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Issue #24: The ROI on Risk

If you haven't seen it, a couple years ago Jim Carrey did an incredible commencement speech at the Ma

James Costa

August 30 · Issue #24 · View online
A batch of thoughts, resources, and motivation from a friendly digital agency owner delivered every Monday at 6am ET.

If you haven’t seen it, a couple years ago Jim Carrey did an incredible commencement speech at the Maharishi University of Management. In it, he talks about his father being the funniest man he knew and how his dad hated his job as an accountant. When asked about risk and whether he should take the jump to be a comedian, he quoted his dad as saying “It’s better to fail at what you love than fail at what you don’t.”
This got me to thinking about risk. For myself, the risk of starting Phuse full-time was pretty low and the stars seemed to align pretty perfectly (in hindsight): I had just turned 18, become a full-time single father (though having become a father a year before), and quit the job I had. What was there to lose, really?
We think a little too much about risk. As Tobias van Schneider said in his piece “What is there to lose?”, we tend to take risk too seriously. Further, when dealing with risk we often don’t always think about the possible outcomes, and instead let the fear of the unknown paralyze us from making any decisions. Sometimes by simply breaking down the possible outcomes we can see that decisions aren’t as serious as we tend to make them. We’ve either been through worse, or forget that humans adapt to the situations we find ourselves in. 
Taking this a step further, I think risk is important and that we shouldn’t discount failure as a return on investment that is acceptable. Failure teaches us that something we’ve done isn’t right (at least right now), and allows us to try other options with new knowledge. We’ve heard this a lot, but we don’t apply this to the precursor to failure: making a decision in the face of failure. As Thomas Edison famously said when asked about his failures in making the light bulb: “I have not failed. I’ve just found 10,000 ways that won’t work.”
Risk therefore becomes realized in any decision we make. For many decisions we ignore the risk as it’s low (such as ignition or melting of nightwear that apparently killed 9 people in 2000), but we make decisions that include risk every day. For example, anyone who has ever hired someone to handle sales for them (generally the last thing most CEOs hand-off) knows that there is a risk that it doesn’t work out, . I’ve had this same risk in hiring our first project manager, and hiring someone to take on operations and in both scenarios I’ve been able to increase revenue due to their increasing productivity (though both positions are for the most part considered non-billable for our team right now). That doesn’t mean I didn’t make some mistakes along the way (i.e. hiring the wrong people), but it helped me learn what to look for.
For others, risk comes in finding a new job. I can’t express how many times I’m approached by people determining whether or not to take a lucrative job offer that they’d be unhappy with thinking it’s a “step up”, when it’s more of a lateral move that moves them further from their long-term career goals (we’ll talk about this another time). We’re also worried about making the jump to a new job because it means a change of habit: it’s scary! But there’s a confidence in people who move jobs after the first few times in that they know the company they’re looking for and the types of perks that are important to them.
Often, the easiest way to approach and avoid significant failure as it applies to risk is by taking small steps in a particular direction; for hiring for a new role it could be hiring part-time or in a contract position, for starting a new job it could be moonlighting or trying it out for a week. While reducing risk by making the smallest decision isn’t always possible, considering it allows you to also gain new knowledge in the factors affecting the decision, thereby improving your ability to reduce risk.
And hey, even if it doesn’t work out you’ve still gotten something back. You just can’t let risk or failure stop you in your pursuit.
PS: Sorry for the delay this week! I shot out a tweet about it, but I got hit with a heavy case of allergies on Sunday that had me sleep for 12 hours. I hate excuses as much as the next person, but hopefully sending this out on Tuesday at 6am this week didn’t screw up your week too much! 😘
PPS: If you enjoyed this week’s issue, I’d really appreciate your support sharing this newsletter. Whether it’s a forward, a Twitter post, or by creating a board game based on this issue, it would mean the world to me.

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I’ve gotten really into board games lately, and just had a friend over to play Munchkin, an wonderfully simple game based on Dungeons and Dragons that keeps it simple for everyone (they also have a ton of great-looking expansions). On Sunday I got to play Kittens in a Blender with my son and some friends, but had to stop as my son started bawling because I blended a bunch of his kittens.
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