Blackjack: 21 Ways To Guarantee Failure in Agribusiness

And some ideas for how to do the opposite...

"Invert, always invert." - Carl Jacobi

We spend a lot of our time around here talking about ways to help agribusinesses succeed. Today, we’re taking an idea from Talk One in “Poor Charlie’s Almanack” where Charlie Munger outlines his recipe for living a miserable life.

So here are our twenty-one surefire ways to make sure your agribusiness never succeeds:

1. Ignore or discount all anecdotes. Stick to only the “hard data.”

   
   Jeff Bezos famously says, “When the data and the anecdotes disagree, the anecdotes are usually right.” We have developed an unfortunate paradigm in modern life where all the incentives center on winning an argument rather than solving problems.
   
   Keynes observed something similar when he said, “Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally.” As long as we “follow the data,” we are safe - we were logical. What is far less discussed is whether “following the data” is leading us all to the exact same conclusions about the market, causing the inevitable bloodbath of a race to the bottom.
   
   The charge of the marketer in 2024 is not to discount aggregated data out of hand but to set it in its rightful place alongside anecdotal learnings our companies collect.
   

2. Learn nothing vicariously, especially nothing from other industries.
   
   I believe that agriculture is a unique industry, but I also see an enormous amount of bad behavior, willful ignorance, and learned helplessness perpetuated by people who constantly trot out the line “ag is different” or “that won’t work here” without providing true first-principles thinking on the subject.
   

3. Change your product every time you get negative feedback. 
   
   We’ve talked before about the challenges of being a company with a “squishy” point of view. These companies will eventually fail.
   
   Most people can’t imagine a future they are not actively experiencing.
   

4. Blame everyone else for your lack of adoption. 
   
   If people don’t want what you’re selling, it’s your fault. Many businesses in agriculture today rationalize the value of their product in a top-down fashion - usually using some form of handy-dandy ROI calculator with a ton of nefarious built-in assumptions, then they lash out at venture capitalists and their prospects for “not getting it.”
   
   If a few people don’t understand what you’re trying to do, ignore them. If no one understands, it’s time to question your assumptions. In my experience, this tends to stem from one of three problems:
   

   1. You might not have a truly breakthrough insight.

   2. You have incorrectly framed/messaged/positioned your breakthrough insight.

   3. Your solution isn’t actually solving the problem you’ve positioned.

5. Complain about the way things are and take no action. 
   
   This is true in every industry, but I believe that it hits agriculture particularly hard. Many of us feel misunderstood, many of us feel unfairly treated…but life does not give you what you want, it gives you what you deserve.
   
   Get up and take action until you prove to yourself and to the rest of the world that you deserve success. Action/Execution > Complaining.
   

6. Totally rely on regulation to commercialize your product. 
   
   I think this is an outgrowth of a larger problem we’ve discussed before: everybody in agriculture is trying to predict the future instead of creating it. Regulatory inflections and changes are important, but hoping that you can predict how legislators will act and what effect that action will have on your corner of the market is a mistake.
   

7. Avoid difficult conversations. 
   
   "Hard choices, easy life. Easy choices, hard life.” - Jerzy Gregorek
   
   Freedom tends to be found on the other side of the thing you want to do least today.
   

8. Tolerate average results. 
   
   "Average is the enemy of the marketer” - Mark Ritson
   
   One of the mistakes that we make in business today is thinking that remarkable outcomes can emerge from an underwhelmingly average customer experience. Word of mouth is was and always will be the most effective form of marketing, what are you doing to ensure your customers share your story with their network?
   
   I love this excerpt from Brian Chesky on Reid Hoffman’s Podcast “Masters of Scale” as a useful way to think through delivering exceptional results. In the clip, Chesky outlines how he and his team went to extraordinary lengths to think about improving the Airbnb customer experience.

   “We’d ask these questions like, “What can we do to surprise you? What can we do, not to make this better, but to make you tell everyone about it?” And that answer is different. If I say, “What can I do to make this better?” They’ll say something small. If I were to say, “Reid, what would it take for me to design something that you would literally tell every single person you’ve ever encountered?” You start to ask these questions and it really helps you think through this problem…
   
   …If you want to build something that’s truly viral you have to create a total mindf%$* experience that you tell everyone about. We basically took one part of our product and we extrapolated: What would a five-star experience be? Then we went crazy. So a one-, two-, or three-star experience is, you get to your Airbnb, and no one’s there. You knock on the door. They don’t open. That’s a one star. Maybe it’s a three star if they don’t open, you have to wait 20 minutes. If they never show up, and you’re pissed and you need to get your money back, that’s a one-star experience. You’re never using us again. So a five-star experience is you knock on the door, they open the door, they let you in. Great. That’s not a big deal. You’re not going to tell every friend about it. You might say, “I used Airbnb. It worked.”

   So we thought, “What would a six-star experience be?” A six-star experience: You knock on the door, the host opens. “Hey, I’m Reid. Welcome to my house.” You’re the host in this case. You would show them around. On the table would be a welcome gift. It would be a bottle of wine, maybe some candy. You’d open the fridge. There’s water. You go to the bathroom, there’s toiletries. The whole thing is great. That’s a six-star experience. You’d say, “Wow, I love this more than a hotel. I’m definitely going to use Airbnb again. It worked better than I expected.” What’s a seven-star experience? You knock on the door. Reid Hoffman opens, [you] get in. “Welcome. Here’s my full kitchen. I know you like surfing. There’s a surfboard waiting for you. I’ve booked lessons for you. It’s going to be an amazing experience. By the way, here’s my car. You can use my car. And I also want to surprise you. There’s this best restaurant in the city of San Francisco. I got you a table there.” And you’re like, “Whoa. This is way beyond.”

   So what would a ten-star check-in be? A ten-star check-in would be The Beatles check in, in 1964. I’d get off the plane and there’d be 5,000 high school kids cheering my name, with cards welcoming me to the country. I’d get to the front yard of your house and there’d be a press conference for me, and it would be just a mind%$& experience.

   So what would an 11-star experience be? I would show up at the airport and you’d be there with Elon Musk and you’re saying, “You’re going to space.” The point of the process is that maybe 9, 10, 11 are not feasible. But if you go through the crazy exercise of “keep going,” there’s some sweet spot between “they showed up and they opened the door” and “I went to space.” That’s the sweet spot. You have to almost design the extreme to come backwards. Suddenly, doesn’t knowing my preferences and having a surfboard in the house seem not crazy but reasonable? It’s actually kind of crazy logistically, but this is the kind of stuff that creates great experience.”

9. Overpromise and underdeliver. 
   
   When Jeff Bezos started Amazon, he constantly preached obsession with the customer, but more than that, he insisted upon delighting customers by exceeding their expectations.
   
   One particularly good example of this is from “Working Backwards: Insights, Stories, and Secrets from Inside Amazon” where the authors talk about how when early customers would buy something from Amazon, they would receive a message at checkout with a shipping estimate - maybe it would be a week - and later they would get a message from Amazon telling them that their delivery had been automatically upgraded to first class and they would receive their item in just two or three days.
   
   People loved it; they would often respond to the emails, and Bezos personally read many of them. One of his favorites was from a customer who said “you guys are going to make a billion dollars.”
   

10. Wait for “more favorable market conditions.”
    
    We’ve talked before about the danger of trend-chasing vs. first-principles thinking. Our job as innovators is not to wait for a better future to emerge, but to pull the future forward as a result of our innovation.

    "No force on earth can stop an idea whose time has come” - Victor Hugo

11. Confuse how much you raised with winning.
    
    I see this one play out a lot in the agtech space, especially now that capital is somewhat harder to come by. But raising money isn’t winning; it’s failure deferred.

    I like this quote from Reid Hoffman on this issue:

    “Raising money is not successful, it means you jumped off a cliff. Raising money is a thermal draft, the ground is a little further away, but it's still coming.”

12. Spend a lot of time on PR for a crappy customer experience.
    
    There is a ton of money wasted on publicity for products that could have been remarkable in and of themselves with more intentional development. PR is a conditioning tool for the market; it cannot save a poor product from failure.
    

13. Build something amazing and never talk about it. 
    
    The opposite of the last point is to build in secret and then expect your idea to catch fire upon release. The natural mental framework for most company leaders - especially product-focused leaders - is to build a really great product in secret and then spring it on the world when it is complete with “marketing.” The reality is that your customers and prospects are getting pummelled with 4,000 to 10,000 advertising messages every single day. There is so much competition, so much noise that the idea of springing your idea on your unsuspecting market is a recipe for failure. Instead of building the product and then figuring out distribution, we should design a distribution strategy while we build the product.
    

    Facebook and LinkedIn leveraged email for distribution; PayPal leveraged the eBay community. What unique distribution mechanism will you use?
    
    I talked about this idea of ditribution in ag with Tim and Tyler Nuss last year on the Modern Acre podcast.
    

14. Think that “the best you can do” is good enough.
    
    Life and business are inherently binary, either you have what it takes to succeed or you need to become better. To harken back to number 5 on this list: life doesn’t give you what you want; it gives you what you deserve.
    

15. Do the same things everyone else is doing. 
    
    Only 4% of companies ever make $1M in annual revenue, just .4% eclipse $10M, and .0006% take in $50M annually.
    
    So why are you copying your competitor’s go-to-market? Why are you assuming they know what they’re doing? The odds are they are not going to make it, and one way to make sure you won’t either is to do the same thing as all the other failing companies.
    

16. Overvalue the advice of others. Live with the results of other people’s thinking. 
    
    Most people accept the assumed rules of the world as they find it. They question nothing and say things like:
    

    - “This doesn't work, we can't raise money.”

    - “People have failed at this before.”

    - “We don’t have traction.”
    

    So they quit, never begin, or chase something smaller - some white space that everyone can clearly see. Then they wonder why they never create exponential businesses and become jaded.
    
    What we are looking for are opportunities in categories that embody the quote from Arthur Miller, “An era can be said to end when its basic illusions are exhausted.”
    
    Where have the basic illusions been exhausted in your segment of the market?
    

17. Be a “squirrel getting chased by a BB gun.” Always doing something new, never doing it well. 
    
    The word “pivot” has become massively overused. It used to speak to a company’s iteration tempo on the path toward success, now it has been confused with a total restart. Executing a pivot requires that you keep one foot firmly planted; the fundamental insight of the company remains. Total restarts on the other hand are an acknowledgement that the fundamental insight was incorrect and as a result we are starting over.
    
    You can execute lots of pivots, and there can be different manifestations of your guiding insight, but a restart is something you can only execute once or twice.

    “All companies that go out of business do so for the same reason – they run out of money.” - Don Valentine, Sequoia Capital

    Companies that jump from insight to insight will eventually run out of money, a very sure way to fail.
    

18. Focus on winning lots of industry awards.
    
    Most of the “accelerators” and industry awards are a waste of time and money. If you need someone to tell you you’re doing the right thing, you’re probably not.
    

19. Give away your product for free. Make sure people know there's no value there. 
    
    Most companies fail to distinguish between price and value, and we dramatically underprice our solution to the point that customers no longer value what we’ve built. Your price is part of the product, not some tertiary consideration.
    
    There may very well be strategic reasons to give product away or heavily discount, but more often than not a company that wants to give its product away does so because it doesn’t have enough confidence in its value proposition to charge a price for it. In that case, it would be better to charge a price for a half-finished product to find out how visceral the pain is and how compelling the value of the solution might be.
    

20. Make commitments you don’t plan to keep.

    
    This excerpt from talk one in Poor Charlie’s Almanack perfectly makes this point.

    “First, be unreliable. Do not faithfully do what you have engaged to do. If you will only master this one habit, you will more than counterbalance the combined effect of all your virtues, howsoever great. If you like being distrusted and excluded from the best human contribution and company, this prescription is for you. Master this one habit, and you will always play the role of the hare in the fable, except that instead of being outrun by one fine turtle, you will be outrun by hordes and hordes of mediocre turtles, and even some mediocre turtles on crutches.” - Charlie Munger

21. Avoid first principles thinking at all costs. 

    
    Most people believe that agribusinesses predominantly fail due to product deficiency, but this is not true.
    

    The reality is that good agricultural technology and innovation often suffocate under the blanket of our adherence to social mimicry.
    

    This is what Peter Thiel would call memetic behavior. In other words, people's sense of success is defined by consensus instead of innate purpose; they accept the premises of the crowd.
    
    Creating innovation is a lot like surfing. You are right when you identify a valid wave that is gathering that others can’t or won’t see.
    

    Too often, the innovation capital in agriculture has been used to run after 20-foot waves that have already crested. Everyone is chasing that wave, and the likelihood of anyone catching it from behind is slim to none.
    

    Tom Blake, an early surfing pioneer once said something that I think translates well for innovative leaders:

    “Man has to awaken to wonder. And so, I suppose, you have to keep looking at the horizon, waiting and watching.”

    Billion-dollar waves are forming all around us in agriculture today. The problem is that we’re all focused on watching other people surf instead of looking at the horizon.

    Make something different. Make people care. Make fans, not followers.