Risks, I’m sure that at one time or another you have all had the thought of taking some sort of risk. It could have been something as simple as creating a new dish, to starting up your own business. Others may have had the idea of just simply inventing something that’s needed but not available or yet created. Those would all be great ideas. I for one can share that the thought of owning my own business has definitely crossed my mind, and quite often. Maybe even so often that I could start renting space out for it in my brain. 🙂
But seriously speaking, there is nothing wrong with it. Why not create that amazing dish? Why not do your own thing? Why not work for yourself? But then, the real questions kick in. Will I make it in this cruel world? Will my business succeed or fail? How would I pay my bills while I grow my business? Trust me, these are all great questions, and they all run through my mind as well. I guess it all comes down to, taking the chance and giving it your all. Nevertheless it all becomes part of the unknown.
Well, I just recently came across an article by Mark Lurie the founder and CEO of Codex Protocol. The article is titled “Why Founding a Startup is Less Risky Than you Think,” and let me share, that it’s a definite must read. I am so inspired by this article, that I had to share with all of you. I just may begin to put some of his ideas into play once and for all. But don’t just take it from me, enjoy the article for yourself below.
People confuse risk with the unknown.
Standing in the desert at night is terrifying, but the day doesn’t feel as scary because you can see what’s around you. However, it’s during the day that you run the risk of heat stroke.
This is not unlike taking the leap from your 9-to-5 and starting a business. It’s a world made up of unknowns, requiring you forge your own path.
But the data says this kind of entrepreneurship may not actually be that risky. Startup founders generally end up really well — better than equivalently talented people working at law firms, banks, or hedge funds. More traditional paths like these often have steep promotion pyramids that employees must climb to make partner or manager.
Don’t get me wrong, startups still come with risks. But they are dramatically less and different than you might assume. Let’s examine the types of risk associated with a startup:
1) Financial Risk Is A Red Herring
Despite what many people think, the financial risk of starting a company is actually the smallest risk of all.
Whether your business succeeds or fails may seem very risky. But that doesn’t mean starting that business is financially risky to you. They are two very different things.
If you invest your own money in a business and it fails, you lose your money. But, if you raise even a relatively small amount of money for your venture, and especially if you can pay yourself a salary while running it, then you have very little personal financial risk. If the business fails, then it’s just like losing another job — and you can always lose your job no matter where you work.
And if the business succeeds, well, that’s the best possible outcome.
2) Career Equity Is What Matters
It turns out that even failed entrepreneurs usually do great.
Look at Julie Wainwright of Pets.com. The site raised hundreds of millions of dollars and then went on to be the biggest failure of the dot-com boom. But despite the massive financial failure, Wainwright is still finding steady work in the startup world, and her most recent company, RealReal, raised $173 million in venture capital as of June 2017. And she’s not the only one.In fact, the fastest way to climb up the career pyramid at a traditional organization might be failing at a business.
This is because companies don’t just want to hire someone who’s knowledgeable in their field and can do a job well. They want to hire the person who tried to start a company, but didn’t quite make it. This person is clearly a leader, has the hustle, and is going to bring incredible things to the table.
For example, say you’re a real estate agent and you decide to start a software company. It bombs. But the next thing you know, Trulia is reaching out to offer you a position as head of Business Development. They recognize that you’re a leader who took initiative to start something on your own, and you have real life experience in the exact cross-section they are in.
In contrast, you might never have worked your way up the pyramid if you had spent that same time as a line-employee at Trulia.
So, you need to make sure that what you’re proving your hustle in is what you love and are passionate about. You can’t fail at a pet-sitting startup if you really want to work in is real estate law. Otherwise, you’ll just be miserable.
3) The Biggest Risk, Regardless, Is Burnout
The biggest risk to your career success is, in fact, losing motivation.
In the corporate world, people often overlook the risk associated with starting down a career path that’s unfulfilling. Working long hours over several years doing something you’re not passionate about will cause you to burn out, which means quitting before you’ve reached the end of the path.
Look at lawyers, for example. They have to stay with a firm and work 80-hour weeks for 10-plus years before they become a partner — if they even get there. Most lawyers quit before that point because they end up hating being a lawyer. That’s a risk.
Regardless of whether you work at a law firm or start your own company, you’re less likely to burn out from long days if you’re doing what you truly care about it. It’s what you want to be doing. You’ll feel fulfilled at the end of an 18-hour work day.
And that’s honestly your best risk mitigation strategy: loving what you do. It’s a very convenient, though unintentional, outcome of this framework.
Remember: Don’t Sell Yourself Short
Too many people follow what they think is the least risky path, because they don’t do what they love. The irony is that they have only increased their chance of personal failure instead. If you want to start a company, do it. It’s not that risky. Think about the risks logically, don’t worry that the road ahead is unknown.
I’m not exactly a fan of risks. But I’ve seen what can happen after big risks firsthand with my companies Codex Protocol and Lofty. I try to frame it as taking what I’m passionate about into a new territory. I know that pursuing what I love in the face of uncertainty is more likely to have a worthwhile payoff.
It makes the “unknown” feel a little less “risky.”
Photo and Article courtesy of Mark Lurie.
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