I don't put money into things I can't explain

I have one rule with money.

It's so simple it's almost embarrassing.

If I can't explain it, I don't put money in it.

Not explain it like an expert. Explain it like I would to a friend over a coffee. Where does the money go? What does it do there? How does it come back? And what could go wrong on the way?

If I get stuck on any of those, the answer is no. Even if everyone around me seems to be getting rich. Especially then.

Before I go on: this isn't advice. I'm not qualified to give it and I'm not trying to. It's just how my head works with money, and I suspect it says more about me than about money.

Where the rule comes from

Nobody in my family ran a business. There was nobody at home to ask about any of this. I learned to build websites from free courses, at night. I learned about money the same way: slowly, on my own, with a healthy fear of what I didn't understand.

When Yeray and I started Foxnice with nobody else's money, that fear was useful. We couldn't afford to lose what we didn't have. So we only spent on things we could see working.

That habit stuck.

The agency itself is the clearest example. I can explain it in one breath. A client has a problem, we fix it, the client pays, and part of that money pays for our own products. No magic. No story that needs a slide deck.

It's slow. But I know exactly why it works, and exactly how it could stop working.

If you need a complicated story to explain where your money is, it's probably not where you think.

What the rule costs me

I'd be lying if I said this rule was free.

I've almost certainly missed things that went up. Things I didn't understand and didn't touch while other people did very well. That happens. I can live with it.

What I'd find much harder to live with is losing money on something I couldn't even describe. Losing on a bet you understood is a lesson. Losing on one you didn't is just noise with a bill attached.

It also makes me boring company in certain conversations. When someone gets excited about the next big thing, my first question is "how does it make money?". It's rarely the question they want.

What "explain" really means

The trap, I think, is confusing "I've heard about it a lot" with "I understand it".

Familiarity feels like knowledge. It isn't. I can hear about something every day for a year and still not be able to tell you how it fails.

So my test isn't "do I know what this is". It's "do I know how this goes wrong". If I can list the ways it breaks, I'm starting to understand it. If I can only list the ways it wins, I'm just excited.

That's the same instinct I use with clients. A website I understand is one where I know where it usually breaks. Money shouldn't get a lower standard than a contact form.

So the rule stays. Short, a bit dull, sticky-note size.

If I can't explain it, I don't buy it.

And if I can explain it too easily, I check again.