I had a cush job at a university with great benefits, decent pay, and normal hours. Five years ago, I took a risk and gave it all up to start a company. Here are the five most important lessons I've learned about risk-taking.
1. There are good risks and bad risks
People that jump into things too quickly tend to achieve unfavorable results. They get excited by the potential and become blind to the consequences. On the other hand, people that wait too long end up missing opportunities due to fear and reluctance. Taking risks can be stressful and dangerous, but it can also change your life.
I've learned that there are good risks and bad risks, but figuring out how to measure them isn't easy. Even if you write down all the pros and cons, the answer might still be unclear. Perhaps that's why so many people talk about risks. It's a complicated subject. Look how many books there are about it.
I'd love to say "just go with your gut", but that hasn't always worked for me. You have to be smart enough to recognize opportunity while being cautious enough to realize what's at stake. It's a lot like gambling, but if you understand the game you're playing you have a much better shot at coming out ahead.
Do your research. Run numbers. Consider your best and worst case scenarios. Listen to your gut instinct, but don't let it trump logic. At the end of the day, there should be a little bit of comfort and a little bit of concern when you decide to take a risk. If either is missing, consider it a red flag.
2. The odds are better than you think
When I quit my job, I already had something going on the side to help cover my expenses while the business ramped up. I planned it out so if things didn't go the way I expected, I'd have something to fall back on. I would never recommend risking everything without having some kind of safety net. That's a crapshoot and, if you've ever been to Vegas, you should know there's a good chance that it won't work out in your favor.
The key to taking risks is to take smart ones, which requires a solid understanding of how things work. Of course, there are always uncertainties—that's why it's called a "risk"—but you can stack the deck in your favor by being knowledgeable, timely, and persistent.
When I launched my first product, it was second to market for the type of service it was. That means it wasn't featured on many tech blogs and it didn't get the kind of coverage or hype that its competitor did. Rather than give up, I decided to roll out some key features quickly and promote the service as much as possible anyway. Marketing wasn't my thing back then (it still isn't), but I studied up and kept at it. My persistence ultimately paid off. In November, my service will see its sixth profitable year of operation!
3. Don't listen to people
I talked to a lot of people before quitting my job. I spoke with my parents, my friends, and even some coworkers about it. Their advice was mixed. Some of them told me to go for it and start my own thing, but most of them told me it was a bad idea. While the former fueled my adrenaline, the latter made me very anxious. I wasn't sure how to handle that type of feedback. I mean, these people were all smart and well-educated and I thought my plan was solid. So who should I listen to?
The answer is none of them. While getting advice from smart and experienced people is perfectly fine, you shouldn't let others decide what risks you take in life. No matter how close you are to someone, they'll never fully understand your situation like you do. They don't know your financial status, how motivated you are, or how successful you'll be. They can only tell you what they would do (or what they wouldn't do) if they were in your shoes.
Now that could be valuable advice if you're talking to a successful entrepreneur, but how many successful entrepreneurs do you personally know? I didn't know any, so I had to go with my gut. I listened to everyone's advice, thought it through, and decided to take the risk. Six years later, I have no regrets.
4. The fun is in the journey, not the destination
Oh, the many nights I've spent developing things, writing blog posts, fixing bugs, repairing databases, responding to support tickets, and playing around with new technologies. I'm fortunate enough to do what I love for a living, and I never take that for granted. Even when things get stressful, I never wish I were doing something else.
To keep things moving forward, I have numerous goals: growth, new products, hiring employees, an office building downtown...but there isn't any finish line, nor should there be. With each goal comes new risks, and with each risk my journey gets more exciting. There's no point at which you'll sit down and say, "there, I've done it. It's all over now." Instead, you'll ask yourself, "what can I do next?"
Even if you nailed that goal of $1M in revenue, you don't stop working and that's it. There's always something else you can turn your attention to. When you succeed, remember what works. When you fail, remember what doesn't. Use that to your advantage and you'll make better decisions in the future. If starting a business is like a road trip, then knowledge is your fuel. Don't worry so much about the destination—just enjoy the ride and keep putting gas in your tank.
5. Know when to call it quits
Sometimes, it just isn't meant to be. Even if you've done something once, doing it again can be a completely different experience. I've played around with many ideas, developed prototypes, bought domain names, and most of them are just memories now. You have to know when to call it quits before it drags you down and burns you out.
There was a project I really wanted to develop a few years ago. I had a logo designed, created a website for it, and even had a partially working prototype until I hit a major road block. At the time, I had to make a decision. I already wasted months of resources working on a project that I didn't even know was viable, and another project was already overdue for a major update. Should I spend the next six months trying to get this thing to work while the other (more successful) project suffered? No way. It was time to call it quits.
When you have a lot of time invested into a project—especially your project—it can be very hard to let go. Maybe it's pride or simply the fear of failure. Maybe a bit of both? In the end, I knew I had to give up on it and move on.
The crazy thing is that once I killed the project, I felt so much better. It was a huge weight off my shoulders. I was able to focus on the more successful service and ultimately launched a new version that caused its user base to triple in one year!
A tip to take home
Risk-taking shouldn't be something that scares you—it should be something that excites you. Look for opportunities, but be cautious and plan when to make your move. If you asked me for just one piece of advice I've learned about taking risks, it would be this:
Waiting too long can be just as bad as not waiting long enough!