Why You Shouldn’t Take Someone’s Feedback If They Have No Skin In The Game

There’s a common misconception among startup founders that all feedback you receive should be embraced, internalized, and even implemented — no matter who it’s coming from. You can always improve, right?

Wrong.

In theory, embracing feedback from a broad and undiscerning spectrum of people makes sense, especially if you’re a B2C company. But in practice, trying to lend credence to so many differing and often unqualified perspectives quickly proves inefficient. In fact, it can hurt your business rather than help it. This especially applies if you’re running a startup where forward progress is paramount, and time and capital are always in limited quantities.

I’m currently the Head of Studio at a mobile gaming company called Glu Mobile, and this is something I learned firsthand while my co-founder, Dennis, and I were still independent at Dairy Free Games (acquired by Glu). I can’t tell you how many times we held focus groups to talk to gamers firsthand — which ended up being a waste of time — or received both solicited and unsolicited feedback from industry veterans. Everybody loves to give feedback it turns out — it makes them feel helpful and appreciated. But all feedback is not created equal, even if it comes from an industry veteran who you know and respect.

So now for a short story.

We were a few months away from beta on a new strategy game and had been tirelessly working on tuning our battle system. Excited to show it off, we went on a little roadshow, showing it to gamers and peers in the industry. Eventually, we ended up showing it to a high-level exec at a more established company, and guess what his feedback was: start over.

Long story short, we took that feedback hard and went back to the drawing board. We spent the next few months coming out with an entirely revamped battle system (delaying our beta in the process). We then showed him again, and he loved it! We were ecstatic at first, but then reality set in. There was an opportunity cost to implementing that feedback — a cost he surely didn’t think through when he initially gave it to us.

In the process of revamping our battle system, we diverted attention away from other important features in the game. And in the end, the features we deprioritized were the features that mattered most to us as a business (you know, the features that actually make us money and keep the players engaged weeks after installing). And the battle system, while improved, did not move the needle without the other systems in place.

The fault, though, was entirely our own.

The truth is, not everyone is properly equipped to provide relevant feedback. Moreover, not every person you encounter or receive feedback from will be properly incentivized to temper their feedback or take the time to ensure their advice is prudent, realistic, or cost-adjusted. Everybody understands the benefit of their feedback, but few understand the cost.

Ultimately, the best people to really take feedback from are those who are somehow involved with your company — someone who’s invested in its success and someone with something to lose.

People who have something to lose if your company fails provide more meaningful feedback.

The reason is simple: they have a vested interest in your company’s success.

Whether it’s an investor who could lose money if your company loses customers, an advisor whose reputation is on the line, or an engineer (especially one with meaningful equity) who’s dedicated hours to designing an aspect of your core product, people who have skin in the game will always provide you feedback that, if not immediately valuable, has at least been carefully thought through. They’re actively and tangibly disincentivized from providing feedback that’s incorrect, illogical, or overly risky.

As it happens, people without tangible investment in your company are much more likely to give that kind of feedback — the kind of feedback that excites them, but that hasn’t been tempered by the sort of serious thought demanded by decision making with real repercussions on the line.

People without skin in the game often only see the benefits of their feedback — not the potential negative ripple effects.

In implementing someone’s feedback or advice, there are always ripple effects — unforeseen repercussions affecting your company roadmap that result from the strategic decision or adjustment in question.

Those without real investment in your company’s success will most of the time not conceive of the more negative potential ripple effects of their advice. They’ll only be able to see — and will usually overestimate — the potential positive results. And that sort of feedback is inherently incomplete, even when it comes from people who mean well, like friends or family.

Especially when dealing with friends or family, remember the Dunning-Kruger Effect: people who don’t have a lot of knowledge tend to think they know more than they actually do, while people containing actual knowledge have a tendency to underestimate their abilities.

For this reason, it’s critical that you work to understand where each disparate piece of feedback you receive is coming from so you can determine whether it’s the sort that you should lend credence to, or take with a grain of salt. Stealing from the Ray Dalio playbook, I’ve learned to constantly assign Believability Scores in real-time to the individuals providing me with feedback, which has been especially great to keep me sane during any startup networking event where unsolicited feedback is always free-flowing.

If you’re going to take feedback from someone who isn’t involved in your company, they at least need to have experience in the field you’re trying to break into or have lived through your scenario.

There is one exception to the rule regarding this need for critics and coaches to have skin in the game and it comes in 2 parts. If the person giving you feedback does not have skin in the game, they must be:

1. A domain expert with hard-won experience in your industry; or
2. An individual who has lived through a very similar scenario in a different industry

This is because, in general, the best feedback is born from personal experience: the mistakes that those committed to the same endeavor have made and learned from; the battles they’ve waged and lost; the lessons they’ve learned.

In fact, the only people without skin in the game that you should receive feedback from are those who, so far as you can tell, have truly internalized the lessons they’re giving you on a personal level. Knowledge, wisdom, expertise — these things are earned. Anyone claiming to possess them who hasn’t actually taken any meaningful risks themselves shouldn’t be granted that same credence.

Side note: When soliciting feedback, be weary of generalists or those claiming to be macro-experts in your field. For me, just because a person is another founder of a gaming company does not mean they are the best person to get advice from in all cases. Go out of your way to find a domain expert or a person who has lived your exact scenario and has the battle scars to prove it. You may think you are the only one who has been in your situation, but in the majority of cases, you are not special — be happy about that.

No matter where feedback is coming from, be weary of quick, sweeping, absolute advice.

This is the all-important corollary to the above: always be weary of advice that feels overly aggressive or absolute. Afterall, only a Sith deals in absolutes.

That was one of the primary issues with the feedback my team and I received from the executive in my story. Telling someone else to redo something is really easy. But truly understanding how that change impacts literally everything else you’re doing is a lot harder, and necessitates a more in-depth understanding of the subject in question.

At the end of the day, every piece of feedback you lend credence to should itself appreciate the nuances of your particular situation. It should be informed by personal experience and expertise, and it should be genuine, coming from someone who has skin in your game.

If it doesn’t, listen with weary ears. Five years from now, you’ll be happy you did.

For those who are interested, here’s a quick checklist I run through internally when receiving feedback:

Take feedback from:

1. People with skin in the game
2. People who are domain experts in your industry who have taken risks in the past and have the battle scars to prove it
3. People who may be in different industries but have dealt with very similar scenarios and have the battle scars to prove it
4. Customers — especially PAYING customers

Do not take feedback from:

1. People who have never taken significant risks in the past — these people are terrible at assessing risk and the cost/benefit of their advice.
2. People who give feedback, especially sweeping and radical feedback, too quickly — this means they haven’t internalized the problem or the risks associated with their feedback.
3. People who talk like politicians — these people can’t empathize with your problem which means they haven’t actually been through shit or can’t/won’t talk openly about mistakes they have made in the past.
4. People whose feedback seems overly complicated — people with no skin in the game always seems to propose complex solutions since they have an incentive to seem sophisticated instead of just solving the problem quickly.