Brad Feld

Back to Blog


Sep 10, 2008

Recently, I’ve found myself in several situations where I realized the complexity of each one had spun out of control.  Rather than be able to make a rational assessment of the situation, collect a set of specific data, and make a decision I found myself in a discussion that was going around in circles.

When I was a kid, my dad used to refer to these situations as "complicated mistakes."  You’d make a mistake and, in an effort to deal with it, you’d pile another mistake on top of it.  Before you knew it, you had a complicated mistake which was much harder to deal with.

I’ve worked hard in my life to understand what a "sunk cost" was an how best to deal with one.  While I’m not perfect, I’m pretty good at assessing the situation and removing the notion of the sunk cost from my going forward analysis.

When you have difficulty understanding how to deal with a sunk cost and you get tangled up in a complicated mistake, a real mess occurs.  You keep trying to fix the complicated mistake and justify the ongoing future investment of time, energy, and money based on what is essentially a sunk cost that you are unlikely to recover.  Rather than valuing your sunk cost at zero and simply evaluating the future potential of the opportunity, you compound the complicated mistake even further.

My solution to these situations is to simplify. Completely write off the sunk cost.  Ignore (or void) as many of the historical decisions that created the complicated mistake.  Figure out what your real current reality is and what you want your future state to be.  Then create a plan that connects your current reality to your desired future state.

Start by simplifying things.