Below is the text of an email I sent to the Tortuga team recently. I've omitted a few numbers from the original email because they are for Tortuganaut eyes only. The most important one is still included.
I'm writing to share the story of a time that I screwed up. I want Tortuga to be a place where we can both celebrate our wins and share our mistakes. Since I can't ask you for something I'm not willing to do myself, this email is my setting an example.
Mistakes are okay, but repeating them is not. At Tortuga, it's okay to try stuff and to take smart risks. We will take big swings. We will play to win, not to “avoid losing.” When we make mistakes -- and they most certainly will happen -- we should reflect on them to avoid repeating them.
I’d like for all of us to share our mistakes and what we’ve learned from them as they happen. What did we learn? How can we do better next time?
Fred's Million Dollar Mistake
In late 2015, I placed a large "final" order of V2 products meant to fill orders until the V3 launch the following fall. The plan was to sell out of V2s just before launching V3. That plan did not work out.
Sales were below my projections in the summer and fall. With V3 looming, we still had a lot of V2 inventory in stock. I had overestimated our inventory needs. To move through inventory faster, we had a V2 Retirement Sale.
Even after the sale, we had [REDACTED] left in stock. So much for inventory management. This leftover inventory was worth $920,000 at retail. Almost a million dollars that we could be deploying elsewhere. Instead, it was sitting in a warehouse in the form of discontinued inventory.
If we wrote off that inventory, we would lose out on the $920,000 in sales and take a [REDACTED] write down on our books.
Luckily, we've been able to divert this inventory to Amazon to sell there. We won't get full retail value out of it, but at least we can sell through it without taking a major loss or wasting all of those bags. The downside is that having V2s available, especially at discounted prices through a trusted retailer, is likely dragging down Outbreaker sales. One problem solved (by luck) but another created.
All this is to say that I screw up too. None of this is a secret, but I wanted to put it all together and share the numbers. This was a $1 million mistake. That's a big one. You probably won't have many chances to make a mistake even 10% that size.
I want you to remind you of two things:
- You won’t get in “trouble” if a project doesn’t go well as long as you share what you’ve learned so we can all get better. Please always get feedback from teammates, even for projects where you bear the responsibility. Remember to mitigate risk by planning for the downsides. Risk doesn’t go away because we ignored it.
- If I can share this, you can share whatever mistakes you make.
In our reporting, calls, and on Slack, let’s share what isn’t going right. Let’s share what we’re learning from our mistakes so we can all get better at the same time. We can’t have a culture in which we only proclaim victory and hide our shortcomings. That’s fooling ourselves to feel good in the short run at the expense of our long-term goals.
It's important to be honest and transparent when mistakes happen. We all believe in what we're doing and will continue working towards our mission. Along the way, we will stumble. But we're a team. We will pick ourselves up, forgive ourselves, and support each other.