Invert. Always invert

I am currently making my way through Poor Charlie’s Almanack - the unofficial biography of Charlie Munger.

There is a lot of gold so far, and I’ll probably write more about things from the book in the weeks to come. Today, I wanted to cover one topic which is so simple and fundamental it’s surprising not more people talk about it. Inversion.

According to Munger, it is most often wise to invert when faced with a challenge. As he says, “tell me where I will die so I shall never go there”. Basically, instead of focusing what to do spend your energy on what not to do.

Most people think about how to win, but if you’re playing long-term games (which he does, and which startups definitely are), the key is not to lose. Given enough time, those focused on winning will make mistakes and end up losing. If you focus on not losing for long enough you’ll end up winning.

While this is not 100% applicable to startups (sometimes you have take a risk and focus on upside maximization in order to get to the next level), I see lots of areas where it makes sense to apply this mental model.

One thing that immediately comes to mind is controlling burn rate and runway. Startups die (lose) because founders give up or the company runs out of money. If you’re obsessed with your runway, you’re probably less likely to scale prematurely. The inverted perspective reduces the chances you’ll go bankrupt.

Bringing an inverted perspective along when making decisions can add a lot of value. I will definitely try to do it more going forward.