How Successful Creators Take the Risk Out of Risk-Taking
Will
What comes to mind when you think of ‘crowdfunding entrepreneurship’?
Some might immediately think of innovative tech. For others, simple mom-and-pop shops might stand out.
For most, the concept of risk will be up there when they think about crowdfunding. For example, most books about starting a new business are full of quotes that glamorize risk: “You miss 100 percent of the shots you don’t take,” (attributed to Wayne Gretzky), “The biggest risk is not taking any risk” (Mark Zuckerberg, allegedly), and “To win without risk is to triumph without glory” (Pierre Corneille). Popular wisdom has glamorized risk and deemed it necessary for a new idea to become a successful business.
Yet, as a result, first-time entrepreneurs are often willing to take make-or-break risks, even when they can’t afford failure. In this pro-risk culture, many entrepreneurs make huge, often dangerous, leaps, because doing so—risking everything—is the norm.
The truth?
Most risk is unnecessary for the vast majority of people starting a business. Many in the world of startups suggest that risk and entrepreneurship are interconnected. I think they’re looking at it all wrong. My argument is this: Risk-aversion, even in the high-roller, fast-paced world of entrepreneurship, ought, in fact, to be recognized and defined more widely as an asset.
Do All Entrepreneurs Take Huge Risk?
One well-known example of risk-aversion is the story of Warby Parker. In 2009, the founders approached the investor Adam Grant. But, because they weren’t working at their startup full time (they were students at the time) and had accepted jobs post-graduation as a backup plan, Grant assumed they weren’t committed enough and declined the offer.
With hindsight, Grant reflects: “When I compared the choices of the Warby Parker team to my mental model of the choices of successful entrepreneurs, they didn’t match. […] In my mind they were destined to fail […] If they truly believed in Warby Parker, they should drop out to focus every waking hour on making it happen.” He continues: “But in fact, this is exactly why they succeeded.”
They didn’t go full steam ahead with only a plan A, but instead they covered their bases, hedged their bets, and minimized the risk of failure.
How did the choice to be risk-averse turn out for them? Well, Warby Parker went public in 2021 and ended its first day trading with a $6.8 billion valuation. Not too shabby for a group of risk-averse entrepreneurs.
The message is clear: the most successful entrepreneurs take the risk out of risk-taking.
This is precisely why we developed the Five-Step High-Profit Launch System to help crowdfunding entrepreneurs minimize the consequences of failure—minimize their risk—when launching a new business.
If the stock market is dropping rapidly, Wall Street can halt all trading to avoid catastrophic losses. Crowdfunding creators can do the same. The sooner you can determine whether or not people will actually pay money for your product or service, the sooner you can shut an idea down and move on to another one—saving yourself blood, sweat, money, and tears, and saving investors thousands or even millions of dollars.
The Five-Step High-Profit Launch System consists of five core steps:
- 1 – Validation, Research, and Strategy
Validation is about proving there is a market for your idea and the market will be prepared to pay for it. The most recognized form of validation or product market fit is the focus group.
- 2 – Audience Acquisition
Once the idea is validated, our next step is in finding your potential customers and bringing them into a community. You want to launch with a bang not a whimper, so building an audience in advance of launch is important.
- 3 – Audience Engagement
It’s not just about finding potential customers, though. You also need to get them excited! Sharing information with your community to ensure that potential customers are excited to buy in advance of the launch itself, increases the likelihood of early traction.
- 4 – Audience Conversion
This is the big moment, it’s time to turn potential customers into real-world customers.
- 5 – Scale and Optimize
Once your idea is alive, you must think ahead. Scaling is all about ramping up your sales from first gear to fifth and building a foundation for future stability and growth.
It’s not that I believe risk is entirely avoidable. Of course not, life is full of risk. What I do believe is that there is a huge difference between taking risks because that’s what you think has to happen for success, and being smart about the risks you take on your path to success.
Whether you’re thinking about launching a product or brand for the first-time or you’re an experienced founder, changing your mindset to a risk-averse approach, rather than risky approach, will save you time, money, and heartache.
