I had a conversation with one our investors about how their mental model has changed since they began investing. Much of the conversation touched on well-known ideas, however, there was something that seemed to contrast common thought; the ability to forget.

“In order to be good at investing”, he said, “I have to forget as much I have to remember”.

Learning from failures is widely accepted as a great way to learn. You make a mistake, analyze what went wrong and vow not to make the same mistake again. But in baseball, especially in pitching, this mindset can snowball into bad performance. Imagine you throw a fastball outside of the strike zone, a bit high. Then you say to yourself, that you’re going to lower the next pitch. The next pitch comes and it’s a bit too low and also outside. You focus on putting the ball a bit higher and a bit inside. Next one; it’s a strike, however, if you throw that same pitch again, the batter will smash it out of the park. So you try and locate the ball a bit closer to the edge of the strike zone, but the batter picks up on it and hits a double. “What went wrong?” you ask yourself. Now, you vow not to put the ball in that same location again (learn from failures).

“I’m Crash Davis, your new catcher, and you just got lesson No. 1. Don’t think. It can only hurt the ballclub.” - from Bill Durham

This sequence of events seems like any good optimization pattern, but in reality, you can quickly begin to treat every pitch as something you don’t want to repeat. As most pitchers know, in order to be elite, you have to be mentally willing to shake it off (forget) and throw that same pitch again.

Why is this the case? I think it has something to do with a concept that Annie Duke laid out in her book, Thinking in Bets: people have a tendency to equate bad outcomes with bad decisions (and vice-versa), when in reality, there’s a great deal of chance involved in most scenarios. In her world, poker, only a fraction of the outcomes in a match are an actual result of the decisions you make during gameplay. The rest, is up to chance. If a bad outcome follows a good decision, learn how to separate the two.

Back to investing…

A failed investment will likely come with a few lessons: difficult space to conquer, market not ready, wrong founder-market fit, product is not a must-have, business model isn’t sustainable, etc. If you get carried away with “not trying to make the same mistake twice”, you may well miss out on good opportunities. From the perspective of at least one successful investor (and an awesome human), you have to be willing to repeat your mistakes as well as learn from them.