Chapter 8 | Manage Your Expectations
"I will not lose, for even in defeat, there's a valuable lesson learned..."
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"I will not lose, for even in defeat,
there's a valuable lesson learned, so it evens up for me."
- Jay Z, Blueprint 2
Jay Z’s words relate to the theme of managing expectations by emphasizing the importance of learning from setbacks and using them as opportunities for growth.
In the context of investing and managing expectations, not every investment will yield positive results or meet the desired goals. However, embracing a growth mindset and focusing on the lessons learned from the setbacks will help investors adapt their strategies, refine their investment criteria, and ultimately make better decisions in the future.
By acknowledging that even in defeat, there are valuable lessons to be learned, an investor can manage their expectations, maintain a realistic outlook on their investments, and continue to grow and improve their investment skills. This mindset will contribute to long-term success in the world of investing, as it focuses on learning and growth rather than just immediate wins.
The reality is that when you're investing in early-stage startups or even small businesses, many of your investments are likely to fail. It's more probable that an investment will fail than succeed, depending on the type of business, its stage, financials, and other factors. However, statistics tell us that the majority of startups do fail.
As a business matures and figures out its revenue model and efficiencies, it becomes more stable, and its financial performance becomes more reliable. The management team understands that if they invest a dollar, they can expect a certain return. With younger startups, there is less proof and evidence of success. As an investor, you must understand that failures in your investment portfolio are normal and part of the game.
The term "shots on goal" refers to the idea that the more investments you make, the more likely it is that you will have a success. Putting all your eggs in one basket is typically a terrible idea as an investor. Instead, you need to ensure that you have a diversified portfolio, given that even with diversification, you will have investments that fail.