In his book, “It’s a Jungle in There”, Steven Schussler, serial entrepreneur and founder of the Rainforest Café, speaks candidly about his tolerance for risk. On a scale of 1 to 10 he’s a 15 on his propensity toward high risk ventures. As a young man he was repeatedly turned down for jobs in his desired field of radio and TV advertising. Steven decided to dress as superman and have himself delivered in a barrel to his “would-be-boss’s” office. The picture he paints is quite hilarious and you should read it for yourself. Spoiler alert: he gets the job.
While vivid and funny, this scenario brings up big questions for an entrepreneur. We ask ourselves: what am I willing to risk for this venture? For this idea? For a chance at success? For the answers, we must search our souls (and/or study our own cognitive bias) and decide what we are comfortable with.
For the bigger question of: how do I begin to analyze this risk? The good news is, there are resources to guide you. Well respected analysts publish articles on risk, business strategies, and entrepreneurial endeavors on a regular basis.
The word risk implies a certain amount of assumption. However, not all assumptions are healthy or accurate. Four great risk assumption “don’ts” are outlined by Scott D. Anthony for HBR. Here are the big four flawed assumptions and how they relate to Steven Schussler’s Superman approach:
- Assuming that taking action is the biggest risk. – Steven had more to gain from donning the superman suit than to stay in his dead-end job and keep getting turned down in interviews.
- Believing that good entrepreneurs seek out risk. – Steven didn’t try to find the hardest path possible. He tried many traditional avenues like sending out his resume, calling stations, and interviewing for positions before pulling his superman stunt.
- Celebrating failure to encourage risk taking. – Steven never celebrated an uncalculated failure because he didn’t take one. He did his homework on his “would-be-boss”, had interviewed with the man several times before, and knew he had a sense of humor.
- Thinking that rewarding success will boost risk-taking. – This assumption doesn’t fit Steven’s superman scenario, but it does fit a later anecdote in the book where Steven starts a side business and is fired for calling in sick to his day job. His risk taking was boosted by his failure rather than his success.
Avoiding these common four assumptions is a great starting place for gauging entrepreneurial risk. Combine these “don’ts” with extensive research and an awareness of your own cognitive biases and you will be well on your way to setting realistic expectations for the risk you will assume in your next venture.