Don’t Let Fear Stunt Your Startup’s Growth
Ask yourself these questions about risk
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Startups live and die by managing risk.
Risk tolerance is necessary in order to turn an idea into reality. But too much of it can lead to overconfidence, then mistakes.
Risk aversion seems like the antidote — the common sense adult-in-the-room keeping the startup grounded. But too much of that can actually wind up grounding the startup.
This often leads to a pretty common and sticky scenario, and one such example came my way via Teaching Startup, from a newly-hired leader, not a cofounder, but indeed the most experienced member of a young founding team.
This new leader had been an advisor to the startup for a couple years, helping them land a round of funding which enabled them to bring her aboard. She joined the team because she was impressed with their great idea and great business model.
But right away, she noticed that the founders gradually started leaning towards a more conservative, slower approach to growth than the one that got them the funding.
This was not why she joined. This was a path to failure. This is what I told her.
What Risk Is and How Much Should You Take
Usually the thing you have to worry about with a first-time founding team is the fearless desire to take big, risky swings without considering the unintended consequences. Then you’ve got folks like me, the “adults in the room,” who never met a risk they didn’t want to mitigate a dozen different ways.
Her situation is a complete flip of those roles, but far from uncommon. It’s bravado that fuels early-stage founders to take enough risky swings to land their first round. But then as soon as things become real, they realize that their bravado is just that, and they panic.
Obviously, there’s a balance. Looking back on my career, the folks I’ve partnered up with weren’t gunslingers. Not a single one. They were just risk-tolerant enough to agree to some of my more wild swings, and I’m just risk-averse enough to need to hold my breath during some of theirs.
