When Winners Quit

February 13, 2024

“I. Don’t. Lose!”

​I’ll never forget the look on her face as she screamed those words at me, her eyes smoldering.

​It was the worst fight of our relationship. I had just told my wife that I had decided to sell the e-commerce business that I had acquired the year prior for a significant loss.

​It was losing $100,000 a month and my liquid net worth was dwindling quickly. Quite simply, my back was against the wall.

​My wife isn’t just my life partner – she’s my business partner. And let me tell you, she’s brilliant, and I respect her deeply.

​But on this one, we just weren’t seeing eye to eye. She was my chief marketing officer, and she was pouring everything she had into this business – determined to right the ship. And it was starting to work.

​That was maybe the most painful part for her. We were seeing signs of life in the ad account, and revenue was starting to tick back up. After months of relentless effort, things really were starting to turn around.

But it wasn’t happening fast enough. As an investor, my job is to look at things objectively. I need to make data-driven decisions; in this case, we would run out of money before we reached profitability.

​Her solution? Sell off assets and continue to grind.

My wife is a warrior.

​As she stood there, I could see her commitment. Her passion. Her unwavering belief in herself.

An AI-generated depiction of my 3-fingered warrior wife

My wife, at heart, is an entrepreneur.

​And I’m not. I’m an investor.

​My business superpower is that I’m a natural handicapper. I look at a problem and I think in probabilities.

​An entrepreneur looks at a problem and thinks in possibilities.

​And this, I think, is the important difference between the two.

​An entrepreneur tackles problems head-on, and brings a burn the boats mentality, willing to defy all odds and set the world on fire to prove the doubters wrong. They see a path where others see dead ends, and they thrive in chaos and uncertainty. They are the builders, the doers.

​An investor knows that they must only be right more often than they are wrong, and is detached from any singular outcome. They prioritize correct decision-making over being right all of the time, because when you make enough bets, some of those bets will go against you. That’s the nature of the beast.

​The fact is, both of these skillsets are valuable when it comes to business. The difficulty is in deciding which one is appropriate in any given situation.

​I’ve just finished Annie Duke’s new book Quit, which is maybe the best book I’ve ever come across on this subject. Knowing when to quit is one of the most important and perhaps most difficult decisions many of us will ever face as entrepreneurs.

​Duke, a research psychologist and former professional poker player, looks at the art and science behind how to make this decision. Her findings are quite illuminating.

​Her conclusion? By the time most of us consider quitting, we are well beyond the optimal time to have made that decision. Put another way: if we wonder if we should quit something, we are probably too late.

​She lays out the cognitive biases and cultural norms that keep us from quitting when we should. She details how sunk cost fallacy and survivorship bias cloud our judgment when it comes to this very critical decision.

So, how do we know when we should quit?

​After all, if every entrepreneur gave up when things got hard, there wouldn’t be many businesses left standing.

​Duke emphasizes setting clear benchmarks or “states and dates” to evaluate progress and objectively decide whether to continue or quit a project. This involves setting a timeline and measurable conditions or benchmarks that need to be met. If these aren’t achieved within the set timeframe, it might signal that it’s time to reconsider the commitment​​.

​Furthermore, Duke points to the usefulness of employing strategies such as pre-mortems, which involve projecting yourself into the future and imagining why a project might fail, to establish clear “kill criteria” for discontinuing an initiative. She also suggests the idea of a quitting coach or accountability partner to help navigate through tough decisions about quitting​​.

​One of the key takeaways from Duke’s work is the importance of asking yourself whether you would make the same decision today, knowing what you now know. This approach helps to counteract the sunk cost fallacy, where past investments unduly influence current decisions, making it harder to walk away from unproductive endeavors.

​It’s this last point that hit me like a ton of bricks.
​With the e-commerce company, I had spent so much time replaying the decision to buy the company in the first place, and whether or not I missed something that would have signaled the bad beat. After replaying the decision thousands of times, I was eventually able to forgive myself, and recognize that I was doing the best I could with the information I had at the time.

​But this last question – would I make the same decision again, knowing what I know now – is the one that really haunted me.

The fact is, I quit too late.

​If I’m honest with myself, I knew months before that fateful fight with my warrior wife. I was throwing good money after bad, and I was doing it for one reason: to save face with my investors, who also happened to be friends.

​If I lost more than everyone else, and made a good show of it, perhaps they would forgive me for getting them into a bad deal.

​The worst part? They’re no better off than they would have been had I quit earlier. I sold the company to a strategic acquirer with a better chance of success than I had. Time will tell if it will work out for them, but the extra $700,000 that I put into the company during those hardest months is simply gone, with nothing to show for it.

​Turnarounds are hard. With the benefit of 20/20 hindsight, I should have taken a page from Duke’s playbook and set go/no-go criteria and performance gates from the start, and communicated them clearly to my investors. This would have made things so much easier once I knew we were losing the war.

​So whether you identify as an entrepreneur or an investor, the real question is how will you know when to quit? 

No matter where you are in the business cycle, going through a pre-mortem and identifying potential failure points and setting criteria for how to spot them can only strengthen your position moving forward.

And if you are in a tough spot, maybe it’s time to ask yourself:

Would I make the same decision again, knowing what I know now?

If the answer is no, perhaps you can do yourself the favor of changing course before it’s too late.

To knowing when to fold’em,


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