March 14, 2020
Inspired by Sergey Brin, Larry Page, and Warren Buffet, we continue the tradition of penning an annual letter from our Company. Last year, we took a risk. We came together and decided to build something that lasts generations. The unwavering support sustained us through an evolutionary year.
Our commitment to leadership
Luis and I continue to believe in the responsibility of leadership. Being a leader at home and at work is at the heart of what we do and will always be our number one priority.
Our subsidiaries continue to invent new wats to improve the lives of as many people as possible. MQ Performance is figuring out how to make cars more affordable, how to ensure that maintenance visits are less, and increase the experience of coming to an automotive dealership. Plane Pat is also leading the way with building a connection between travel and the clothes we wear. They believe that the clothes should express and share the experiences and emotions experienced after traveling.
The infinite game
As a private company, we concentrate on playing the infinite game. We want to be better today than we were yesterday. We find joy in our advancement.
Usually we expect projects to have some realized benefit or progress within a year or two. But, we are trying to look forward as far as we can. Despite the dynamic business landscape, we try to look at three to five-year scenarios in order to decide what to do now. We try to optimize total benefit over these multi-year scenarios. While we are strong advocates of this strategy, it is difficult to make good multi-year predictions.
The infinite game does have risks. Markets may have trouble evaluating long-term value, thus possibly reducing the value of our subsidiaries. Competitors may be rewarded for short-term tactics and grow stronger as a result. We understand the risks around our long-term focus. We will make business decisions with the long-term welfare of our company and clients in mind and not based on accounting considerations.
Risk vs reward in the long run
The business environment changes rapidly and needs long term investment. We will not hesitate to place major bets on promising new opportunities.
We will not shy away from high-risk, high-reward projects because of short term earnings pressure. Because we recognize the pursuit of such projects as the key to our long-term success, we will continue to seek them out. For example, we funded projects that had a 10% chance of earning a billion dollars over the long term. Do not be surprised if we place smaller bets in areas that seem very speculative or even strange. We continue to seek projects further outside our current businesses, especially when the initial investment is small relative to the level of investment in our current businesses.
We encourage our subsidiaries, in addition to their regular projects, to spend 20% of their time working on what they think will most benefit their specialty. This empowers them to be more creative and innovative. Many of our significant advances may happen in this manner. Most risky projects fizzle, often teaching us something. Others succeed and become attractive businesses.
Our structure is decentralized. Luis and I have known each other for over 15 years. We lead the company collaboratively with me as the Chairman.
To make timely decisions, Luis and I speak often to update each other on the business and to focus our collaborative thinking on the most important and immediate issues. Decisions are often made by one of us, with the others being briefed later. This works because we have tremendous trust and respect for each other and we generally think alike. Because of our long-term friendship, we often predict differences of opinion among the two of us. We know that when we disagree, the correct decision is far from obvious. For important decisions, we discuss the issue with mentors or a team appropriate to the task. Differences are resolved through discussion and analysis. As different topics come up, we often delegate decision-making responsibility to one of us.
We devote considerable time to the overall leadership of the company and our subsidiaries. We are extremely fortunate to also have a cohort of mentors that support us in areas that we may not be able to immediately cover. They deserve all the credit for developing us to be the kinds of leaders we are today.
Summary and conclusion
MQ is not a conventional company. Luis and I intend to continue to lead MQ with strong values. We will optimize for the infinite game. We will support selected high-risk, high-reward projects and manage our portfolio of subsidiaries. We will lead the company collaboratively as a team.
In this letter is our company’s spirit. We have reaffirmed our commitment to the infinite game. We look forward to a long and hopefully prosperous experience.
We have a strong commitment to ourselves, each other, and our vision. Luis and I will do our best to make MQ a long-term success and the world a better place.