Business Gambles

“No business school would recommend gambling as a financial strategy, but sometimes it pays to be a little crazy early in your career.” 

-Fred Smith, Founder of FedEx

Large established organizations with resources and relationships are in a position to weather the storms of the economy.  They can use forward contracts and lines of credit based upon previous success, and develop reserves to get through short-term disruptions.

Those just starting out have none of these options.

This makes them vulnerable, but also innovative in that they have to find a different way to do things given the tremendous constraints.  The seemingly insane approach that is the only logical solution in a desperate situation, like calling the major potential client and selling a product then going and building it (like Bill Gates and Larry Allen did at the start of Microsoft), or knowing just enough to get in the door and figuring it out after (Steve Cohen, now owner of the Mets). 

When you have nothing to lose, there is no fear so you can take actions that established players would never even consider.  This is why so many companies are started by 20-something singles who can work seventy hours a week and live off of Ramen and caffeine.  Going bankrupt when you have only a few k of computer equipment and a few hoodies is a lot more of an acceptable risk than when you have the five bedroom house with the white picket fence and goldendoodle in the burbs.

Miyamoto Musashi, the ronin swordsman and philosopher taught that we should fight as if we are already dead, so that we have no fear.  In the first stages of a business endeavor or relationship, we should live by this ideal because we have nothing to lose by going all in early.

Leave a Reply

Your email address will not be published. Required fields are marked *