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CEO Management Error Classification
Framework for determining when to intervene with hired CEOs by classifying potential errors as either fatal (business-ending) or non-fatal (learning opportunities).
How It Works
CEOs need autonomy to learn and build confidence. Constant intervention creates resentment and blame-shifting. Let them make expensive but non-fatal mistakes to build judgment.
Components
Define what constitutes fatal vs non-fatal errors upfront
Allow CEOs to make expensive R&D bets even if you disagree
Intervene only when business survival or reputation is at stake
Let CEOs learn from their own mistakes
Maintain clear communication channels but respect hierarchy
When to Use
When managing hired CEOs, especially in businesses where your reputation or the business survival could be at stake.
When Not to Use
In early-stage businesses where any mistake could be fatal, or when the CEO consistently makes poor decisions.
Anti-Patterns to Avoid
Example
“Andrew lets CEOs spend $2-3M on R&D even when he disagrees, because if he intervenes, they'll blame him for holding back strategy and bonuses. Better to let them learn from expensive but non-fatal mistakes.”