Bold Bets Over Timid Ones
The letter commits, in writing, to making bold rather than timid investment decisions wherever there's a sufficient probability of gaining market leadership advantages. Some will pay off, some won't, and either way there's a lesson.
Notice what this is not: it's not recklessness. The bar is 'sufficient probability of gaining market leadership advantages.' It's a portfolio mindset applied to strategy. Timid bets feel safe individually but guarantee mediocrity in aggregate, because the winners never get big enough to matter.
Paired with this: when forced to choose between prettier GAAP accounting and maximizing the present value of future cash flows, take the cash flows. Real economics beat reported optics, even when the market punishes you for it in the short run.
“Some of these investments will pay off, others will not, and we will have learned another valuable lesson in either case.”
Key idea
Make bold bets where the upside is market leadership, expect some to fail, and always choose real cash flows over accounting appearances.