Successful Failure

We like to celebrate market winners. But what it really allows is failure.

Illustration: Naobim. Source: Pixabay

Centuries ago, if you couldn’t pay your debts, you were thrown into debtor’s prison where you wrote letters imploring family and friends to bail you out. In ancient Rome, if you pledged yourself as loan collateral and couldn’t pay the loan, you became your creditor’s slave. Colonial Virginia was settled by thousands of indentured (i.e. indebted) servants working off their debts via labor.

In the US we abolished debtor’s prisons by the mid-1800s. Some notable people had been imprisoned, including Light-Horse Harry Lee, a Revolutionary War hero and Governor of Virginia. Congress later replaced debtor’s prison with bankruptcy, a way to start over.

19th century debtor’s prison in England. Source: Wikimedia

This came to mind as I reflected on serial entrepreneurs like Elon Musk or Steve Jobs. In many ways, Steve Jobs was the most successful failure in modern history. The list of his failures is lengthy. He helped invent the Apple I and the Apple II — early computers that sold by the … hundreds. The product didn’t work very well until Apple’s engineers added a floppy disk. Then came the Lisa, another flop. Jobs we so distracted he missed deadlines and got himself fired. That didn’t help Apple much. At one point in the late ‘90s, the stock had fallen by over 80%.

Apple shares in the 1990s. Source: Bloomberg

Jobs took a half dozen Apple employees with him and founded NeXT, which produced a computer which sold, um, a few thousand. It had some amazing software, though, prompting Apple to buy the company in 1997, bringing Jobs back. He brought his lessons with him.

When Jobs introduced the iPod, iTunes, iPhone, and iPad he had an inexpensive alternative approach to a large-scale consumer need with a seamless software ecosystem. His early failures prompted his later successes, which has carried on for Apple. In these days of ginormous banks, Big Tech, and ever-bigger health-care systems, it’s important to remember: we can either learn from our failures, like Steve Jobs, or send them off to prison. The choice is clear.

Douglas R. Tengdin, CFA

Charter Trust Company

“The Best Trust Company in New England”

By |2018-08-27T07:09:14+00:00August 27th, 2018|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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