Entrepreneurs are often thought of as over-ambitious risk-takers. But in actuality, they’re ambitious risk managers.
There’s a huge difference between the two:
One is a supposedly brave individual who quits his job and jumps right into a business venture. While the other carefully plans his exit from work and how he’ll approach entrepreneurship. And this is what sets apart the so-called entrepreneurs from the successful ones.
There’s no such thing as taking a leap of faith in this industry. You need to conduct careful research before taking the leap. It takes strategy, careful planning, and proper execution to see entrepreneurship through.
In fact, this is why some compare being an entrepreneur to being a poker player. You don’t become a famous player because of a single hand you’re dealt. It’s all about probabilities over time.
And when it comes time to forfeit and lose money, you’ll happily do so knowing it’s a part of the percentages game. It’s the same when you’re an entrepreneur—you have to know when to go “all-in” and when to fold ’em.
The key is determining what things you can de-risk and what things are worth risking. For example, one risk you have to squash is finding a product-market fit. The second is focusing on how you’ll bring that product to market.
Then comes a risk worth taking—figuring out how much it’ll cost you to win customers. This will take time to find out and cost money. Odds are you won’t have the answer immediately.
You don’t want to be the entrepreneur who toils at these problems for years and years. The smart approach is to give yourself a set time (i.e., a year) and budget (i.e., one year’s salary).
If things don’t go as planned within that time frame and budget constraint, then it’s time to step back. Take this time to reconsider how you’ll move forward with the venture or move on to something else.
5 Lessons Poker Teaches Entrepreneurs
Advanced poker players and successful entrepreneurs have a lot in common. To be great at “the game,” you have to instill certain values and characteristics to succeed.
1. Patience (before and during)
2. Check your emotions at the door (losing a battle doesn’t mean you lost the war)
3. Calculate risks (recognize opportunities for investment and approach with confidence)
4. Stay focused on your game plan (being an entrepreneur takes more time and effort)
5. Learn to live to fight another day (know when to fold ’em)
The Lessons I learned in Entrepreneurship
I didn’t wake up one day with the bright idea of becoming a venture capitalist. No—instead, I was bitten by the entrepreneurial bug and pursued a startup.
I was just shy of 30 years old when I co-founded a business with my first customer. I took the risk of using my life’s savings (401K) and went all out with hiring software developers and other people we needed.
It was 1998, and we were building one of the first architecture, construction, and design software tools for internet collaboration. The end-user was going to be professionals in the construction industry, and it was great timing.
Oracle already had a platform for developing internet applications, so we decided to build on top of that.
I started flying all around the country, presenting the product to hundreds of customers and the Oracle sales team. Over time, we couldn’t get the software to work, and Oracle became unresponsive. As it turned out, the entire platform was shut down because it wasn’t functional.
I wasted a better part of the year (and all my money) on this venture. But there was a silver lining—I spoke to multiple venture capitalists, and one of the firms told me, “Let’s keep in touch.”
That firm was Blue Chip Venture Company, Cincinnati’s first and largest venture firms. At that time, I didn’t even know we had a venture capital in Cincinnati.
So I reached out to them and let them know the original plan was a no-go, and I was trying to decide whether to reboot and do it all again or do something else. What happened next was a surprise—they asked me to come and work for them.
The funny thing is I thought that to get into venture capital you needed to exit a successful company. As it turns out, I didn’t need to build a successful startup to do it.
It was enough that they saw what I was doing and were impressed with how I was managing it and decided to ask me to join their team. Looking back, I did everything I could:
· I planned my exit from work
· I determined my budget
· I set a self-imposed time limit
· I reassessed the situation once things went awry
With any failure, you have to see the lesson. You should always ask yourself, “What’s the worse that can happen?” (risk calculation) and determine if it’s worth it. For me, I felt that if this idea didn’t work, then I’d at least learn something about product development (which I did), meet investors (which I did), and make tons of connections (which I did).
I came out on the other end in a place I didn’t expect, but that’s where the luck came in. You never know what cards the dealer will give you in the next hand.
Take the lessons learned, sit back, reassess, and replan how you’ll move forward–there’s a lot of positive things that can still happen.