You Don't Have to Love Risk to Create a Successful Startup
One of the myths that’s been elevated in today’s era of sexy tech startups is that to be a true entrepreneur, you must love taking risks. But this perception often keeps many would-be founders from even trying, because they have heard so many times that most startups fail. A 2020 Kauffman Foundation survey of people who came up with a business idea but abandoned it before starting revealed that 49 percent gave up because they didn’t believe the business would survive. Fifty-five percent of women quit before they started.
We are not big risk-takers. We are risk neutral, meaning that we protect ourselves from the worst that could happen while still embracing the volatility—and possibility—of entrepreneurship. More important, though, we are very comfortable with ambiguity. Risk and ambiguity are quite different ways to think about your prospects. We weren’t going to leap off a cliff without a parachute, which is a risk calculation. We ensured that we still had income from our consulting firm and health insurance when we decided to shift into starting another business. We also had serious and real financial obligations: Stacey was taking care of her parents. Lara had a new baby. We were not going to sell everything we had, sign personal guarantees for big loans, gamble everything, and sit in folding chairs in a garage eating ramen noodles to start a company. The truth is, most entrepreneurs don’t do that anyway. Most business owners do not risk it all, but they understand their exposure.
Successful founders are even more comfortable with ambiguity: the uncertainty of not knowing all the answers, not knowing the next steps. We weren’t just okay with the uncertainty, we thrived on it. If you don’t know the next step, then you can be curious. You can be open minded. You can allow an opportunity to come your way. Whereas if you’re so anxious to have every next step planned out, then you’re not open to opportunities. You’re not noticing them. In our experience, great ideas come from noticing a problem. Current startup culture tends to celebrate creating a cool thing, then looking for a problem to solve. That’s one way to do it, but seeing a need is not only viable but infinitely valuable. Part of the benefit is giving yourself permission to have an idea that is not in your area of expertise and being okay with that. The other advantage comes from using your lack of knowledge and concomitant desire to learn as your strength, not your weakness. We didn’t know anything about the water business, but we were sure we had identified a problem worth trying to solve. The quest for answers was the fun part and the lucrative one, if we got it right.
Don’t Be Afraid to Share Your Idea
Like most inventors, one of the things we weren’t certain about was how to get started without someone stealing our idea. We wanted to keep our new concept under wraps, but that hindered our ability to get it off the ground. Lara turned to a trusted old friend for advice, Spanx founder Sara Blakely. Against the odds, Sara revolutionized the world of women’s undergarments with her own patented product. By the time Lara sat down with her for coffee, Spanx had become a household name, thanks to Oprah, and was on its way to becoming a billion-dollar company. At twenty-seven, Sara started selling Spanx out of her Atlanta apartment with nothing more than a fax machine, five thousand dollars in savings, and her irrepressible spunk. She had famously written the Spanx patent application herself seated in the Barnes & Noble on Peachtree Road in Atlanta, which is where she met with Lara one afternoon as we started working on our baby-water idea.
Lara confided what we were trying to do and how we worried that doing market research might give away our idea. Sara stressed we couldn’t let that fear hold us back. She was emphatic that if we wanted to get this off the ground, we needed to tell people, especially moms, our target audience, precisely so we could get their input. She was obsessed with customer feedback, because scrappy startups can’t afford to pay for customer research. Sara gave us a key piece of guidance that proved pivotal: If you don’t share it, how is anyone going to help? Most people are too busy to take your idea, she said, so we should focus our energy on getting it out into the market and to customers.
Excerpted and adapted from LEVEL UP: Rise Above the Hidden Forces Holding Your Business Back by Stacey Abrams and Lara Hodgson with Heather Cabot, published on February 22, 2022 by Portfolio, an imprint of the Penguin Publishing Group, a division of Penguin Random House, LLC. Copyright © 2022 by Stacey Y. Abrams and Lara Hodgson.
Stacey Abrams is the four-time New York Times bestselling author of Stacey’s Extraordinary Words, While Justice Sleeps, Our Time is Now, and Lead from the Outside, an entrepreneur; and a political leader.
Lara Hodgson is President and CEO of NOW Corp, and has served as an entrepreneur in residence at Harvard Business School. Prior to Now, Lara co-founded Nourish (a children’s products company), and Insomnia, LLC, a firm specializing in investment, development and management of complex and innovative “world changing” projects.
Heather Cabot is an award-winning journalist, author, and former ABC News correspondent/anchor. Sheis the author of the critically-acclaimed business narrative, The New Chardonnay (Currency, 2020), co-author of Geek Girl Rising (St. Martin’s Press, 2017), and a freelance writer published in Forbes, Elle, Parents, The Huffington Post, People, USA Today and more.