How To Achieve Failure: A New Mission For This Blog

As I look back at the posts I published around here, a clear theme emerges. One that aligns well with a classic Charlie Munger advice.

“I Wish I Knew Where I Was Going To Die”

The late Charlie Munger started his 1986 commencement speech to the Harvard School (in Los Angeles) by echoing a speech previously given by Johnny Carson. The famous TV host provided a recipe for being miserable. The prescription included using chemicals to alter one’s mood, envying other people, and being resentful.

Expanding on Carson’s advice, Munger offered some more tips for achieving misery, concluding with this:

My final prescription to you, for a life of fuzzy thinking and infelicity, is to ignore a story they told me when I was very young, about a rustic who said: “I wish I knew where I was going to die, and then I’d never go there.”

Most people smile (as you did) at the rustic’s ignorance, and ignore his basic wisdom. [...] The rustic’s approach is to be avoided at all cost by someone bent on misery. To help fail, you should discount [it] as mere quirk [...]

What Carson did was to approach the study of how to create X by turning the question backward, that is, by studying how to create non-X. The great algebraist, Jacobi, had exactly the same approach as Carson and was known for his constant repetition of one phrase: “Invert, always invert.” It is in the nature of things, as Jacobi knew, that many hard problems are best solved only when they are addressed backward.

While the inversion approach is useful for the pursuit of happiness – figure out how to live a miserable life, and avoid everything on the list – Munger had found it highly effective in other areas as well. Success in business and investing, for example. To achieve it, one can ask what makes businesses fail, and there is your list of things to watch out for. From Munger’s 1995 lecture at Harvard University:

The use of autopsy equivalents at Johnson & Johnson: At most corporations, if you make an acquisition and it turns out to be a disaster, all the people, paperwork, and presentations that caused the foolish acquisition are quickly forgotten. Nobody wants to be associated with the poor outcome by mentioning it. But at Johnson & Johnson, the rules make everybody revisit old acquisitions, comparing predictions with outcomes. That is a very smart thing to do.

Munger himself followed the same advice:

I sought good judgment mostly by collecting instances of bad judgment, then pondering ways to avoid such outcomes.

It’s such a brilliant – yet simple – idea. But not a popular one.

Successful entrepreneurs and investors are garnering almost all of the attention. Many try to imitate them, or pattern-match against them. It’s a natural human tendency. But also textbook survivorship bias.

The volume of content devoted to analyzing failures pales in comparison to content worshipping success. Most ignore the rustic’s approach, which, as Munger teaches us, might result in a life of fuzzy thinking and infelicity.

When the study of failures is taken seriously, though, important patterns may get discovered.

“I Wonder, Who Decided At Lucent That They Should Go Out And Get Killed?”

People do ask what happened to Nokia. Or Yahoo, or Blockbuster. It’s just that the answer is usually a reflex: they got fat and lazy / too bureaucratic / missed the new thing / too slow to decide. It makes for a satisfying narrative, and a reporter could always find a few disgruntled former employees to confirm it. But the reality is often more nuanced.

As I mentioned last year, this was Clayton Christensen’s key insight leading to Disruption Theory. In his telecommunications example, Lucent and Nortel – who built circuit switching equipment – were industry leaders. Then a rusty little company called Cisco shows up with the router:

Their technology, the router, wasn’t good enough to be used in voice. But they deployed it at the bottom of the market with data, and then went up market, and ultimately, killed Lucent and Nortel.

The reason why is that when they looked down at the router, the router on every dimension wasn’t as good. So they kept making better and better circuit switch devices.

And we ask ourselves, “I wonder who decided at Lucent that they should go out and get killed?” “And when was the date on which they decided they would get killed?”

And the answer, of course, is that nobody made the decision. In fact, what happened is all the individual people in a very successful organization did everything right, but [they] did all of these things independently. And what made sense in those circumstances, when it summed up, [...] summed up to disaster.

Lucent and Nortel were probably always – like any large company – somewhat lazy and bureaucratic. At the same time, however, they were also highly successful at some point. What changed wasn’t that the levels of fat or slowness reached some critical threshold; it was the performance of some disruptive new technology that suddenly reached a critical threshold.

It’s not about Lucent or Nortel in particular; Christensen’s brilliance was noticing that the same pattern – an industry leader, dismissing an upstart’s new technology as inferior, only to be displaced by said upstart – repeated itself across different fields. In hard drives, steelmaking, automobiles. That’s how he developed his theory.

Had Munger’s longtime partner Warren Buffett known about Disruption back in the 1960s, perhaps he could have avoided the mistake of investing in Berkshire Hathaway in the first place. We’ve discussed it before: the New England textile business was, in effect, disrupted. Southern competitors leveraged a lower cost structure to enter the bottom of the market, while Berkshire kept retreating upmarket. Until it lost the final trenches.

Disruption isn’t the only reason successful companies fail, of course. And the theory became a victim of its own success, as the term Disruption has been used to describe almost any minor technological improvement. But it was an extremely important observation, one that had a deep impact on Silicon Valley.

The rustic’s method runs through Christensen’s two famous books. The Innovator’s Solution explains how to secure long-term success by avoiding the trap of The Innovator’s Dilemma, a study of how great companies fail.

Perhaps more of this could be useful.

A New Mission

I had no plan when I started this blog. I did have a rough idea in mind – mostly writing about Google and Israeli tech, the two places where I spent my career – but I allowed myself to wander off. I’ve been maintaining a list of “potentially interesting topics”, and, every now and then, picking one that grabs me. More often than not it ends up as yet another half-baked doc in my “drafts” folder. But, occasionally, I do finalize and publish an article.

As I look back at the ones that made it through, a theme emerges. Ever since my first post, I’ve tended to write a whole lot about business failures. I first noticed it at the end of 2025. Since then, it’s escalated further.

I’ve just published a three-part series about Stitch Fix, a company that had real hype around 2020-21 but is currently a beaten-down micro-cap. Largely forgotten. I, however, find the story fascinating.

When it went public in 2017, Ben Thompson called it an important company. Proof, he wrote, that one can build a venture-backed business that isn’t an aggregator and still generate outsized returns. Then came Covid, and – as e-commerce demand surged – Stitch Fix tried to become an aggregator, sacrificing its core business along the way.

I didn’t expect it to attract much traffic. I just thought the story carried important lessons. And I also felt energized by the detective work of digging through the details, and solving the mystery of what went wrong.

Perhaps it’s time to say it out loud. Heck — my name is Matan, and I have a thing for analyzing what made successful companies stumble.

Now that I’ve acknowledged it, perhaps it is time for this blog to be more focused and deliberate.

The plan is, then: more articles like the Stitch Fix series. Ones that will uncover what actually caused previously successful companies to fail. Over time, I expect more patterns to emerge. They might give us more clues to answer the rustic’s question of where businesses are going to die. So we never go there.

It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.

- Charlie Munger

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Not financial advice. This post is for educational and general purposes only and should not be relied upon for investment decisions.