Ambiguity vs. Risk

Posted by on May 20, 2009 in Entrepreneurship | 2 comments

Unspecified Danger

Unspecified Danger

Throughout my career I’ve always said that I dealt well with ambiguity. As a long-time freelancer I had to. I never knew what situation I’d actually be entering until I did so, and once in, I had to deal with whatever arose. We’re now in the midst of starting our own company in a fairly bleak (at least on the surface) economic landscape and pursuing and winning work of all sorts. Some have called us (my wife/partner and me) crazy but we both wholeheartedly disagree. While it’s certainly not easy to do what we’re doing — throw three kids under the age of 6 into the mix and it gets even more complicated — we are having fun and actually feel more in control of our situation than we ever did while working in someone else’s organization.

I bring this topic up because it’s something that has been popping up frequently over the past few weeks — in both conversations and the things that I’m reading. Just after starting exUrban, Inc. I was speaking with a very talented front end developer with whom I worked and who was laid off just after the new year. We were speaking about a job I was pitching, and I wanted to gauge his interest and pick his brain about the required level of effort. He was interested but felt very strongly that he must get back to a full time job for the stability factor. I asked him how the stability of our previous employer had worked out for him.

Other folks have said similar things to me: “I like freelancing, but I can’t handle the risk.” “Starting my own company scares me, it’s so risky.” “I hate invoicing . . . ” (really?). Recently, I had two conversations within three days that went similarly. One friend told me that he doesn’t know how people start their own thing. He’s an agency guy and likes to be on the inside where it’s less risky. Another friend, an academic, said “I don’t know how you do it” (start a company and all that comes with it). Then he explained how he gets funding for his projects and it dawned on him that he and I are both striving to fund our livelihoods.

There is certainly risk in what we are attempting to do but we mitigate it through hustle. We take every meeting, pitch everything that comes our way and conjure ways to succeed. If I can’t close a sale that’s my issue, but I’m moving to the next opportunity to try again. If I’m in an agency and some other guy doesn’t close a sale I lose my job because the funding will dry up. Where is the risk more pronounced — trapped in a box canyon or running free on the plains?

We, as entrepreneurs, and freelancers deal with ambiguity: is the job going to come through, is it not, what happens if it doesn’t, what happens if it does? Ambiguity abounds in each of these scenarios but I’ve got other pokers, in other fires, and odds are that some of these other things will heat up and come through. An interview with Jim Collins from the April 1, 2009 issue of Inc. magazine brought all of this home to us.

How do you define entrepreneurship?

I take a broad view of it. The traditional definition — founding an entity designed to make money — is too narrow for me. I see entrepreneurship as more of a life concept. We all make choices about how we live our lives. You can take a paint-by-numbers approach, or you can start with a blank canvas. When you paint by numbers, the end result is guaranteed. You know what it’s going to be, and it might be good, but it will never be a masterpiece. Starting with a blank canvas is the only way to get a masterpiece, but you could also blow up. So, are you going to pick the paint-by-numbers kit or the blank canvas? That’s a life question, not a business question.

It has to do with your ability to handle risk, no?

Not risk. Ambiguity. People confuse the two. My students used to come to me at Stanford and say, “I’d really like to do something on my own, but I’m just not ready to take that much risk. So I took the job with IBM.” And I would say, “You’re not ready for risk? What’s the first thing you learn about investing? Never put all your eggs in one basket. You’ve just put all your eggs in one basket that is held by somebody else.” As an entrepreneur, you know what the risks are. You see them. You understand them. You manage them. If you join someone else’s company, you may not know those risks, and not because they don’t exist. You just can’t see them, and so you can’t manage them. That’s a much more exposed position than the entrepreneur faces. But there’s lower ambiguity on the paint-by-numbers path: very clear but more risky. The entrepreneurial path: very ambiguous but less risk. Of course, the truth is that it’s all ambiguous, anyway. If you think you can predict the future, you’re crazy.

This quote has been our lodestar over these past weeks because it crystallized and validated what we’d been thinking all along. We’ve opted for the “life concept” of entrepreneurship and embrace the ambiguity. Within ambiguity lies opportunity, and that’s all one can ask for.

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2 Comments

  1. I took my side business full time last September. I gave 3 weeks’ notice at my day job, the economy tanked, and I still quit on schedule. Crazy? Yes. But is it working? Yes. Bold Avenue is growing, I’m learning a lot and offering more services than before, and it’s all happening in *this* economy.

    It sounds like you have people in your life to give you a reality check (those are good sometimes), so I won’t bother with that side of things. But I will say it’s possible to start a business now. It sounds like you have a great perspective and the drive/hustle to make it all work! I’m excited for you! I wish you and your wife the best with this endeavor!

  2. Stephaine:

    Thanks for stopping by and commenting. I’m excited to hear that things are working out for you and I applaud your chutzpah! There is great opportunity out in the market and it’s fun to chase it down. My father has always said: “it’s amazing what happens when you work hard . . .”

    Thanks again, and best of luck to you too!
    Ted