Things I Believe About Drinks Entrepreneurship
Six corollaries between Wall Street and whiskey
Ben Carlson is a favorite financial writer of mine.1 He seamlessly marries the anecdotal with data to illuminate and simplify arcane investment topics. In his recently published Risk and Reward: How to Handle Market Volatility and Build Long-term Wealth, Carlson combines stories of stand-up comedians prepping for talk shows with data-driven insights on soccer goal-keeping to illustrate the importance of smart inaction.2
In one of the most incisive sections of the book, Carlson outlines 20 things he believes about investing. I was struck by how much his investment philosophy parallels my own when it comes to entrepreneurship. Beverage brand founders would be wise to heed some of his takeaways:
Carlson: “…Simple beats complex. The problem is that simple is much harder to implement because complex will always sound more intelligent and appealing. It’s easier to be fooled by randomness with complexity.”
My view: For drink brands, simple is easier than complex—easier to manage, easier to message. It’s also less expensive than complex. Aim for fewer SKUs and fewer markets, done better.
Carlson: “…Self-control can make you far more money than just about any other trait as an investor. I know plenty of high IQ people who are terrible investors because they don’t have the right temperament.”
My view: Brands that scale require laser-like focus from their founders, leaders, and broader teams. Lack of focus is a pitfall I encounter time and time again. Brand creation and product invention is lighting a spark, while brand-building is growing the fire by continually gathering more and more fuel. It is dangerous for companies to conflate the two. Excitement needs to be sustained on a core product in a key market(s) for years.
Carlson: “…Process is more important than outcomes, but at some point performance matters. A successful investment process requires making good decisions over and over again. But you have to understand the difference between discipline and delusion if your process isn’t working.”
My view: In the early years, prioritize learning over raw volume. Strong velocity in ten accounts beats weak velocity in a hundred. Don’t confuse case counts with brand strength.
Carlson: “…There are many different paths to being a successful investor, but only a handful of ways to fail. There is no one-size-fits-all when it comes to investing the right way. But unsuccessful investors typically exhibit the same poor investment behavior…”
My view: I can’t tell you how your brand will succeed, but I can list the dozen or so ways your company will fail:
undercapitalization
lack of focus
lack of product-market fit
market/marketing dilution
consumer confusion
lack of differentiation and/or memorability
mis-prioritizing goals
not understanding the order of operations when it comes to brand-building
not building a foundation that’s scalable
poor company culture
growing too quickly
taking on the wrong investment at the wrong time
not establishing commercial value proposition
There are no secrets or surprises here, just an unwillingness to come to terms with how difficult it is to nail these things down.
Carlson: “…Every investor has their own behavioral blindspots. Knowing your lesser self is more important than worrying about what other investors are up to.”
My view: Founders must be curious about themselves. Understanding your “lesser self” allows you to build the team that covers your gaps.
Carlson: “…Optimists are better investors than pessimists… If you don’t think things will be better in the future than they are today, what’s the point of investing in the first place?”
My view: You wouldn’t be building a brand if you didn’t believe in the bright future of this industry. Worry less about the macro headwinds and more about the microcosm that is the backbar you haven’t won yet.
Along with Morgan Housel. See both The Psychology of Money and The Art of Spending Money.
He also quotes Warren Buffett, “The stock market is designed to transfer money from the active to the patient.”