at the same time, he never performed below the 47th percentile. He was always in the second quartile of results every year.
Intuitively, if you were challenged to guess which percentile that investor would find himself in after 14 years, you would maybe take an average of 27% and 47% and guess 37%. But that investor’s performance was in the top 4% of all investors in the past 14 years!
While other investors had an awesome year followed by a pathetic year, this particular investor had consistent performance. He was never the best performer in the market. But neither did he ever lose a lot of money and perform poorly in the market.
By being in the top 50% for 14 years consistently, he made it to the top 5% for the whole period!
And that changed the whole way Howard Marks would invest. He realized that if in any given year, he took a lot of risk and found himself in the top 5%, his clients would praise him. But if his risks backfired and his investments failed and he found himself in the bottom 5%, his clients would leave him! Top 5% didn’t matter as much as the bottom 5% did.
Marks realized that he didn’t have to attempt to be the best investor on every deal. He just had to make sure to not fail in any deal.
You don’t have to be the best if you are “consistently” ok.
As musician philosopher Derek Sivers says:
- “For something to succeed, everything needs to go right.
- For something to fail, only one thing needs to go wrong.
- Don’t try to be more right.
- Just be less wrong.
- Because avoiding failure leads to success.”
Warren Buffett’s partner Charlie Munger quips: “All I want to know is where I’m going to die, so I never end up going there.”
If you take away the top 10 bets that Warren Buffett has made in his 70 year investing career, he would be a very mediocre investor. What Buffett is good at is not hitting home runs consistently. But not getting out. The discipline he has to not fomo in all the deals that sound good, and not investing in things he doesn’t understand even when the whole world is going gaga over it – has made Buffett the most successful investor of all time.
Just be less wrong. Don’t go where you may make more mistakes.
So how can you become failure proof?
- Don’t try to do everything. Don’t do things you don’t know well. Focus on your core competency.
- Have pre-mortems. Gather a bunch of people and ask them to imagine that your project has failed. And to list down how it would have happened. Then avoid all those errors.
- Study how other people have failed instead of succeeded. People love reading autobiographies of successful people. But it’s from failures that you’ll learn the most.
- Understand blind spots. You don’t know what you don’t know. It’s always safer to have another pair of smart eyes giving guidance and ideas from time to time. Find a teacher or a mentor. Be a part of a mastermind group.
- Win by not failing. Pay more attention to the downside than the upside.
- Skills don’t matter if you have discipline. Consistently performing well will enable you to beat far superior skilled competitors.