
Entrepreneurs and the Cult of Failure - amahadik
http://hbr.org/2011/04/column-entrepreneurs-and-the-cult-of-failure/ar/1
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alexqgb
Gladwell wrote a piece last year that suggested the most successful
entrepreneurs come out ahead by finding clever ways to avoid risk. Forgive the
long excerpt, but it really is good.

"In a recent study, "From Predators to Icons," the French scholars Michel
Villette and Catherine Vuillermot set out to discover what successful
entrepreneurs have in common. They present case histories of businessmen who
built their own empires—ranging from Sam Walton, of Wal-Mart, to Bernard
Arnault, of the luxury-goods conglomerate L.V.M.H.—and chart what they
consider the typical course of a successful entrepreneur's career. There is
almost always, they conclude, a moment of great capital accumulation—a
particular transaction that catapults him into prominence. The entrepreneur
has access to that deal by virtue of occupying a "structural hole," a niche
that gives him a unique perspective on a particular market. Villette and
Vuillermot go on, "The businessman looks for partners to a transaction who do
not have the same definition as he of the value of the goods exchanged, that
is, who undervalue what they sell to him or overvalue what they buy from him
in comparison to his own evaluation." He moves decisively. He repeats the good
deal over and over again, until the opportunity closes, and—most crucially—his
focus throughout that sequence is on hedging his bets and minimizing his
chances of failure. The truly successful businessman, in Villette and
Vuillermot's telling, is anything but a risk-taker. He is a predator, and
predators seek to incur the least risk possible while hunting. "

<http://www.gladwell.com/2010/2010_01_18_a_surething.html>

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amahadik
"He is a predator, and predators seek to incur the least risk possible while
hunting!"

Very well said!

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markklarich
Good post!!

At the risk of being simplistic, I have long believed that in the world of
business there are two types of people -- those who use and enjoy risk and
those who are risk averse. Often those who are risk averse become employees,
even academics. Those who enjoy risk become business owners, usually
preferring the process of start up. This is why, if you are a risk taker, you
don't really enjoy being an employee.

The government employees who try to encourage start ups belong to the second
category and cannot for the life of them understand the risk takers. So, they
are more likely to view success as a lack of failure.

Most bankers (Who recently forced a rewrite of the bankruptcy code to benefit
their business.) have little or no use for risk. They are of the "employee"
mentality. (not all, but it is common) As the article points out, this reduces
the number of start ups.

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amahadik
An interesting concept on risk-averseness is that it also depends on how much
you have to lose. That is, if you have not much to lose, you don't mind taking
on more risk.

This might also explain why startups as they grow up, tend to lose their
entrepreneurial spirit (Do you Yahoo! anymore?).

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jdp23
His recommendations make a lot of sense: accept that failure is a natural part
of doing business, remove structural obstacles to reduce the objective risks
of a failed venture, turn failure into fodder. But his overall framing seems
to be that entrepreneurs should be heavily driven by fear of failure. That
works well for some people but not others -- for many (including me), fear
leads to stress and increases the likelihood of irrational reactions.

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amahadik
Yes, the author helps clearly distinguish between anxiety and fear, which I
felt is very insightful!

