Recently, I’ve heard a lot of people making the point that startup founders aren’t risk-takers. Inc. points out that most entrepreneurs see themselves as measured, cautious, and deliberate. Chandra Clarke writes that actually, entrepreneurs are *not* risk-takers, because they don’t take breath-taking gambles – they merely take calculated risks.
I fundamentally (and respectfully) disagree.
First off, a little background:
As a professional skydiver (and startup marketing guy), I know a few things about risk. I’ve got almost 1000 skydives, a few different world & state records, and a handful of medals in the sport. I’ve also founded two companies and worked with several startups in various stages over the past 15 years.
(And once upon a time, I left Vegas with money in my pocket.)
Contrary to what I’m hearing a lot of lately, I see a lot of similarities in high-risk sports like skydiving and the approach that successful entrepreneurs take to growing their businesses. In fact, I’d say it’s the act of taking calculated risks that make entrepreneurs excellent risk-takers.
So with that in mind, here are 3 lessons I’ve learned in the skydiving world that translate over to life as a founder:
All risk-takers hedge their bets.
Most people think of skydivers as taking on a huge amount of risk. And it’s a fair assumption. We do step out of planes at 2 miles up, with nothing between us and the earth but 100 square feet of nylon packed into a tiny bag…and our wits. And yet, skydiving isn’t about crazy people with death wishes (well, not entirely). Unlike in the movies, in real life, you generally don’t see people amped up & screaming as they exit an airplane – for the most part, when we get down to business we’re a fairly-controlled group of people. Although it may not look like it to a non-skydiver, it’s a sport of calculated precision, and we treat it as such.
The fact is, almost every aspect of skydiving revolves around calculated risk.
In skydiving, we build out redundant systems to compensate for the risk of what we’re doing. For instance: we jump with two parachutes – a main and a reserve. If something goes wrong, we can cut away the main and deploy our reserve.
But the redundancy doesn’t stop with gear: we also build redundancy into our procedures. Skydivers deploy our parachutes above a certain height, because the more height we have, the more time we have to work on any issue that comes up. On the plane on the way up, you’ll also spot most experienced skydivers touching their handles in the order they need to use them to deploy their main, cutaway their main, and deploy their reserve. If a hairy situation comes up at 3000 feet up, we want to be sure we execute emergency procedures as second nature, without a thought.
So does this sound like the traditional image of extreme sports athletes? Or does it sound like we’re paranoid?
And it’s not just unique to skydivers. Proximity flying in BASE jumping seems pretty crazy, right? Proximity flyers use wingsuits to skim along inches away from the walls of mountains – it’s pretty epic stuff. And yet, most proxy flyers leave themselves more than one ‘out’ every time they fly – they scout terrain in advance to make sure they choose a line with good angles, and they fly with their wings collapsed, so they can pop-up in the event of a stray tree or other obstacle.
Does this mean they’re not risk-takers? Hardly.
Entrepreneurs, on the other hand, measure. They look at all available data before launching a new product, or taking action. Do they make quick decisions? Sure. They have to. But they do so calmly, and based on available data. They don’t simply huck themselves off a cliff and expect that they can figure out how to fly on the way down.
The simple fact is, whether you’re a skydiver, an aerobatic pilot, a tightrope walker, or a startup founder, you want to play with a stacked deck.
Does that negate the risk? Not hardly. It just means you’re smarter about how you handle it.
Those that don’t calculate risks? They’re not around anymore.
Q: Why does no one skysurf anymore?
A: Because all the skysurfers are dead.
Fifteen years later, very few skysurfers exist. Most people have never heard of skysurfing. Even most new skydivers today don’t know about it. Why did this happen? Because of the disproportion of risk and reward.
Skysurfing involves strapping a board to your feet and using it to do tricks and aerial maneuvers while in freefall. It’s pretty cool to watch – and (from what I hear) even cooler to master and do.
Problem being, with that skysurf board comes an inordinate amount of extra risk. In 140mph wind, the board acts as a giant propeller – if you don’t have a high level of skills, the board winds up flying you. And when you’re on your back in a flat spin doing 140 mph towards the earth, it’s next-to-impossible to deploy a parachute without something fouling up. Several skydivers have died from this very thing.
Which is why, 15 years later, most are either dead or have hung up the board. They continue to skydive, but don’t skysurf. They recognize that the risk is too much for them to successfully navigate.
By the same token, an entrepreneur may decide that one course of action is too risky. That doesn’t mean (s)he still doesn’t have a ton to lose. It just means they’re being smart about where they think their best chances are.
Risk isn’t a binary thing – it isn’t a matter of someone risking or not risking. Risk is measured in degrees…and there’s a certain threshold where everyone has their limits.
Simple rule of thumb – if you go all in against chance, you will lose. It’s not a matter of if – it’s a matter of when.
All of which goes to say…
Those who attempt to mitigate risks? They’re still risking.
Late last year, I flew as part of the Wingsuit World Record. Over 5 days, 100 of the top wingsuit flyers in the world (and me – dunno how I got in there, but I’m not complaining) ultimately built a 100-person, slot-specific formation over Perris Valley, California.
Wingsuit World Record 2012
(photograph by Craig O’Brien)
Two jumps later, one of our skydivers’ parachutes collided with another on deployment. Her injuries ultimately proved fatal.
Throughout the event’s more than 40 jumps, we had maintained rigorous safety standards. We had gone out of our way to ensure adequate separation. We had had a safe event, put on by some of the most experienced wingsuit flyers in the world.
And yet someone with thousands of skydives to her name unfortunately passed away. In spite of doing everything right.
We see the same thing in the startup world. You see an opportunity. You build out a search product. You launch it. And the next day, Facebook announces Graph Search.
You saw a need, did your homework, cashed out your 401k, and took a calculated risk on developing a product. And you lost.
In spite of calculating risks, sometimes things outside of your control get in the way.
The ultimate point is: risk is constant. It will always be there. You can mitigate the chances of bad things happening, but you can’t foresee everything. Ultimately, when you start a startup, you’re playing at the high stakes table. It pays to not bet it all blindly.
In startups, we preach failure. But failure is worthless if you aren’t able to learn from it and move on. The key to survival of any risk is to hedge your bets. You have to make sure you never find yourself in a do-or-die situation. Once you find yourself behind that curve, it’s already too late.
So ultimately, as a startup founder, go out and take risks. Step out on the wire. Take a flying leap.
But make sure you look first…or that there’s a mattress there to catch you when you fall flat on your face. That way, you can get up and do it again.
This is the first post in a series on the similarities between high-growth startups and high-risk sports. You can read the second post here.