Good Risk, Bad Risk

A friend recently spoke with me about his love for risk. Wait a second! Red flag. Isn’t that like saying you love driving 130 mph on a motor cycle through traffic?

Well, not quite. Richard Branson is quoted, saying: I have always thrived on havoc and adrenaline. Does this make Branson irresponsible? Before you make an effigy of me for defaming our British entrepreneurship patron saint, let’s take a step back. Risk is essential. Risk often means reward.

I too enjoy risk. Some risk makes me feel on edge, alive, and in the moment. Other risk makes my stomach churn, causes insomnia, and generally, I worry, shortens my life expectancy.

But what’s the difference? The differences are as follows:

1) Good risk is invited. Bad risk is unexpected.

2) Good risk is well-researched and has a clear intent. Bad risk comes without a solid purpose or concrete knowledge.

3) Good risk has tremendous upside and a controlled/understood downside. Bad risk is variable in ways that could cost you dearly.

So, until I think of more, suffice it to say that good risk: Invited, expects a reward, and has an understood downside. Bad risk is ugly and can make a good mess of things.

Good risk for startups: My parents will support me and I’ve got a job waiting (lifeboat). I won’t starve, and you know what - I’ve done my research and talked to stakeholders. The idea could have legs. A prototype is fast on the way.

Bad risk for startups: So and so just left and I think is going to sue us. We didn’t due proper paperwork, so technically he/she owns an equal share. We said some things we shouldn’t have. Things got out of hand.

Can’t you feel your stomach churning? But more so for the latter I hope. Because the first should excite you, if you’re a junkie like me. And if the second doesn’t scare you, it should. As Andy Grove says, ‘Only the paranoid survive.’ And as I’ll go ahead and say: Only the potential-seeking make it big.

You’ll never find gold if you don’t go looking for it.

 
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