Entrepreneurs often get burned by a failed investment (like a bad ad agency) and become hesitant to invest in that area again. This is a cognitive trap. The first loss was the money spent; the second, more significant loss is the opportunity cost of not trying again with a better strategy.
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Success brings knowledge, but it also creates a bias against trying unconventional ideas. Early-stage entrepreneurs are "too dumb to know it was dumb," allowing them to take random shots with high upside. Experienced founders often filter these out, potentially missing breakthroughs, fun, and valuable memories.
The worst feeling for an investor is not missing a successful deal they didn't understand, but investing against their own judgment in a company that ultimately fails. This emotional cost of violating one's own conviction outweighs the FOMO of passing on a hot deal.
Post-mortems of bad investments reveal the cause is never a calculation error but always a psychological bias or emotional trap. Sequoia catalogs ~40 of these, including failing to separate the emotional 'thrill of the chase' from the clinical, objective assessment required for sound decision-making.
While it's easy to regret known bad decisions, like passing on an investment, the far greater mistakes are the unseen ones. The meeting you canceled or the connection you didn't pursue could have been the pivotal moment of your career. This mindset liberates you from the fear of making visible errors and encourages action.
Seemingly costly failures provide the unique stories, data, and scars necessary to teach from experience. This authentic foundation is what allows an audience to trust your guidance, turning past losses into future credibility.
Entrepreneurs often view early mistakes as regrettable detours to be avoided. The proper framing is to see them as necessary, unskippable steps in development. Every fumble, pivot, and moment of uncertainty is essential preparation for what's next, transforming regret into an appreciation for the journey itself.
Hesitating to start a project for fear of wasting time and money is a paradox. The most significant waste is the opportunity cost of inaction—staying on the sidelines while revenue and experience are left on the table.
Most entrepreneurs already know what to do but fail to act. This isn't due to a knowledge gap, but a psychological inability to delay gratification. They are rewarded more for their current (safe) behavior than for enduring the uncertainty and frustration required to achieve long-term scale.
Entrepreneurs are natural risk-takers. Relying solely on logic, which is designed to keep you safe by recalling past failures, stifles the very creative and intuitive superpowers that drive entrepreneurial success.
Beyond analyzing losing positions (errors of commission), the speaker emphasizes studying mistakes of omission—high-quality businesses he understood but failed to invest in. This reflective practice helps identify flaws in process, time management, or conviction, which can be more instructive for future success than reviewing simple losses.
