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Wednesday, May 16, 2012

An Inflated Sense of Risk

I was at the Berkeley alumni panel organized by Dan Wallach a week or so back, and was very fortunate to be seated next to Jon Blow when someone asked if joining a startup, or doing an indie game was risky. Jon immediately went into this rant about how in this modern world, we have an inflated sense of risk: almost all risk has been taken out of society by civilization --- if you startup fails, you don't go to debtor's prison, and you are not at risk of getting eaten by tigers or wolves. As a result, we have people who inflate the little risks in life to a ridiculous amount, to the point of not letting kids walk or bike to school because they might get abducted by strangers!

This came to me again recently when someone asked me for advice. He was about to leave his current giant employer for another employer that was much smaller, but was well on its way to being public. From a business point of view, neither company had significant risk. Yet he wavered. "I have two pre-school kids, and I can't afford to take the risk of even joining a high quality startup such as OSMeta."

Here's the deal. If you join a smaller company from a giant firm or even a tiny startup, and then face new challenges, overcome them, and work with really smart people, there's zero chance that if everything goes belly up over the next few years the giant corporation will not hire you. Zero. By contrast, if you do spend your time at a large corporation with reduced risk and perhaps a fat package that comes to you every year no matter what happens, would you push yourself as hard? (Some people might: if you're one of them, this does not apply to you, and you're probably a super star at the large corporation anyway and are not reading this) And if you don't manage to push yourself as hard and giant corporation falls onto bad times, what's going to happen? You could be pushed out of your job (by better politicians, perhaps), and now you're actually less employable than if you'd taken the small company "higher risk" job.

So what I think is that people inflate the risk of going solo, doing the startup thing, or even joining a smaller firm, and forget the risk of staying stagnant at a large corporation where you might not get a chance to stretch, and the political game is far more vicious as it's practiced by many people who have nothing better to do all day precisely because the business faces effectively no risk. Startups eliminate such behavior because if you don't pull your weight, it's very obvious and the business is at risk, and good startups fire such people.

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