“This is how civilisations decline. They quit taking risks. Every year there are more referees and less doers. When you’ve had success for too long, you lose the desire to take risks.” That’s the view of Elon Musk, the boss of Tesla, on risk. Mark Zuckerberg, the co-founder of Facebook, has regularly clashed with Musk. But they agree on this issue. “In a world that’s changing really quickly, the only strategy that is guaranteed to fail is not taking risks,” Zuckerberg says.
We often think of entrepreneurs as buccaneering risk-takers. We admire their audacity to try things that others wouldn’t dare and to put their livelihoods at stake to chase a dream.
In the UK there are concerns that we aren’t taking enough risks to keep pace with other countries and that businesses with exciting potential aren’t getting the backing they should. “An aversion to risk is holding Britain back,” wrote William Hague, the former leader of the Conservative party, in The Times in 2023.
But the truth is more nuanced. I have looked at the stories behind the risk-takers and found successful entrepreneurs and innovators are often not the buccaneering risk-takers they are portrayed as, but have a deep understanding and appreciation of risk – the downsides, the upsides and the opportunities they may be able to take advantage of. Here are some examples of how risk shaped the stories of five iconic entrepreneurs:
Jeff Bezos
Jeff Bezos was working for a hedge fund in New York in the early 1990s when he told his boss that he wanted to leave to set up a business selling books on the internet. He did so because he was more concerned about the risk of missing out than the risk of failing. Bezos says he built a “regret minimisation framework” to make the decision. “I wanted to project myself forward to age 80 and say: ‘Ok, now I am looking back on my life, I want to have minimised the amount of regrets I have,’” Bezos said. “I knew that when I was 80 I was not going to regret having tried this. If I failed, I wasn’t going to regret that. But I knew the one thing I might regret is not ever having tried. I knew that would haunt me every day. So when I thought about it that way it was an incredibly easy decision.”
Phil Knight
Phil Knight, the co-founder of Nike, pushed his finances to the brink as he tried to build the sportswear brand, which was initially called Blue Ribbon. He did this because he felt the upside risks outweighed the downsides, even if the business failed. “If Blue Ribbon went bust, I’d have no money, and I’d be crushed. But I’d also have some valuable wisdom, which I could apply to the next business,” Knight writes in Shoe Dog, his memoir. “Wisdom seemed an intangible asset, but an asset all the same, one that justified the risk. Starting my own business was the only thing that made life’s other risks – marriage, Vegas, alligator wrestling – seem like sure things. But my hope was that when I failed, if I failed, I’d fail quickly, so I’d have enough time, enough years, to implement all the hard-won lessons. I wasn’t much for setting goals, but this goal kept flashing through my mind every day until it became my internal chant: Fail fast.”
Ophelia Brown
Ophelia Brown is one of the leading female entrepreneurs in the UK. She founded the venture capital firm Blossom Capital, which has raised $1bn (£763m investors and has backed promising businesses such as Checkout.com, whose valuation hit $40bn in 2022). Brown says she founded Blossom on the basis it would be prepared to take risks that others weren’t – it would back promising startups in Europe. Brown had noticed that promising start-ups in Europe were finding it harder to raise financial backing than similar start-ups in Silicon Valley. European venture capital firms were not prepared to take the risk of backing these businesses, while venture capital firms in Silicon Valley did not want to switch their focus away from the US. But Brown wanted to do this because she thought the upside was worth it – building successful businesses in Europe like there were in Silicon Valley. “Silicon Valley knows that to have the upside you need to be comfortable taking the risk and comfortable with failure to make sure that you’re taking enough risk to get the big outcomes,” she explains. “Obviously Silicon Valley has had many big outcomes, so they were quite comfortable with that model.”
Tom Beahon
Tom Beahon co-founded Castore, the sportswear brand, with his brother Phil. He initially wanted to be a professional footballer. However, his failure to make it as a footballer left him with an understanding of risk that helped drive the growth of Castore. “To my mind – my little uneducated brain at 20 years old – the worst had happened,” Beahon says. “But you realise that the sun still rises the next day. So what it instilled in me was whatever I do, I need to be in control of my own destiny. I’m not getting called into the manager’s office again. Failure doesn’t scare me. I’ve failed. The worst has happened. What scares me is not being in control. Often there’s this misconception of entrepreneurs that you have this lightbulb moment and all of a sudden the world changes. It’s very rarely like that. So to have this setback [with football] – that is probably the seminal moment in my life. I wouldn’t change it for the world.”
Simon Arora
Simon Arora and his brothers Bobby and Robin built B&M into one of the biggest retailers in the UK, worth more than £5bn. They built B&M while eschewing advertising and launching an online business, which are pivotal for other retailers. These decisions reflect Simon Arora’s understanding of risk and his concern that new ideas or new ventures could dilute what made B&M special. “I absolutely agree that you need a significant amount of humility if you want to be a successful business leader,” Arora says. “The way that humility expresses itself is in two or three different ways. One is an understanding that you can’t do everything yourself, you are not excellent at everything and you should surround yourself with people that are better than you at the things that they do. The second is this sense of healthy paranoia – this humility to know that you’re not perfect, you will make mistakes and bad things will happen in your business that you overlooked or you hadn’t thought of. That healthy paranoia makes you a better leader because you plan for those eventualities.”
