Risk

Thentrepreneur 

Risk

Intro

I find the way entrepreneurs deal with risk extremely fascinating. They usually approach it in a very different way compared to most people. Risk often gets viewed negatively as something to be avoided, but a good entrepreneur understands that risk is an opportunity to develop and progress in their respective fields. Every risk you take is like rolling the dice, but the difference is that your efforts in the process can influence the outcome.

Risk & Innovation

"Innovation and risk are closely intertwined. Without taking on risk, don't expect to be innovative. As Simon Sinek said, "Innovation is doing something that fails, fails, fails, and sticking with it because we can see the light at the end of the tunnel." A real-life example of this is Elon Musk. In October 2002, when PayPal was purchased by eBay, Elon's 11.7% share of PayPal made him $175.8 million."

By 2008 that money was entirely invested in two extremely risky and experimental companies SpaceX and Tesla he did this to the extent that he had to borrow money from friends and family to pay for his daily expenses. Elon is now one of the most influential and wealthiest humans on earth.

Understand that risk is opportunity

Anything that is significantly innovative will by default come with a significant level of risk. If you want a big outcome you must take big chances. This is why almost all of the most well-known entrepreneurs are so successful because they took on such high levels of risk that most people simply would not be willing to do. They are the 1% because they are willing to do what 99% of people aren’t willing to do.

If you do what everyone else does you will logically end up in the same place everyone else will. It’s a simple input-output equation therefore if you want a non-average result you must do non-average actions usually resulting in risk if that be humiliation or financial loss.

Mark Cuban.

Like Elon, Mark Cuban is a serial entrepreneur, before becoming the owner of the NBA’s Dallas Mavericks and one of the faces of Shark Tank (knock-off Dragons Den basically) Cuban launched various technology companies.

Unlike Elon, Mark is not energised by the prospect of risk. Although Mark agrees that accepting a certain level of risk is a vital component of being a successful entrepreneur. His relationship with risk is still a reluctant one “I hate risk” he told Creativelive “I’m terrified of it” he manages it by preparing obsessively and selecting risky options that have a worthy payoff.

Why do they do this?

Many entrepreneurs are willing to take on high levels of risk because of their underlying passion for their vision. Elon so strongly believes in his vision for a self-sustaining colony on Mars that to him sacrificing a few Billion dollars for the survival and prosperity of humanity is a worthy course. To him, the vision is so strong and meaningful that it outweighs the risk this is summarised quite elegantly in this quote by Elon “When something is important enough, you do it even if the odds are not in your favor”.

So basically…..

These wildly successful entrepreneurs are proof that a risk-averse approach or taking uncalculated risks are not the best strategies. Success lies between these two. In general, most people don’t take on enough risk but to take on more risk, you must be willing to prepare and work like hell to make sure that you optimise the probability of success with the decisions you make. If Elon hadn't worked as hard as he did, none of his risky decisions would have paid off.

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Interesting Video

Thank you for reading i look forward to seeing you next Monday!

Thomas❤️

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