Be approximately right rather than exactly wrong.

I love this statement from John Tukey, coiner of the word ‘bit’ to describe a single switch of digital micro-data.  Tukey was a statistician, one you would expect to describe events in terms reeking with precision.

Instead, Tukey implored us to think in terms of relevancy, cause and comparisons to known events.  And all this ethereal talk makes me think of how we investors and entrepreneurs are often led to search for instances in which our plan can be wrong, based upon a past measure.  Or how one fact in an argument can be disproved, making the entire argument in error in the minds of some.

Yet, if we do bet upon the jockey with more weight in our decisions to invest than upon the horse (or business plan), then our goal is to be approximately right and not to discount the plan for failure of one element which can be proved precisely wrong.

I made an investment in 2000 in a company that a decade later returned 110 times our investment at its IPO on the NYSE.  I invested in the jockey even though I liked the plan.  And that plan changed several times during the early years, molded into one that worked unbelievably well, enough to create an entire debit card industry which the company dominates today.  It would have been easy for early investors to find reasons not to invest based upon any number of facts upon which the original plan was based, many of which could be proved exactly wrong in the minds of fellow would-be investors.

Early stage investing is more risky than later stage when we can look back, know and measure prior successes.  But the bet is more often upon the jockey and that s/he will be approximately right by maneuvering the plan with the management team, rather than executing a plan that was flawed as originally written, and in retrospect exactly wrong.