The Costly Mistake That Changed My Investing Approach—and Why I'm Doubling Down on a Founder-Led Visionary

How Short-Term Thinking Can Cost You a 14-Bagger

It’s easy to feel invincible when a stock nearly triples in just a few years. That’s exactly what happened when I held Amazon (NASDAQ: AMZN) in 2014—my confidence was at an all-time high, and I felt like I was playing with house money. So when the company announced the Fire Phone, a product I genuinely disliked, selling the stock seemed like the obvious move. The reasoning was simple: if management was willing to pursue such a questionable idea, maybe they’d lost their way.

The painful truth? I was right about the Fire Phone being a flop. I was spectacularly wrong about Amazon.

While that phone became a footnote in tech history, the company went on to become a 14-bagger—delivering fourteen times my initial investment. More importantly, I missed out on witnessing the company’s expansion into Web Services, its acquisition of Whole Foods, the birth of its advertising empire, and the launch of Amazon Prime. Each of these “bad ideas” that could have scared off risk-averse shareholders turned into transformative business pillars.

The Three Lessons That Nearly Escaped Me

That early mistake taught me three invaluable lessons about investing in founder-led companies:

First, avoid the trap of short-term thinking. Successful entrepreneurs expect to experiment, fail occasionally, and iterate. Amazon under Jeff Bezos wasn’t afraid to swing and miss—and that mindset created the company’s ecosystem of innovation.

Second, trust the founder. Data consistently shows founder-led companies outperform the broader market. When a visionary has skin in the game, their incentives align with long-term value creation, not quarterly earnings management.

Third, don’t bet against a company’s willingness to innovate. Even imperfect attempts at new markets reveal a management team committed to growth and adaptation. That’s the hallmark of companies that compound wealth over decades.

When History Repeats: The TransMedics Aviation Gamble

Fast forward to 2023. I’ve internalized these lessons, and they’re being tested again—this time with TransMedics Group (NASDAQ: TMDX).

I’d picked up the stock at the beginning of 2023, riding early momentum as the company’s Organ Care System proved itself invaluable. OCS technology keeps donated livers, hearts, and lungs viable during transport—a substantial improvement over ice storage and a game-changer for transplant outcomes.

Then came August 2023: management announced the acquisition of Summit Aviation, a capital-intensive business that immediately triggered my old instincts. My first thought? “Margin compression. Game over.” The market agreed harshly; the stock was cut in half over the following months.

But here’s where I applied the Amazon lesson. I did nothing. No panic selling. No second-guessing. Just patience.

The Vindication of Patient Capital

By year-end, CEO and founder Waleed Hassanein unveiled the full vision: a nationwide logistical network that could revolutionize organ utilization rates and donation outcomes. It sounded ambitious. It sounded risky. And it sounded exactly like what a founder-led company should be attempting.

Two years later, the results speak for themselves:

• Stock price has tripled from 2023 lows
• Sales have more than doubled in the same timeframe
• The in-house aviation unit now handles 78% of transplants under the National OCS Program
• Most recent quarter: 32% transplant revenue growth, 35% logistics revenue growth
• Net profit margin reached 17%

My initial concern about margin erosion proved partially valid—gross margins did decline slightly. But free cash flow margins expanded dramatically, revealing that the aviation acquisition wasn’t a drag; it was infrastructure investment that’s now generating returns.

The Growth Runway Ahead

TransMedics has set its sights on more than doubling transplant volume to 10,000 procedures over coming years. Beyond that, the company is preparing to enter kidney donation and international markets—opportunities potentially several multiples larger than current operations.

Yes, skeptics will point out that new product lines face execution risks and that expanding into unfamiliar territories requires flawless capital allocation. They’re right to note these concerns. But I’ve learned that these are exactly the moments when founder-led companies prove their mettle. Hassanein and his team have already demonstrated their ability to execute on ambitious pivots. That’s worth more than any wall of worry.

The Bottom Line: Learning From Others’ Wisdom

As Warren Buffett wisely noted, “It’s good to learn from your mistakes. It’s better to learn from other people’s mistakes.” My Fire Phone miscue cost me a fortune. But refusing to repeat that error with TransMedics? That discipline is worth far more.

Every dip, every new market entry, every expansion attempt from a founder-led company deserves patient observation. History suggests that’s where real wealth compounds—not from perfect markets, but from trusting visionaries to execute on their long-term dreams.

I’ll keep adding to TMDX, keep letting it flow with this management team’s vision, and keep applying the hard-won lessons from the stock I should have held forever.