I don’t know if most of the founders listed in the article are abnormally high risk takers in terms of downside risk (other than Adam perhaps). They all seem to have secured a decent backup plan if things started going south.
To see this, just look at what each founder was doing immediately prior to going all-in on their startup. It was typically something that set them up to fail gracefully if necessary. Bezos had plenty of connections at D.E. Shaw by the time he decided to drive to Washington and could have easily returned to the finance industry at any point. If Facebook had failed, Zuckerberg would have at least been able to secure a high-level role at an existing tech company. And it may only be a rumor, but I believe Elon Musk had a certain window of time to resume pursuing his PhD at Stanford if he desired.
This isn’t a criticism of these founders not being “risk takers”, but rather just an observation to serve as a counterpoint to the article. The decisions I have made in my own career so far are based on laying the groundwork for the same strategy—set things up so I can attempt a startup at some point, and if it fails, my previous work history plus a decent amount of savings should minimize downside risk. And the additional experience of leading a failing startup isn’t worthless; I once worked at one where many employees jumped ship to better jobs than the ones they were at prior to joining the startup.
That isn't what they mean with risk taking, they want a person who will bet 1 million to make 10 million, then bet 10 million to make 100 million, then bet 100 million to make 1 billion, then bet 1 billion to make 10 billion, then bet 10 billion to make 100 billion and so on.
That is what those founders did, a person who is happy with 1 million dollars is not the kind of founder these people are looking for. Most people would stop after 1 million dollars, you need to find some very crazy risk takers to continue after that.
I don’t think that contradicts what I’m saying though. The founders set things up so they did not have significant personal downside risk. When that is the case, you have no problem at all gambling $1M or even $1B, because losing that gamble just isn’t that big of a deal if your fallback plan is a job that still pays 5x the median household income.
On the contrary, jumping straight into bootstrapping a startup with a state school background and a small amount of inheritance money would be taking on a huge amount of downside risk. None of these founders did that, which is why they were comfortable with making what looks like an insane gamble to someone who does not have such a safety net in place.
Well certainly, but that’s not an apt comparison. I’m comparing P(willingness to take massive financial gamble | safety net) with P(willingness to take massive financial gamble | no safety net). I think the former is greater, whereas the article seems to imply the latter by stating “people who are born on third base tend to be pretty risk-averse”. Are people born on third base over or underrepresented among tech billionaires?
They want people born on second base, those who didn't inherent millions but got an upper middle class education and a stable family to rely on. I know people who were born with millions, they are very risk averse as they don't feel they could rebuild what they have if they ever lost it.
Note how the successful founders weren't rich, they had educated parents and went to good schools, but they didn't inherent millions so they had to work through life.
I’d bet (and this is entirely anecdote-informed supposition, but I did spend several years as a professional poker player and then went through YC and did that whole world for awhile) that you’d find little to no correlation between someone’s fall back plan and their willingness to swing for the fences.
This is a quite underestimated point. Most people will be extremely destabilized if their monetary situation (either their net-worth or the money they are managing) changes violently in a very short period of time. Startup Founders are people who can cruise through that.
They bet 1 million when they have 1.01 million in the bank, most big founders has almost all their wealth in the company they founded until they step down.
The kind of person who only bets 1 million when they have 15 is exactly the kind of risk averse person they don't want as a founder.
> They bet 1 million when they have 1.01 million in the bank
But that’s still not that big of a loss when it doesn’t entail the loss of personal market value. A VP at Google can quit their job, bet their entire life savings on the roulette wheel, lose it all, and still not worry about starving four months later. For most people with at least $1.01M net worth (roughly 1 in 10 Americans), this is absolutely not the case.
To see this, just look at what each founder was doing immediately prior to going all-in on their startup. It was typically something that set them up to fail gracefully if necessary. Bezos had plenty of connections at D.E. Shaw by the time he decided to drive to Washington and could have easily returned to the finance industry at any point. If Facebook had failed, Zuckerberg would have at least been able to secure a high-level role at an existing tech company. And it may only be a rumor, but I believe Elon Musk had a certain window of time to resume pursuing his PhD at Stanford if he desired.
This isn’t a criticism of these founders not being “risk takers”, but rather just an observation to serve as a counterpoint to the article. The decisions I have made in my own career so far are based on laying the groundwork for the same strategy—set things up so I can attempt a startup at some point, and if it fails, my previous work history plus a decent amount of savings should minimize downside risk. And the additional experience of leading a failing startup isn’t worthless; I once worked at one where many employees jumped ship to better jobs than the ones they were at prior to joining the startup.