It Takes Guts To Start A Company--So How Do You Get 'Em?

By Anthony K. Tjan, Richard J. Harrington, AND Tsun-Yan Hsieh

It takes guts to act, accept a risk, and to try something new. If the world were full of passionate and purposeful people with brilliant minds, but no guts to act, there would be no progress.

The guts trait can be subdivided in several different ways. One is the divide between risk takers and risk tolerators. Risk takers derive excitement and engagement from being in a situation laden with meaningful uncertainty. Many of the entrepreneurs we have spoken to refer to the dramatic emotional shifts of their “high-amplitude” lives (they love it that way, too). Bungee jumpers, cliff divers, and other adrenaline junkies are extreme examples of guts-dominant people.

Risk tolerators do not necessarily seek risk, yet willingly pursue their goals by understanding and accepting and managing the risks inherent in a given decision. The guts-oriented professionals we spoke to, such as doctor and former astronaut Scott Parazynski, are risk tolerators. The common correlation between astronauts, entrepreneurs, and high-performance athletes, Parazynski told us, is one of understanding and assessing the risks at hand and learning how best to mitigate them. These risk-tolerant individuals confront fear not with the risk-seeker’s defiant smile but with thoughtful training, management, and self-awareness techniques.

The willingness to take risks is born of a combination of elements. Your personality, your experiences, your “training” to deal with risk, and your support network all factor into your readiness to accept and embrace the risks that entrepreneurship requires.

External factors aside, some individuals are quite simply more risk-hungry than others. While you cannot choose what degree of guts you’re born with, it can help to know if you’re naturally fearless, genetically risk averse, or somewhere in between.

In the course of screening businesses in our day jobs as venture capitalists and advisers, we are principally screening people and their propensities for being strong business-builders. A big part of that is whether we feel that there is a natural fire in the belly, a desire to make something happen, and a need to share in that risk.

Risk tolerance is not an immutable quality. By placing themselves in certain targeted environments, business-builders can train themselves to be smarter or more comfortable with risk taking.

Business-building is a journey. The more miles you travel and the greater the number of critical decisions that accompany that journey, the greater your comfort will be with risk. A large acquisition or sale that was fear-inducing the first time around eventually becomes almost second nature. Those who have the opportunity to manage through a crisis, a challenging post-merger integration, or a reset or turnaround of a business gain invaluable perspective. The greater your experience, the more comfortable you will become with endeavors that people on the outside perceive as high-risk.

Practice leads to risk reduction. The training of commercial air pilots, NASA’s training program, the risk-mitigation strategies and programs that large corporations adopt--how can some of these training practices be applied to smaller, faster-growing businesses?

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