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In my experience, being an entrepreneur is all about taking on and managing risk well. An entrepreneurial spirit almost enjoys risk. At a firm, you usually don'
by osrec 9y ago
In my experience, being an entrepreneur is all about taking on and managing risk well. An entrepreneurial spirit almost enjoys risk. At a firm, you usually don't get much material risk exposure to manage, so entrepreneurial individuals end up seeking out opportunities that can give them a more direct handle on their risk exposure (and any subsequent rewards). More often than not, this means starting a company where you largely decide which risks you're comfortable accepting, and which risks you prefer to avoid. The thrill is in navigating those risks using your guile to deliver value much above the expected risk premia for your domain. I worked in an investment bank for a few years, but the risk environment was too restrictive for me to really make a mark (from a job security perspective also, I'd often see lifers get the boot, so never really felt comfortable, even though on paper I should have been). Thus I quit, started my own company, took on a great deal more risk, but still experienced more work satisfaction. I think what I like most is the ability to take your professional future by the horns without any artificial constraints holding me back. For me, what it comes down to is this: entrepreneurs despise restrictions, and modern companies can't seem to exist without them.
- mlevental 9y agoyou're equivocating. first you say it's about risk seeking/management and then you say it's about agency/independence. personally I strongly believe it's the latter. if you derisked my startup for me but let me stay in control I would be much happier. eating the risk is the premium /I'm/ paying for the agency - it's that opportunity that you don't have in a large company (trading risk for freedom).
- psyc 9y agoThere's overlap. The herd instinct reduces risk.
- osrec 9y agoPerhaps, but what I was trying to convey is that your own company gives you the freedom to choose your risks without restriction. Working for someone doesn't usually allow you to do that (as your boss decides your risk environment).
- shanghaiaway 9y agoNobody chooses high risk over low risk. People choose various degrees of autonomy, based on what risk they are willing to accept.
- TheOtherHobbes 9y agoTraders choose high risk over low risk. Statistically, most day traders end up regretting that choice. I suspect for a good proportion of entrepreneurs, the financial risks are low - it's either money you can afford to lose, or it's someone else's money, or both - the professional risk is low because a lot of companies will still hire you if you fail, and the personal risks are unknown and/or ignored. Being a corporate employee is actually riskier. You can be fired at will with little or no safety net, for reasons that have nothing to do with your own professional skills or mistakes.
- osrec 9y agoQuite the contrary in my experience. For most entrepreneurs, their first attempt is often make it or break it - i.e. the risk is high. The only thing is, the entrepreneur often knows that the odds are not as bad as they appear, because of their personal abilities at managing the risk. That's what they're hoping to get rewarded for eventually.
- osrec 9y agoPeople choose risk based on their appetite. For sure, we try to minimise it, but if your statement were true, no one would ever cross a street or even drive a car. People will often take a higher level of risk in order to improve the potential reward.
- chiefalchemist 9y agoRisk is relative. One person's high risk is another's snooze fest. I also feel you could factor opportunity into the equation. That is, I might accept less autonomy for more opportunity. And of course there's timing. Life is funny like that.
- throwaway84742 9y agoExcept of course tech entrepreneurs of today mostly do not invest their own capital, and therefore do not incur much personal risk.
- chepaslaaa 9y agoThe time tech entrepreneurs spend on building software that may or may not become a viable product is worth a fuckton of money.
- throwaway84742 9y agoAs someone who has been there, I’ll tell you more: I got paid with investor money, like majority of other folks in tech startups. It was maybe 1/3rd of what I’d get from an established company, but still enough to pay mortgage and provide for a family of 3. Where do you think that seed capital goes? To pay the founders and whoever they manage to hire.
- PeterisP 9y agoBut that's the point - 2/3 of what you'd get from an established company, multiplied by a few years, is a very large amount of money. If "maybe 1/3rd of what I’d get from an established company" was enough to pay mortgage and provide for a family of 3, then in the "not doing a startup" scenario you'd have earned&saved that money, and you effectively lose it if your startup doesn't work out.
- throwaway84742 9y agoSure, but it’s not like I was living under a bridge or anything. My standard of living did not change one iota. The stereotype of a starving founder is just not true most of the time. In fact I’ve yet to meet a founder who did not pay him/herself a pretty good upper middle class living wage. Not millions, natch, but still six figures.
- 9y ago
- chiefalchemist 9y agoActually. I'd say it's not about taking risks, but mitigating them. Perhaps this is what you mean by "manage them"? A normal person looks at a problem, see the risks, can't see how to get around them, and backs down. An entrepreneur see the same problem, the same risks, identifies possible ways to mitigate the risks, and then attacks. Entrepreneurs as risk takes is myth, or at least a false label.