Durable Value Ep 79: Failure Science, Why Good Companies Drift and How to Avoid Catastrophe

Durable Value: An Investor's Podcast

In this episode of Durable Value, we talk about the science of failure—why even great companies and properties can drift off course, and how to recognize and prevent the subtle missteps that lead to bigger problems. We discuss the difference between luck and skill in investing, the dangers of narrative reinforcement, and practical strategies for building resilience in your business. Whether you're a real estate investor, entrepreneur, or leader, you'll find actionable insights to help you avoid common pitfalls and turn failures into stepping stones for long-term success.
Timestamps:
00:00 - Introduction: The Science of Failure
01:26 - Luck vs. Skill in Investing
02:20 - Information Machines & Signal vs. Reality
02:57 - Luck as Skill: The Genius-Idiot Cycle
03:15 - Real Estate Market Cycles as Levelers
03:38 - Execution Engine: Buying the Right Assets
06:20 - Navigating Seller and Broker Dynamics
07:03 - Macro Understanding from Multi-Market Experience
09:05 - Short-Term vs. Long-Term Thinking
10:33 - Capital Pressure and Market Cycles
11:25 - Institutional Capital and Volatility
12:07 - Raising Capital in Down Markets
13:31 - John Boyd’s OODA Loop: Orienting to Reality
13:50 - Failure as a Path to Success
14:32 - Red Teaming & Pre-Mortems
15:12 - Building a Culture of Openness
15:39 - Rebuilding Systems for the Long Term
16:02 - From IRR to NOI: Adapting to a New Decade
16:22 - Building for Stability and Optionality
19:58 - Closing

Chapters

1. Introduction: The Science of Failure (00:00:00)

2. Luck vs. Skill in Investing (00:01:25)

3. Information Machines & Signal vs. Reality (00:02:19)

4. Execution Engine: Buying the Right Assets (00:03:37)

5. Navigating Seller and Broker Dynamics (00:06:19)

6. Macro Understanding from Multi-Market Experience (00:07:02)

7. Short-Term vs. Long-Term Thinking (00:09:04)

8. Capital Pressure and Market Cycles (00:10:32)

9. Institutional Capital and Volatility (00:11:24)

10. Raising Capital in Down Markets (00:12:06)

11. John Boyd’s OODA Loop: Orienting to Reality (00:13:30)

12. Failure as a Path to Success (00:13:49)

13. Red Teaming & Pre-Mortems (00:14:31)

14. Building a Culture of Openness (00:15:11)

15. Rebuilding Systems for the Long Term (00:15:38)

16. From IRR to NOI: Adapting to a New Decade (00:16:01)

17. Building for Stability and Optionality (00:16:21)