(Editor’s Note: The article originally appeared in the Union Leader)
Angel investing and advising has given me a front row seat to the startup scene in the Northeast. Over the past five years I have talked with hundreds if not thousands of entrepreneurs from Maine, Vermont, New Hampshire, New York, Massachusetts and beyond.
Many of these entrepreneurs share similar characteristics. But over that time I’ve noticed that there is one trait in particular that tends to be present in all the entrepreneurs I end up investing in: high risk tolerance.
Startups are by their nature risky business propositions. Everyone knows the stats. Something like 80% of startups fail. Increased failure makes sense because starting from scratch has a higher propensity for failure than maintaining the status quo.
Smart entrepreneurs understand that but take the risk anyway.
Let me be clear. Smart entrepreneurs with a high risk tolerance are not reckless or cavalier. They have done their research. They believe in themselves, their product market fit and their team.
They’re not leaping blindly from a building. But they do jump.
I was at a recent professional speaker event hosted by the Manchester Boys & Girls Club featuring Jim Koch, the founder and CEO of Boston Beer Co.
“There’s a difference between scary and dangerous,” Koch said. “There are things in life that are scary, but not dangerous, but we’re scared of them. And then there are things that are dangerous, but not scary. And those are the real problem. Those are the issue.”
Too many times I see entrepreneurs who never give themselves a chance to actually succeed. It is going to be very difficult to succeed in your venture if you’re only committing nights and weekends to it. For a startup to succeed it requires superhuman effort. You cannot part-time superhuman effort. This is scary… but not dangerous.
At some point, if you don’t believe enough to commit, why would an investor or a team member?
Listen, I am a huge supporter of the side hustle. If you’re looking to generate an extra $500 a month of passive income, then by all means work on something on the side. That is another conversation all together, and one I am willing to have with anyone. But if you think you have an idea that can become the next great startup home run then you need to take a swing.
I know that can be a frightening proposition, especially in our current startup culture. Reading the headlines, you probably think you need to raise $100 million and have customers in 75 countries to have a chance to succeed. The odds of achieving that seem so daunting many people keep one foot on the safety net.
But that perception doesn’t have to be the reality. One of the reasons I started my firm, York IE, was to evolve the startup culture. A home run or a strikeout are not the only two outcomes. It doesn’t have to be so binary. You can build a successful business off a single if you do it with grit and ingenuity. But a single isn’t easy. You have to be fully committed and dedicated to manifest that into reality.
And, yes, if you commit to something completely you may fail. We all have responsibilities and people counting on us. But what is the worst case scenario? You will have to get a new job. Do you know how much better you will be prepared for that new job with all the additional education and experience you gained by fully running your own company?
The reality is that isn’t the worst case scenario anyway. The worst case scenario is that you never fully give yourself the chance to pursue your dream. You string yourself along part-time never committing enough to know if the idea was good enough or if you were good enough to build the company you wanted.
I’d rather know one way or the other.
What about you?