The Problem: Secondhand Stakes

How do you weigh someone else’s advice—especially when they know something you don't—but they don’t bear any downside consequences for the outcome?

The Story: When the Axe Misses

In 2019, my brother and I opened the first axe-throwing bar with a liquor license in Utah. If you’re thinking, “That’s a terrible idea,” well—you’re right. But for the particularly dense among us (me), the only way to learn it is to live it.

At the time, Williams Entertainment group was growing from two locations that we easily kept an operational handle on as owners, to seven locations in three states with general managers and operators who didn't share the same downside risks (and upside potential) as the owners.

After Coronavirus hit, the axe-throwing bar's performance started to nosedive. Despite the declining performance, our employees were hopeful. They told us that if we just kept holding on, the bar would turn a corner and become our most profitable location. They were certain of it and since we didn't want to write-off our investment and take a total loss we trusted in their certainty.

After a few more months and another $100,000 in the hole, I had what I thought was a stellar idea. Since the employees are all so bullish on the bar, why don't we let them have some ownership in this undervalued asset that is about to turn a corner?

I gathered to operational team together and presented my plan: "I won't lose another penny on this bar but I think there's a path forward. Since all of you are so confident that this is about to turn a corner, I'd like to give you the opportunity to take part in some of the upside. I know cash may be tight for some of you so I don't expect you to 'buy-in' but I'd be willing to take some of your paycheck each month and apply it toward ownership. It's a win-win. Less cash out the door for me and upside for you."

They looked at me with blank faces.

What I thought was an opportunity for them to hop on a rocketship for pennies on the dollar right before we reach escape velocity, they viewed as getting a discounted ticket to the Titanic. The only thing that changed their opinion on a dime was the prospect of them having some of their own dimes in it. From certain success to certain failure in the course of 30 minutes. I had seen enough--I shut the bar down the next week and sold the lease.

Optimism is easy when you don't lose anything when you are wrong.

I remembered those axe-throwing employees a few years later sitting with Carli's Oncologist. He recommended an intense chemotherapy protocol and I asked him, “If your wife had cancer, would you give her this exact treatment?”

He said, “Of course.”

But the truth is, he didn’t know. His answer was theoretical. His skin wasn’t in the game (in fact as long as he was prescribing the standard of care he was ensuring that his skin wasn't in the game...a topic for another day). That doesn’t make him or my axe-throwing employees "bad" — just ill-equipped to make the final decision about how we should best move forward.

The Solution: Skin in the Game

Experts are useful. But if you’re the one who carries the risk, you’re also the one who carries the responsibility. Let them inform your thinking—but don’t outsource your decision-making.

You’re the one who has to live with the outcome.

So make the call like you’re the one who pays the price—because you are. Usually the one who stands to lose the most if wrong is the best equipped to make the decision.

Make your calls like you’re the one who pays the price—because you are.

—Raleigh