Is there a level of early success in a career or firm that’s the optimal foundation for long term sustained success? Are there fields where too much success too early means a level of scrutiny that’s unhelpful? An erosion of necessary humility? A creation of incentives that lead to premature scaling?
In venture capital, firms that enjoy too much explosive success in their Fund 1 tend to be given a very long rope from LPs who automatically re-up for several subsequent funds. With a long rope, GPs can hang themselves by over scaling. Size tends to be the enemy of greatness in fund returns. I know of GPs who hit it out of the park with a $10M Fund I. Fund 2 is $200M, Fund 3 $300M, and within a decade their AUM is over a billion. The later fund returns never approach the high water mark of Fund I.
Now, of course given a binary choice, you’d rather your first fund be successful than not successful, and early success does produce advantages that compound. You can attract better talent, for example. You spend less time fundraising from LPs and thus have more time to focus on investing. And so on. So, there’s an “optimal” amount of early success that’s well north of merely average for positioning you for great long term success. But optimal but is probably less than “maximum.”
In short, a Fund 1 that returns 4x might be better for long term franchise returns than the Fund 1 that’s a 10x.
In athletics, there are plenty of examples of youth who flourish early but then wilt under the excessive scruinity their early success attracts. David Epstein’s work also points to premature specialization of youth athletes — a kid who starts to break out as a star soccer player in middle school is whisked into club teams and told to specialize. Perhaps counterintuitively, early specialization actually reduces their readiness for a long term professional career in that sport.
Finally, I’ve heard an argument that late bloomers (in whatever field, but especially artists) often experience high levels of productivity early in their career and then experience long dormant periods. They re-emerge as a late bloomer — which is when they make their signature contribution to society. If true, did something happen in their early years in which they were too productive? Could they have been a medium-length bloomer (instead of late bloomer) if they didn’t come out of the gate so strongly?
Compounding loops and the rich-get-richer effects and the early-bird-gets-the-worm effects are real and pervasive. But perhaps we don’t say often enough, about people or firms: “She has a great future but I worry she’s had too much early success…“
Morgan Housel speaks of early success being the death knell for investors – poor foundations combined with overconfidence can be a ruinous combination.
Perhaps it’s just my bias, I think the most likely way this could be a real problem is probably psychological, related to humility/hunger. It’s kind of like how people often recommend to not share your goals publicly before you have done the thing, because doing so destroys motivation. By striking success early, some people may feel they have already proven themselves, or that the expectations for their next venture are too high, which causes them to freeze. May be better for some to stay under the radar and build up a resume over time while motivation is still strong.