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On Risk and Life
“Anyone who has never made a mistake has never tried anything new.” -Albert Einstein
I remember when I was learning how to ski I was told that if I wasn’t falling I wasn’t trying. So I fell time and time again. Eventually, falling paid off and I became a good skier. This is true in life as well. If you are not falling down, so to speak, you are not really trying.
I blogged about this principle last summer and it offended a lot of people. I see this a lot with accountants. Accountants aren’t risk takers. It easy to get good at accounting and then point your finger and shake your head at those who are actually trying to do something truly entrepreneurial. I have no respect for people who look at risk takers with disdain. Risk takers drive this economy. One entrepreneur can put money in the pockets of thousands upon thousands of people. I’m not trying to single out accountants here. Many others who are employed by risk takers also mock those same risk takers. Look at lawyers. A corporate lawyer’s job is to mitigate as much risk as they can. That’s fine but the problem is that risk (often high risk) is a reality of business. A lot of times lawyers end up botching deals with even minimal risk because they could not mitigate all the risk. Guy Kawasaki has a great saying about this: work with lawyers who want to do business, not prevent it. For an excellent example of this read how Joe Mansueto dismissed his lawyers, changed a term sheet on his own and bought Inc. Magazine. It’s a great story.
I made the decision a long time ago that I didn’t want a Fortune 500 career. I want to work with start ups. That may mean running them, working in them (as I am doing now), consulting for them, teaching students about them, etc. The career path I have chosen is a little more risky (albeit a calculated risk) than what other may have chosen. That may mean switching jobs on a frequent basis. That may mean many emotional ups and downs. I have never regretted this decision. I have never once asked “what if”. I am associated with a gentleman who had a long Fortune 500 career. He recently left that world for a start up. He said this to me: “I have never felt so alive. I wake up in the morning happy and excited about the unknown. I wasted my best years in trade for what I believed was a ’secure’ job.”Â
I feel the same way. I tried my hand at a “good”, “secure” corporate job for three and a half years. It was the worst employment situation of my life. I have never worked with such dumb people, been so disrespected and depressed in my whole life. It was like being a puppet. My last day there was one of the happiest days of my life! I have never looked back. Never.
Life is great! I had the best year in 2006. I have a cool job at Podango. I love to teach. I write. I will be launching my own podcast this month. I do some consulting work on the side and I work with start ups all the time. I really couldn’t be more blessed financially or otherwise. I can’t imagine how sad and depressed I would be if I shuffled paper all day or did the books all day or sat staring out a window wondering “what if”.
Robert Frost wrote “Two roads diverged in a wood, and I - I took the one less travel by, and that has made all the difference.
Amen.
I think people get risk all wrong. Smart entrepreneurs are “risk” takers, but they aren’t gamblers. I think they do all they can to minimize risk because they are smart and do their homework, but they are also willing to jump in the water when they know they need to jump in the water knowing darn well they may have to swim alone for a while.
Other people say they don’t like “risk,” but what they are really saying is that they don’t like to gamble and they don’t like to put skin in the game to learn all they can to make a smart decision.
In my mind “i’m not risky” is like saying “I’m too lazy.”
Left by Russell Page on 12/29/2006I’m watching a situation occur with a friend of mine that’s making me wonder if there are some people who just aren’t cut out to take risks. My friend, an entrepreneur, sold the company he started and managed to a guy who was previously the CFO of a $75M company but who thought that if a bunch of college kids could take a company from nothing to $1.5M in a few years then he, with all his experience, could take it to $10M.
Unfortunately, he’s only brought in something like $700K since he bought the company. He took the risk, but he’s failing and it’s costing him big time. Is it the fact that he’s an accountant that accounts for the failure? No, although it is amusingly coincidental based on this post. Is it that he’s too used to working in a big company and doesn’t get startups? I don’t believe so. I think his problem is that he’s not willing to admit that he’s a failure. He’s not willing to admit that he, with all his experience, isn’t doing as well as the kids who started the company did with it, so he figures he must have gotten ripped off in the deal somewhere.
The sad thing is that if he would just admit he was a failure, then he could identify the problem, fix it, and become a success. Arrogant people just aren’t cut out to take risks. Humility, or seeing things as they truly are, is the key to being successful in business in the long term, and often in the short term as well. Ha, accountants. I love mine though.
Left by Joshua Steimle on 12/29/2006@ Russ
You are absolutely right. Those who say that entrepreneurship is gambling simply do not understand the nature of risk. They equate risk with gambling when nothing could be further from the truth.
Entrepreneurship is about calculated risks not gambling. The thing that is funny is that in business we take calculated risks all the time. Corporate managers risk others money - that’s easy. Entrepreneurs usually risk it all.
Talk about separating the men from the boys.
Left by Chris Knudsen on 12/29/2006@Josh
Its amazing what hubris does to an individual. I have seen this very same thing happen before but with a relative. His business folded and he blamed everyone but himself. It was disgusting.
You only learn from mistakes when you are willing to admit that you’ve made them.
Accountants have there uses. I’ve had good ones myself but…well I’ve said my peace about accountants
Left by Chris Knudsen on 12/29/2006Nice post, Chris. Enjoyed reading it.
Left by Blake Snow on 12/29/2006Great post Chris. We have a lot in common. I agree with most of the points that have been made. I would also add that taking risks is sometimes over-glamorized, and it is often assumed (not by you guys), that the more risks you take the greater the reward. That correlation does not always exists (and correlation is not causality). While that is generally true, I think that there is something to be said for being deliberate and picky about the risks you are willing to take. I also agree with Josh’s point about the humility - it’s hard to be successful long-term if you’re arrogant because you’re blinded by your desperation to see things a certain way.
Left by Darren Johnson on 12/30/2006This was a good read. thanks. People need to remember that risk is what fuels the world we live in! Some small, some large but without risk we never grow and never become better (as people, as companies, as a country, etc).
Thanks again, good read.
Left by Christer Edwards on 12/30/2006[...] Some of my best posts were made great by the comments not by my commentary. Last August I called out CleanFlicks. There was a great debate about the merits and morality of this business in the comments. I’m still getting comments on the post. Just the other day I blogged about risk and Josh and Russ piped in on the comments with some great value add commentary that I felt really completed the post and complimented my points. [...]
Left by Chris Knudsen on Utah Business and Entrepreneurship on 01/02/2007