To The Moon

I give these examples to lay the foundation for failure being not only acceptable but necessary in many cases. It’s what these great investors and entrepreneurs learned from failure that led to their greatest success.

Here’s a little bit of my story and why I may look at the world of investing differently than many other analysts.

Two Face Poker

In 2006, I started a poker chip company called Two Face Poker. I spent ~$30,000 of my own money to build a custom poker chip mold and manufacture 20,000 poker chips that were of casino-level quality.

I built the website. I set up drop shipping for cases and cards on the site. The branding was amazing.

Poker was still booming, and I thought I had done everything to build a great poker chip business.

I sold very few chips and the mold still sits on my desk today.

What I didn’t know at 24 was how important marketing was, especially on the internet. We didn’t have social media in the same way back then and I wasn’t good at being active on poker boards or advertising on Google.

I thought a great product was enough.

It wasn’t.

The silver lining was my friend Marc, who was involved in Two Face Poker in the idea phase, watched what could be built on the internet without much infrastructure and learned from my successes and failures. He launched Marco V Cigars a few years later and is still successful today. The difference was, that Marc understands sales and marketing. (And he makes great cigars 👇️ )

Marco V Fine Cigars

Steeped in heritage and handcrafted from planting to packing, Marco V cigars are unrivaled in flavor, draw, burn, and consistency.

marcovcigars.com

Investments in Apple, Chipotle, Tesla, and Microsoft

Two Face Poker died slowly around 2008, but I kept investing in individual stocks.

I owned a large position in $Chipotle Mexican Grill(CMG)$ in 2007 and sold it in 2008.

I bought $Apple(AAPL)$ and $Las Vegas Sands(LVS)$ days before the market bottomed in 2009, only to sell both within a few years.

And I bought $Microsoft(MSFT)$ when it was cheap in 2012 only to sell when I had doubled my money.

I bought the right stocks.

But I didn’t hold onto them, so I didn’t generate asymmetric returns.

In each case, the businesses weren’t broken, but I was blinded by a distraction like “I’m already up 100%” or my favorite, “Apple is the biggest company in the world, how much bigger can it get?”

That logic was dumb.

I’ll get to the frameworks that came out of these mistakes on Sunday, but this should give you an idea of why I err on the side of not selling stocks.

REM5 Virtual Reality Laboratory

In 2017, the entrepreneur bug hit again and I co-founded REM5 Virtual Reality Laboratory to bring virtual reality to the world. My co-founder and I saw virtual reality as an amazing technology that could be the next computing platform. But no one was thinking about the “last inch” of distribution. aka. Putting VR headsets on people for the first time.

At that time, you could try an Oculus Rift in the middle of $Best Buy(BBY)$ on certain weekend hours if you were lucky enough to fend off the 13-year-olds who were camped out there all day.

Our idea was to trick people into coming to REM5 for pizza and beer and show them VR when they got there. From there, we had optionality in education, corporate events, content creation, and so much more.

REM5 was a smashing success by VR standards. From a small warehouse in St. Louis Park, MN we built a business that was on its way to making over $1 million in revenue in 2020. We were even searching for new, bigger locations to expand to and considering when we would grow to more states.

And then the pandemic happened.

On March 13, 2020, we met with staff to discuss the coronavirus that had been spreading and what we wanted to do. We decided to operate as normal that weekend and shut down on March 16, 2020, for a week or two.

Little did we know, we would go from a $1 million run-rate to $0 overnight.

After two years of struggling to keep the business afloat, I stepped back and my co-founder continued building and expanding into a content studio called REM5 Studios. REM5 VR Lab still exists, and REM5 Studios is doing amazing work with the Gates Foundation, but it wasn’t big enough to support everyone involved and my kids were young.

The reality of life collided with the demands of entrepreneurship.

What I took away from the REM5 experience is maybe the most impactful to my view of investing today.

In 2017, we knew we were up against giants like Facebook ( $Meta Platforms, Inc.(META)$ ), $HTC Corp(HTCKF)$ , and eventually Apple, but we thought we had a unique view of the industry and we were riding a wave of growth that would last a decade. And a business model with lots of optionality was the right way to go into the industry.

In hindsight, we had the right business model, and “the last inch” is still a problem for the industry. But we overestimated the rate of adoption for VR and never saw a pandemic coming. Without the pandemic, we would likely have multiple locations and be extremely profitable.

I could look back and be upset at this, but I don’t. I tell the story that I think exemplifies how crazy you sound being a founder.

https://asymmetric-investing.beehiiv.com/p/i-have-failed