Often the difference between a successful person and a failure is not one has better abilities or ideas, but the courage that one has to bet on one’s ideas, to take a calculated risk—and to act.
—Andre Malraux, author
MANY PEOPLE STANDING ON THE threshold of their entrepreneurial dreams will say they are unable to commit out of fear and doubt. We’ve learned about one technique for confronting the doubts you might have when contemplating an entrepreneurial venture. As you’ve seen, the E-Formula offers a powerful tool for gauging the strength of your idea (and its components of innovation, desire, effort, and ability), the soundness of your personal and professional situation, and the richness of the opportunities available to support your entrepreneurial vision. Getting this equation right is your first defining moment of the Idea phase of the entrepreneurial process, and the first step toward activating the entrepreneur within you.
But you can’t stop there. To fully move through the Idea phase and into Startup, you first must come to terms with your fears—and the walls of risk in which those fears can imprison you. Taking control of your relationship with risk is the second defining moment of your entrepreneurial journey, and the subject of this chapter. Here, we’ll talk about the nature of fear, the link between entrepreneurism and risk, and the role your attitude toward risk can play in the success or failure of any entrepreneurial effort. I’ll introduce you to the Risk Box—the four-walled enclosure of possessions, age, health, and position that can grow so thick and high that it blocks you from pursuing your idea, even when every element of the E-Formula is in alignment. By learning to separate your notions of fear and risk, and by understanding how to work with risk, rather than running away from it, you’ll be better able to break down the artificial barriers that can stand in the way of your progress as an entrepreneur. Mastering risk is an essential threshold you must cross in order to begin the process of launching your business. Consider this chapter the key to the next phase of your journey.
Fear and doubt are two of the strongest enemies you’ll face as you prepare to launch your business. While the E-Formula can help you erase the doubts you may have about the viability of your idea and the likelihood that you can see it through, no formula can help you eliminate your fears. Why is that? Well, let me begin to answer that question by asking you to consider another one: what is fear? Fear is an idea; a feeling; the anticipation of something that is yet to happen or that may not happen at all. Fear isn’t a living thing or an object; it exists only in our mind. It’s that very intangibility and those deep psychological roots that make fear such a daunting enemy.
Being scared is an outcome of fear, but there’s a difference between the two emotional states. In most cases, we become scared because something very real has happened to us. You might be afraid that the icy roads will cause you to have an accident, but when your car starts skidding out of control, you become scared. It’s scary when you lose your job. It’s scary when you lose your house because it was collateral on a business loan. Those are real outcomes, negative events that actually have occurred to entrepreneurs. When the conditions that scared you are dealt with or pass—you find a new job, you move into another home, you reach your destination and stop driving on the icy road—you no longer are scared. Fear, on the other hand, has no end point. It plants the seeds of danger and failure in your mind, and those seeds don’t rely on hard evidence. Feeding on nothing more than vague ideas and speculation, fear can quickly overwhelm your thinking, choking out your ability to see any outcome other than doom and disaster.
We can allow our fears to become very powerful. In fact, our fears can drown our hopes, even when the outcomes we hope for are much more likely to occur than are the outcomes we fear. Fear can trump logic, because the two don’t play by the same rules. You can quantify the strength of your idea; you can evaluate how well your situation positions you to pursue your idea; you can logically assess the opportunities available for marketing your idea within the prevailing economy, industry, and marketplace. But facts don’t always smack down fear, because fear isn’t always about facts—or logic, or reason, or reality.
For all of these reasons (and many more), fear can have no place in your decision-making process. Business continuity managers earn their living developing recovery plans to help organizations make a speedy bounce-back after real disasters (either natural or manmade). These experts recognize fear as an emotional albatross that can have a paralyzing impact on even the most well-informed and educated judgments, and they make it their job to eliminate fear from their clients’ planning processes wherever possible. You, too, must banish fear from the decision-making table, as you evaluate when and where to fully activate your entrepreneurial venture.
HOW FEAR CONTROLS BULLS AND BEARS
It has been said that Wall Street traders are guided by only two things—greed and fear. Studies seem to indicate that of these two emotional influences, fear plays the stronger role. Psychologists who have studied traders and investors have discovered that, although everyone who participates in investing is in it to see a profit, fear of losing money can be nearly twice as influential in traders’ decision-making process as the desire to make a profit. In bull markets, when prices are rising, traders are less likely to take an aggressive approach to their deal making than during a bear market, when prices are dropping. During a bear market, traders should expect to lose on new investments, and therefore be less prone to making them. Instead, it seems that the traders’ fears of losing capital actually grow stronger as stock prices begin to rise.1
With all of their training, experience, and finely tuned formulas, many Wall Street traders still can fall victim to decision making guided by fear, not facts. You can’t afford that kind of weakness. Fear will drive your entrepreneurial enterprise into the ditch if you let it take the reins. One of the most important tasks you can accomplish as you prepare to activate as an entrepreneur is to stop listening to fear and, instead, focus on true risk assessment and planning.
Fear is personal, and it typically stems from personal values that have no relevance to the business decision. The fear of loss is deeply ingrained in most humans, and it is a powerful, innate characteristic that will skew and cloud decisions. As you think about all of the personal things in your life that might be put at risk if you walk the path of the entrepreneur, fear takes control, enabling you to focus only on the negative potential outcomes. “I may lose money.” “I may lose all of the progress I’ve made in my career.” “I may lose possessions or any number of other valuable items.” But those fears don’t really offer any answers for moving forward; they can only hold you back. That power to keep you from taking on challenges that involve some element of risk is fear’s one great trick. So, yes, it’s true that if you never step forward, you can never be shoved back. But you can never advance, either.
Don’t get me wrong; fear can be a valuable emotion. Fear truly can help keep us safe from danger, even disappointment. We learn fear through life experiences, and that’s why it can become a larger presence in our decision-making process as we grow older. An element of fear surrounds every decision that we make, and it sometimes helps us avoid injury, pain, expense, sadness, regret, and embarrassment. But fear is a double-edged sword. If we allow fear to guide our behavior, we will also miss many of life’s most rewarding experiences—some of which will require that we experience pain, or injury, or regret. As an entrepreneur-in-waiting, you need to examine your fears carefully, following both their roots and their branches to reveal what, if any, reality is feeding them. Then, you can choose to eliminate, avoid, or accept any true risks you uncover.
Eleanor Roosevelt once said, “You gain strength, courage, and confidence by every experience in which you stop to look fear in the face.”2 In fact, that’s how you can use fear as a tool for growth. Your challenge is to recognize when you are making decisions based on fear, and then to analyze those fears carefully and weed out anything that doesn’t represent a true risk. The understanding you gain about risk in this chapter, along with the exercises you learn in chapter 4, will help you with that process.
We look at those who have accomplished great things, and all we see is their success. We rarely see or hear what they did to get there: what they sacrificed, how they failed, how they feared the process and questioned success. As you prepare yourself for the demanding process of entering the Startup phase of your entrepreneurial experience, you can expect to be afraid. That’s only natural. But if you want to arm yourself to successfully finish the journey that lies ahead, you will need to face your fears and eliminate their influence on your risk-assessment and decision-making processes.
As I mentioned earlier, the term entrepreneur seems to be synonymous with risk taker in much of the prevailing mythology that surrounds the world of business, so it’s important that we understand what constitutes a true risk. Most of the fear that you’ll face as an entrepreneur will be associated with risk. For most entrepreneurs, that fear tends to be greatest as they enter the Startup phase and actually decreases significantly once their business is launched. Risk involves putting something of value at stake. In launching a new business, your risks might include an existing job, savings, a home, possessions, time, and even relationships. The prospect of failing in an entrepreneurial venture may not seem like an impassible barrier, but you may be stopped cold by the fear of losing what you must put at risk. Activating as an entrepreneur involves some risk taking, it’s true. More importantly, though, it requires risk breaking—destroying the powerful grip of risk-aversion-based fear that can hold you back from pursuing your idea.
Achieving nearly anything worthwhile requires some form of risk. In that regard, life is like poker. You have to ante up something of value in order to play the game—or, at least, in order to enjoy the experience. If there’s no money on the table, poker feels pretty pointless. At the same time, I’ve seen people have as much fun at penny ante as the big dudes seem to be having at those $1,000-minimum-bet tables in Vegas. The amount of pleasure we get from playing poker isn’t directly linked to the amount of money we have staked on the game; instead, it comes from the direct connection between our mental life and our learned affiliation to money.
The close relationship between money and mind forms a roadblock that has stopped many would-be entrepreneurs from pursuing their dreams, so don’t be surprised if it shows up on your own path. In fact, perhaps the biggest obstacle you will have to overcome in order to start a business is your mind, not your money (or lack thereof). I’ve often heard people claim that they simply don’t have the money to pursue their entrepreneurial idea, but when we dig deeper into the obstacle before them, we most often find that they’re butting up against mental barriers that they themselves have erected.
Why is that? Why do some people start businesses while others watch from the sidelines, wishing they could be in the entrepreneur’s shoes? Why do we hear so often about immigrants who come to this country with nothing and then go on to become multimillionaires, while others around them still struggle in nine-to-five jobs they hate? Or how about the story of the 20-something billionaire genius who starts a multinational business in his parents’ basement—don’t you ever wonder how those people can do it, if you can’t?
The simple answer is that you are holding yourself back from being that person who succeeds, and the reason has everything to do with what’s in your head and your learned fear of risk. According to statistics from the Kauffman Foundation, in the United States, immigrants continue to have a substantially higher rate of entrepreneurial activity than native-born citizens, and that’s because they accepted risk as a partner when they stepped foot on that plane or boat to come to America.3 Once they decide that the potential for success on the road ahead is greater than the potential regrets they might have for the things they’re leaving behind, the sky is the limit for what these folks can achieve. They’ve already faced their fears and come to grips with the nature of the risks they’re taking; with that ante on the table, they have to throw every ounce of their focus, time, and effort into winning the game.
Many of the rest of us, however, have an oddly contradictory relationship with the idea of risk. When we consider investing our time, money, and other resources in an entrepreneurial venture, we fear the worst-case scenario of losing it all, even if we have a very good shot at gaining it all back at a later date. At the same time, that fear of losing doesn’t keep us from engaging in other, even riskier behavior. We take risks every day that can be much more real and immediate than those we face when starting a business.
We risk our retirement savings by contributing to 401(K) plans that are invested in the stock market, and then just stand back and let others take control of our financial future. We watch with joy as the principal goes up and cringe with disgust as it goes down. In fact, month after month, some of us throw money on the 401(K) roller coaster and don’t even bother following its ups and downs, figuring we’ll just wait and see what happens when the ride is over. Seriously, how closely do you read the prospectus on the mutual funds in your 401(K) or for your kids’ 525 college savings? But we ante up those dollars with none of the fear about the stock market’s unpredictable swings that we feel when considering the business cycles our startup venture might face.
And then there’s our comfort with the risk of personal debt. Many of us have put our financial security at tremendous risk by taking on an oversized debt burden, using credit cards and home equity to buy more and more stuff, even when it threatens our ability to put the kids through college or retire in any kind of security or comfort. It’s easy to become more concerned about visible signs of wealth (concerns based in fear) than about the dismal view of a future with no means of financial support (which represents a true risk). Some of the same people who are willing to risk all they have in a gamble with personal bankruptcy, a risk that offers no real payoff, would never consider taking on the risks involved in starting a new business. You have to have a much healthier understanding of risk than any of the people I’ve just described if you want to survive and thrive as an entrepreneur. And the first step toward improving your risk-breaking capabilities is to become very familiar with the risks that most frighten you.
As you saw in the E-Formula, your personal and professional situation is one of the critical elements in your readiness to embark on an entrepreneurial journey. The components that define our situation vary, but, in just about every case, they come from the same four categories: possessions, age, position, and health. These categories represent the high-value assets and liabilities that weigh most heavily in our decision-making process. Together, they form the four walls of what I call the Risk Box (figure 3.1), a psychological enclosure that you will need to break through in order to move forward with your entrepreneurial idea. Understanding what’s contained in your Risk Box is an essential step toward becoming an entrepreneur.
Figure 3.1: The Risk Box
We all reside within a Risk Box, and for good reasons. All decisions have a degree of risk associated with them, and every risk has a cause and, in many cases, a consequence. We start building our Risk Box at birth. We learn to approach certain people, places, and things cautiously, and to completely avoid others. As we collect a broader and deeper idea of the risks life has to offer, those ideas form psychic walls within which we retreat in order to protect ourselves from disappointment or danger. Gradually, over time, we begin putting things we value in the Risk Box for protection; the more we put in the Risk Box, the thicker and stronger its walls become, as we place more importance on keeping everything inside “safe.”
The purpose of the Risk Box is to protect, and that can be a very valid and noble function. But just like an older home that’s subjected to ongoing remodeling and additions, over the years, our Risk Box can become clunky, outdated, and less effective in meeting its true purpose. You’re going to need to be able to move freely outside the walls of your Risk Box, so let’s take a closer look to see just what those walls are made of.
Wall #1: Possessions
Face it, we Westerners are a materialistic bunch. We highly value our possessions, and many of us have a sense of entitlement so great that we don’t let our ability to pay get in the way of acquiring new things. Thanks to creative financing, we don’t have to. Lots of people are able to get their hands on bigger homes and fancier cars than they truly can afford. Our possessions include everything involved in our lifestyle, including our clothes, memberships, service plans, and savings. Possessions not only pacify our desires for pleasure, convenience, and so on, but they also provide a sense of security—even identity. Our home provides shelter; our car gets us to and from the places we need (or want) to be; our savings help to keep us afloat during the times when we’re not working, whether that means our “golden years” or simply a lengthy period of unemployment.
Okay, so we all understand the concept of possessions. But how can our attitude toward possessions skew our ability to activate as an entrepreneur? Think for a moment what would it be like to have everything you want in terms of possessions: what would ever draw you outside your comfort zone and into new experiences? The more possessions you have, the more you must protect, and the thicker the possessions wall of your Risk Box becomes.
Possessions offer security, but they also bring with them their own hidden pitfalls. As a new entrepreneur, you cannot allow yourself to become focused on the protective power of your possessions. Rather than allowing your possessions to form an impenetrable barrier between you and your entrepreneurial aspirations, you must find ways to use the security of your possessions as a platform for exploring new territories, new ideas, and new elements of success. By separating your sense of identity and security from your possessions, you’re better able to focus on the things you really cannot afford to risk. Your character, capabilities, intellect, and ideas are your most valuable possessions because those are the qualities that helped you accumulate the rest of the stuff you have now, as well as all of the new possessions you’ll acquire in the future.
WEALTH AND THE WOULD-BE ENTREPRENEUR
Wealth is probably the curse of the entrepreneur, in that it can extinguish desire. Where wealth should be the greatest catalyst to fund an entrepreneurial dream, far too often it just fuels complacency. The wealthy have much less motivation to go through the effort of building something new. They might have a notion of a new business or process that might interest them for a while. But because they have little riding on the success of their efforts, it can be easy to just walk away from them when the going becomes difficult (as it always does, at some point in every entrepreneurial experience).
I think children born into wealth are the best example of this innovation-killing disease. They are born into a Risk Box with thick, prefabricated walls formed by inherited possessions, and those walls only grow stronger over time. Often, they don’t feel the need to be challenged, and they don’t want to be challenged. Billionaire investor and philanthropist Warren Buffett has referred to children of wealth as being “members of the lucky sperm club,” and he’s been quoted as stating, “I don’t believe in dynastic wealth.” Buffett plans to donate over 85 percent of his fortune to charity and once commented, “I want to give my kids just enough so that they would feel that they could do anything, but not so much that they would feel like doing nothing.”4 Buffett, one of the wealthiest people on earth, practices what he preaches. He still lives in the same house he bought in 1958. A Reuters article in 2010 noted that his total compensation package had risen that year to just under $520,000. According to the article, his salary at Berkshire Hathaway remained at $100,000 (which it had been for the previous 25 years or so), but his compensation package also included $344,490 for “personal and home security services.”5 This is just more evidence of the great cost of guarding our possessions and our health (which form just two walls of the Risk Box).
Wall #2: Position
Our position in life is defined by the personal and professional attributes that we have accumulated over the years. We constantly invest in our position with what is perhaps the greatest and most limited resource any of us will ever have—time.
Your personal position might consist of a variety of factors, such as marital status, children, or a caregiver role. It can also represent your economic status or your involvement in groups, clubs, school, local government, charities, or religious organizations. Personal position extends to your interests, such as gardening, travel, sports, and so on—activities that you like to invest your time in. And all of these factors will be affected by your decision to start a business.
Your professional position is what you do for a living, and you may have, like most of us, worked very long and hard at building a professional position. We invest heavily in maximizing our professional goals, through education, relocation, working time, and sacrifices of personal pleasure. The career ladder we hear so much about is nothing more than the passageway to a professional position and significant achievement; wealth and respect are granted to those who climb the highest. Position feeds the ego. That benefit alone may prove too powerful for some to concede in pursuit of new endeavors.
Position is an investment that we hate to risk; it may be the most heavily fortified wall of our Risk Box because its investments are so tightly linked with those we make in our possessions and wealth, and even our age. When you give up a position at the top of an existing business or organization, you give up more than income. You may forego stock options, bonuses, hefty vacation accrual, and allowances, not to mention the special treatment, respect, and other perks you might command in an executive-level position. Leaving a position to follow entrepreneurial endeavors can knock you off the career ladder indefinitely in your industry, making it very difficult to restart where you left off if your endeavor goes belly up. Breaking through this wall of the Risk Box requires a willingness to take on new challenges and to define yourself by where you’re going, not by where you’ve been.
Wall #3: Age
Entrepreneurism has no age limits. According to the Kauffman Index of Entrepreneurial Activity, 1996–2006, the highest rate of entrepreneurial growth during those years came from individuals aged 55–64. The average age for entrepreneurs who founded technology-oriented startups during that time was 39.6 Nevertheless, many of us believe that entrepreneurism is for the young—depending on your definition of young. The reason is simple: younger people, say those under 30, have fewer possessions, have had fewer experiences, and, typically, are more willing than their older counterparts to take risks and accept their results. As you age, the walls of your Risk Box grow thicker and calcify. You gain more possessions, and your personal and professional position takes on more meaning and importance. People changing careers late in life might be putting a lot at stake in making such a change, and thus must rely on the clarity of their longer vantage point to see through the walls of risk that surround them.
The Risk Box walls are designed to protect our assets and our relationships so we can live a safe life. At the same time, the Risk Box walls often are shaped by society at large, not by our own ideas and desires. Popular wisdom and our own personal experiences show us how horribly wrong things can go in any new enterprise, and that knowledge teaches us to be careful and protect what we have. The older we get, the more desperately we may cling to the things we’ve stashed in our Risk Box. When that happens, our assessments of opportunities tend to be influenced more heavily by the need to protect, rather than to pursue new possessions or positions in life.
While some folks may choose to sit safely within the walls of their Risk Box, true entrepreneurs are more likely to charge on through life, always expanding their world rather than finding a way to be content within artificial limits. And age is one of the most common of these perceived limitations, whether it manifests itself as “I’m too young to take on this much responsibility” or “I’m too old to start over.” Breaking through the age wall of your Risk Box will require that you use your age as an entrepreneurial tool, whether that means drawing upon the endless energy and optimism of your youth or the accumulated wisdom and experience of a long working life.
Wall #4: Health
Your own personal health plays a very important role in determining your ability and desire to start a business. It’s vitally important to be both physically and mentally prepared to take on the work of launching a new business or enterprise. Any startup is extremely demanding and requires stamina, endurance, patience, and the ability to deal with stress. Long, fast-paced hours will press the capabilities of any new entrepreneur. Being in poor health could compromise success. More importantly, the demands of startup could take a real toll on your physical and emotional health.
But protecting your own health isn’t the only form of concern that can add to the bulk of this wall of your Risk Box. Your concerns also include the health of close family members and friends, all of which can greatly influence your performance and resulting entrepreneurial success. Caring for elderly parents, a sick spouse, or children will take priority over any other activities. Balancing a new business with long-term care needs of loved ones can take its toll on any new entrepreneur. These are situational factors that you have to carefully consider when determining whether or not you are ready to pursue your entrepreneurial idea. Remember that breaking through any wall of your Risk Box isn’t a one-shot deal, and that truth applies particularly here. As you move into the Running phase, health risks might take on new dimensions. Should health issues develop unexpectedly during your entrepreneurial journey, you may have to find supporters or new partners to keep the business going.
The possessions, age, position, and health that thicken and strengthen your Risk Box walls are independent variables in determining the outcome of a business venture. Being able to break through the walls of your Risk Box won’t guarantee the success of your new venture; that rests in the strength of your idea, the thoroughness of your planning, and the depth of your commitment to see it through. But your ability to break through the barriers of risk that surround you does determine whether you will become an entrepreneur.
While the Risk Box is most closely associated with the situation factor within your E-Formula (I.D.E.A. + Situation + Opportunity = Activation), it can also dramatically shape your perception of opportunity. Not only can the Risk Box prevent you from moving forward to pursue opportunity, it can block your ability to even see the opportunities that are available to you as an entrepreneur.
The Risk Box isn’t the reason you can’t start a business; it’s an excuse to avoid trying. The contents of the box have come to us through a lifetime of experiences, and we don’t want to part with any of those “valuables” even for a short period of time. The truth is, however, that by risking some portion of our security, we might be repaid many times over in new possessions, a new position, more security at any age, and a healthier physical and emotional environment. If we can’t see that those opportunities exist, however, we aren’t likely to pursue them. In fact, the Program Management Institute (PMI), the world’s leading not-for-profit association for professionals who study risk, actually views risk as an “opportunity.” Taking on risk equals taking on opportunity, which means growing rather than maintaining the status quo.
Remember the immigrant entrepreneur I mentioned earlier? The immigrant I described has a Risk Box with very thin walls. His mind does not block the path with fears of losing wealth, possessions, or position in life because he is starting with basically nothing—a clean slate. It’s less about entrepreneurialism than it is about survival. I’m not saying that the less you have, the greater your chances of being an entrepreneur. Look at T. Boone Pickens, who has accumulated much and, at age 81, was still pursuing new entrepreneurial opportunities.7 Yes, he’s a unique individual, and his story is truly remarkable. But it’s also true that his willingness to take on risk in the pursuit of an idea that he believes in is something that any of us can cultivate. It’s this quality, as much as the money in his bank account, that enables Pickens to operate without a net, and as a result he achieves remarkable success.
So remember: it’s not the quantity or monetary value of our deposits within the Risk Box but the value we place upon them that determines the thickness and strength of the walls of risk we must push through in order to become an entrepreneur. Your entrepreneurial activation occurs when your commitment to pursuing your idea is stronger than the walls of your Risk Box. As an entrepreneur, you will mitigate the risk of loss by careful planning, research, and effort in launching the idea.
Today, everyone needs to be an entrepreneur. Corporations increasingly expect their employees to develop a feeling of ownership about the organization and to approach their work with an entrepreneurial spirit. The economy doesn’t run on predictability these days; it demands flexibility and a willingness to innovate and change on a dime. And the age of the good old reliable lifetime employer is over. As safe and untouchable as we might like to feel tucked away inside the walls of our employer’s business, our cubicle, our Risk Box, our situation can change in an instant.
In reality, the protective value of the Risk Box is nothing but an illusion. Your finances and savings can be wiped out by a swindler or through powerful market forces in seconds. Over 80 percent of equity trading is done by hedge-fund dealers and other institutional investors, so the individual solo investor doesn’t stand a chance in today’s equity markets. Your job can be eliminated due to downsizing; you can be diagnosed with a life-threatening illness without warning. These threats can break through the walls of your Risk Box in an instant. The more you allow yourself to entrench in the status quo, the greater the impact unstoppable events will have on you. The Risk Box won’t protect you from risk, but it can make you less innovative and therefore less capable of dealing with the events of life as they unfold.
In 2006 Daniel H. Pink wrote A Whole New Mind: Why Right-Brainers Will Rule the Future, which formulated a hypothesis that global demand for analytical, process-oriented left-brain thinkers is diminishing as the demand for creative right-brain thinkers—such as successful entrepreneurs—grows rapidly. To quote Pink, “The last few decades have belonged to a certain kind of person with a certain kind of mind—computer programmers who could crack code, lawyers who could craft contracts, and MBAs who could crunch numbers. But the keys to the kingdom are changing hands. The future belongs to a very different kind of person with a very different kind of mind—creators and empathizers, pattern recognizers and meaning makers. These people—artists, inventors, designers, storytellers, caregivers, consolers, big-picture thinkers—will now reap society’s richest rewards and share its greatest joys.”8
Our society too often trains us to be good workers rather than creative thinkers and problem solvers, and that makes entrepreneurial thinking a highly sought-after skill. The one talent I look for most when I’m hiring new employees is an ability to think creatively. The left-brain programmers, accountants, and such have become commoditized, so their skill can be shopped for the lowest price. Those exercising entrepreneurial gifts such as bold approaches to risk taking, problem solving, creativity, and innovation will be most sought after in this new era, which Pink has called “The Conceptual Age.”
You become a prisoner of the Risk Box by submitting to “the system” and turning your destiny over to others. Careers and money can be replaced, but when you allow your identity to become so tightly wound up in those things and society’s rigid benchmarks for success, the outcome can become deadly. We’ve all heard the stories of how people snapped during the Great Depression—and even the Great Recession—as the walls of their Risk Box closed in around them. But what we hear less about is how deadly the Risk Box can be for dreams and opportunities. We’ll never know how many businesses, ideas, and inventions have been blocked by Risk Box walls.
Living in the Risk Box is a highly addictive habit, but it’s one you can break. Understanding and managing the enslaving properties of the Risk Box will help you move closer to living an entrepreneurial life, in everything you do. By developing the dexterity and innovative energy of entrepreneurism, you’re doing something real to arm yourself against the negative impact of personal, professional, or economic change.
We humans have an instinctual drive engrained in us over generations. That drive is to live within the orderly structure of the society created around us. It tells us to get an education; find a job; work to support ourselves, our family, and our home; and prepare for retirement. Stay on the sidewalk, don’t walk into The Grove, and don’t take the path less traveled. Entrepreneurism is a competing drive, one that challenges society’s narrow direction. By following our own ideas and abilities, we can break through to find the more fulfilling life that waits for us just beyond the Risk Box walls.
I’d like to end this chapter with a story about my father, who I think truly illustrates how even the most cautious people—people with no desire or intention to pursue the life of an entrepreneur—have to embrace risk in some fashion in order to build a fulfilling life of personal and professional success. His story also illustrates that only you can determine if the entrepreneurial experience is compelling enough to draw you through the walls of your Risk Box.
My father was no swashbuckling risk lover. In fact, he was a risk mitigator—someone I would describe as an old school conservative product of the ’40s. He was extremely hardworking and reliable. He supported his family and planned for his future, and he used stability, consistency, and predictability as the platform for that plan. He also worked in a 100-percent-commission-based sales business, with no guaranteed income above the $30 per week stipend (generously negotiated by his union) he received for collecting insurance premiums from his clients. My father understood the nature of the risk involved in commission-only work, but he felt up to the challenge of avoiding the negative outcomes those risks might entail. He was right; he retired from Prudential after 35 years of successful service and received a well-earned pension.
Sometime during his 15th year in business, my dad was presented with an opportunity by State Farm Insurance. That company was growing under a different model than Prudential, in that independent agents owned and ran their own State Farm office. Much like a franchise, the agencies were similar to running your own business. State Farm wanted to add offices in the area, and in particular the company wanted certified life underwriters (CLU) to expand the State Farm product portfolio to life insurance from what had traditionally been home and auto coverage. A few agents in my dad’s office made the switch as the commissions were greater and the prospect of ownership was appealing. The downside was the lack of benefits and retirement guarantees that my dad valued so much at Prudential, not to mention the risk of starting a new office.
State Farm approached my dad and wanted him because of his CLU certification and years of experience. He would have to start from scratch or convince his customers to switch to State Farm upon their renewals, but there was tremendous upside potential for his efforts. The only problem was that my dad was not cut out for ownership. His personality needed the structure and guarantees of an employer. I’m sure a great point of consideration for not moving ahead with State Farm was stability and our family health insurance. My brother had developed diabetes when he was four years old. That existing condition would make it difficult and extremely costly to change to another carrier upon becoming an independent agent. My dad turned the opportunity down. There were significant risks involved, but those risks weren’t the overriding reason for his decision. The idea of ownership didn’t appeal to him at all; he chose his current lifestyle over that of the entrepreneur.
My dad was a tremendous success in his career and life. He was able to provide very well for his family. He put me and my brother through college loan free; he paid cash for his house, paid cash for his cars, bought me a car for college graduation, established a reliable pension, took wonderful family vacations, and built an incredible nest egg to retire comfortably on and provide a legacy for future Weber generations. He had a solid plan that went far into the future, much like the products he sold. A neighbor of my parents did start a State Farm office, and by all indications it was very successful. I hope my dad never regretted not making the change. I hope he never looked back.
I’ve added this story to assure you that I’m not advocating that entrepreneurism is the single pathway to a happy, successful life. Our lifestyles, like our attitudes toward risk, fulfillment, and success, are formed from very personal ideas. But you cannot let other people’s notions shape those ideas for you. You have to take control of your approach to risk, rather than letting the fear of risk control your approach to life. In fact, throughout your entrepreneurial journey, you’ll have to supply the will and drive that keep you moving forward. No matter how much encouragement and assistance you gain from family, friends, partners, and advisors, your progress will be determined by your own strength, stamina, and determination. Building that kind of entrepreneurial “muscle” takes careful planning and preparation. The Entrepreneurial Exercises you’ll work through in the next chapter of this book will help you in this process by positioning you to take on the demanding work that lies ahead in the Startup phase of your journey.