Three Tips for Risk Taking

In 2007, Drew Houston, founder of Dropbox, quickly turned down Steve Jobs’ generous offer to buy his fast-growing company. In response, Jobs boldly replied that Apple was going to take over the Dropbox market with the new iCloud service. Certainly, that wasn’t very comforting to Houston and his business; but not selling his company was a risk he was willing and prepared to take.

As this story indicates, successful global leaders take risks. Many individuals are natural risk takers, while others tend to be more risk averse. For those more inclined to avoid risk altogether, here are a few tips to help make risk taking a smart, comfortable, and natural part of business.

Decide What You’re Willing to Risk

Speaking of his encounter with Jobs, Houston said: “We were interested in building the company and we weren’t looking to sell.” The Dropbox team had decided, prior to that occasion, that continuing to build the company and face any competitors that show up was a risk they were willing to take.

Although choosing not to sell a company isn’t the decision every company will make, the principal is the same. Smart risk takers take time to analyze the situation before they are forced to make a decision, and they set limits on what they are and are not willing to risk.

Stay Educated and In Control

Mark Cuban is an extremely successful businessman and entrepreneur. Many recognize him as the owner of the Dallas Mavericks, while others learned of him through the popular television show Shark Tank. The road to becoming a wealthy and prominent individual was certainly fraught with risks. But Cuban is known for saying, “I hate risk. I’m terrified of it.” For him, the key to being willing to take risks is staying in control.

Becoming educated allows individuals to mitigate the risks around them. Doing market research and analyzing industry trends puts power in the decision maker’s hands. Because professionals often fear what they do not know, receiving an education helps to expel fear and allows control to return. Like Cuban, business leaders will be better able to control risk when they are “relentless about learning.”

Accept and Learn from Failures

Travis Kalanick dropped out of college in the late 1990s to help start a media search engine company called Scour, Inc. After only a few short years, the company went bankrupt because of several copyright infringement lawsuits. That failure, however, didn’t stop his determination and drive. In 2001, he founded a company called Red Swoosh, a file-sharing service that was later purchased for several million dollars in 2007. And then in 2009, he and Garrett Camp founded Uber and grew it into a world-wide company.

Kalanick’s story, like many others, isn’t one of instant fame and success. His first major risk-taking experience ended in disaster and total heartbreak. But that didn’t stop him from taking risks in the future. In fact, the early failures helped him avoid high risk ideas later on.

Part of taking risks is accepting beforehand the potential of failure. It’s a natural step to further growth and development and can often lead to pivotal educational moments. Don’t be afraid to take risks just because they carry an inherent chance of failure.

Conclusion

Being able to take educated risks is a valuable skill for global business leaders. Although many struggle when it comes to risk taking, there are a few strategies to help alleviate the worry. Decide beforehand what you are willing to risk. Be relentless about learning in order to stay educated and in control. And accept that failure happens and be ready to learn from those experiences. Adopting these ideas into personal and business habits will cultivate a necessary but managed level of risk willingness.