How Much More "Moving Fast and Breaking Things" Can We Take?

After more than a decade of withstanding the blowback from the "Move Fast and Break Things" era, it remains to be seen whether we'll ever learn from our mistakes

Since the great financial crisis, those accessing the capital markets have seen meteoric highs — including an earth shattering number of unicorns and IPOs — and tumultuous lows — including record inflation and drawdowns rivaled only by the GFC.

With the dawn of a new year, we find ourselves at a timely inflection point to reflect on, and (hopefully) learn from, what appears to be an all-time low for the Move Fast and Break Things (“MF&BT”) era.

In early 2012, a 28-year-old bright-eyed and bushy-tailed Mark Zuckerberg decided to take the company formerly known as Facebook public. With the GFC in the rearview mirror and a cool $1 billion of net income reported on its financial statement, Facebook ushered in a new era of corporate culture that would change how startups and public companies alike would approach growth, the capital markets and engagement with society writ large. In Facebook’s preliminary prospectus, Zuckerberg described one of the company’s “core values” as the ability to “Move Fast”. He explained:

Moving fast enables us to build more things and learn faster. However, as most companies grow, they slow down too much because they’re more afraid of making mistakes than they are of losing opportunities by moving too slowly. We have a saying: “Move fast and break things.” The idea is that if you never break anything, you’re probably not moving fast enough.

That last sentence is critical, and it defines the very ethos of the decade-plus of MF&BT that would follow: moving fast is necessary for growth and development, and breaking things is simply an unavoidable externality of moving fast. From Travis Kalanick’s forced exit from Uber, to the meme stock and SPAC flashes in the pandemic pan and the downfalls of Theranos, WeWork and, most recently, FTX — each failure (admittedly distinct in degree, kind and magnitude) was, ultimately, a product of the MF&BT zeitgeist.

Of course, Facebook was not the singular cause of some, or any, of these events. But Facebook surely catalyzed the MF&BT era and culture that has pervaded many of the “disruptive” companies that have followed the path paved by the social media company.

However, with Zuckerberg subsequently changing Facebook’s motto to “move fast with stable infrastructure” (admittedly, not quite as catchy) and then simply to “move fast”, it’s quite possible that we’re seeing the end of the MF&BT era, culminating in the collapse of a few notable MF&BT figureheads.

For one, the epic collapse of FTX and the Notorious SBF (Sam Bankman-Fried) serves as a case study on the massive potential downsides associated with a focus on “moving fast enough.” As the NYT reported based on their recent interview with SBF:

Mr. Bankman-Fried did, however, agree with critics in the crypto community who said he had expanded his business interests too quickly across a wide swath of the industry. He said his other commitments had led him to miss signs that FTX was running into trouble.

Basically, in the absence of the traditional risk management guardrails typically implemented by established firms with clear track records (say, I don’t know, Jane Street), a group of twenty-somethings living it up in the Bahamas put together a crypto trading firm devoid of risk management parameters in a nascent and yet-to-be properly regulated industry with the singular goal of scaling as quickly as possible. Sound familiar?

Now, with SBF likely facing life in prison, there stands but one remaining bastion of the original cult of MF&BT: the “Chief Twit” himself. Though some ardent fans and sycophants continue to support Elon Musk’s vision for Twitter, all signs point to Twitter’s eventual demise due to the MF&BT culture (that is, unless Musk indeed relinquishes control, both in title and in practice, which remains to be seen). From moving so fast as to not fully appreciate that he had in fact entered into a definitive agreement to purchase Twitter, to moving so fast as to alienate half of the platform’s top advertisers, Musk has certainly moved fast enough to break things at Twitter. Indeed, he would’ve even broken the merger agreement had the Delaware Chancery Court not held firm.

In fact, Musk has moved so fast and broken so much since taking over Twitter that Tesla has plummeted more than 73% from its all time high. Although there are a number of factors contributing to Tesla’s stock market decline, it’s clear that the stock’s recent drop is due in no small part to Musk’s erratic behavior in the public eye, his continued sale of Tesla stock, and the investing public’s understandable view that his time is finite and each hour he spends tending to Twitter is an hour not spent in his capacity as CEO of Tesla.

Musk recently explained “why moving quickly [as CEO of Twitter] is so important”:

I'm a big believer in like you want to look at the net output, so it's sort of like, “What's the batting average?” If it's like baseball, the point is not that you hit the ball but it's like well how many home runs you get […] it's like you've got to swing for the fences. You're gonna strike out a bit more but we're gonna swing for the fences here at Twitter and we're gonna do it quickly and I think, generally, my error rate, and sort of being the Chief Twit, will be less over time […] so I think we're actually executing well and getting things done I think we'll have fewer pure gaffes in the future.

In the MF&BT world, the mistakes don’t matter if you ultimately hit a home run. The problem is that moving so fast as to not consider the implications and consequences of those mistakes can be negligent, at best, and criminal, at worst.

Which brings us to today: With 2022 in the rearview, what does the future hold for the MF&BT movement? Although its best days are likely behind it, we have certainly not seen the last of it, and may well see permutations of it for years to come. Thus far, our institutions have been able to withstand unique and material stresses caused by these companies. Our courts held Elizabeth Holmes accountable for the Theranos fraud, Musk accountable for the Twitter deal, and appear poised to hold SBF accountable for the collapse of FTX. Meanwhile, the markets are increasingly reverting to the mean — allocating capital away from ultra-high-growth “story-telling” companies and short-term crazes like meme stocks and SPACs, and towards companies with strong fundamentals and clear paths to profitability. Unfortunately, although the same cannot necessarily be said for our dysfunctional and slow-moving legislature and executive branch, there are signs that Congress (e.g., on antitrust and crypto) and administrative agencies like the SEC and CFTC are looking to catch up.

The real question is whether the next decade will be one of continued resilience (or worse, decay) in the face of the MF&BT culture, or if it we will be one finally defined by corporate antifragility. The key to making sure it’s the latter: implementing effective guardrails that draw on lessons learned from the last decade. This is particularly true in the legislative arena, which is currently the weakest link by far, but the most crucial for establishing enduring—antifragile—strictures.

As Nassim Taleb writes in his book of the same name:

Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better. This property is behind everything that has changed with time: evolution, culture, ideas, revolutions, political systems, technological innovation, cultural and economic success, corporate survival, good recipes (say, chicken soup or steak tartare with a drop of cognac), the rise of cities, cultures, legal systems, equatorial forests, bacterial resistance … even our own existence as a species on this planet.

The true test will be whether our institutions can become antifragile in the face of MF&BT culture. Doing so will not only prevent future corporate calamities at the hands of reckless actors, but will also foster a healthier capital market and ensure that those seeking to access it do so responsibly, with an eye towards long-term, sustainable, growth.