In software, we tend to label unwanted or unexpected behavior as bugs. Funny programmers will, however, proclaim their bugs are actually “undocumented features.” Sometimes the line between feature and bug is blurry. I read of an old video game that would crash unexpectedly when the player pressed the exit button. Instead of preventing the crash, the developer changed the error message to “Thank you for playing.”
What if we take the concept of feature vs bug outside of programming? I recently spoke with a music startup founder who shared his story of an unexpected musical influence: the slowing playback speed of a Walkman running low on battery. Bug? Maybe. But for him it was a feature that drove a deeper appreciation for music’s component parts.
In investing, liquidity is traditionally a feature. In fact, there’s typically a discount factored in for securities that aren’t liquid. Talk to financial advisors, though, and you’ll hear stories of panicky client calls (😱 SELL SELL SELL!) during market turbulence. One of the ways an advisor creates value is by adding a bit of friction to prevent rash decisions. After all, I learned in school that investors tend to sell low and buy high. I invested a startup that almost immediately had cofounder turmoil. If I could’ve sold right then, I probably would have. The business has grown almost 20x and is getting stronger by the day. For me, the illiquidity of startup investing has been a feature.
Binding oneself to a course of action and removing optionality seems negative on first pass. However, it may be exactly what’s needed to stay a difficult course.