When you think of Mark Cuban, Warren Buffett, Zuckerberg, or the Google founders, what is the first thing to comes to mind? "Billionaire entrepreneurs," right? With that notion of success, many people believe that it is an unsatisfiable thirst for money that makes men like this who they are. That idea, however, could not be any further from the truth...
The first part about "thirst" - or hunger - is accurate, but it's not really about the money. Maybe a yearning for power, clout, or just success and achievement in general, sure... But not for the money. Money is just a symptom of success of this caliber, and you need to realize that if you are ever going to achieve real wealth of any kind.
What the aforementioned entrepreneurs all have in common is the skill of knowing when to gamble. A Princeton University study recently analyzed two distinct groups of people: the first were all founders of successful businesses while the second group was composed of the general population. Essentially, this study pinned the presumed "no risk, no reward" mentality of the entrepreneurs versus the "play it safe" school of thought adopted by the masses.
Each person in each group was given three options for venture investments:
Option 1: $5 million with a 20% chance of success
Option 2: $2 million with a 50% chance of success
Option 3: $1.25 million with an 80% chance of success
Challenging the perceptions of the public, the result of the study was that the vast majority of entrepreneurs chose Option 3: a higher chance for profit, but less of a reward. The general population, on the other hand, mostly chose Option 1. Why is this? There is not just one reason, but several... and it all comes down to the mentality of using one's perception of reality to know when to gamble.
1. The Entrepreneurial Mindset and their concept of Self-Fulfillment.
Entrepreneurs have accepted that most business ventures are like multi-billion dollar lotto tickets involving a huge prize because there is a slim-to-none chance of actually winning it. They are incredibly in touch with reality in terms of what people will find appealing and therefore they can tell , just by the appearance and content of the lotto ticket, when to fold and when to go all in.
If an entrepreneur isn't doing what they love most in life, usually they are doing what they're best at in life. Their conception of optimistic secession usually goes something like: "After I attain success doing what I'm best at, I'll be in a place doing whatever I want". And for most entrepreneurs, that is enough.
Again, the primary motivation of most entrepreneurs is not money. It is the goal of being in a state where they have complete control and ultimately becoming their own boss. That is why the study has shown that entrepreneurs are attracted to the higher success-rate as opposed to the higher-margins. Many would be surprised to know that most Fortune 500 CEOs would do their job for free, as would various successful politicians.
In fact, many do. From Bloomberg to Larry Ellison - who each get paid a $1 per year for what they do (by choice) - the fact of the matter is that passion is what makes the difference. What drives them is the need to redefine themselves by the relationship they have with the rest of the world, by their responsibilities and services they commit to make their lifestyle and legacy.
2. The Starting Point
Much of the general population involved in the study is either trying to make ends meet or is already gainfully-employed, which explains the difference between the two groups. The goal of trying to make ends meet is usually not enough to make you commit to entrepreneurship. There needs to be something more, like the passion to implement a set of ideals unto other people or the discontent with the standard day job.
Feeling a sense of complacency when all that is desired is enough money to survive is a disadvantage when it comes to being an entrepreneur because that complacency will become a method of giving up as soon as the comfort zone is abandoned.
3. The Ability To Follow Through
It takes a lot of balls to leave your job or risk everything you own for your own business. So, why did the study show that entrepreneurs are less compelled to take risks than the public perceived? It is not the openness to risk, but the confidence in themselves to execute that give most entrepreneurs the faith to start a venture. Moreover, they have the dedication and devotion necessary to stick with it and fight for it all, as opposed to just throwing out the lotto ticket (that took a minute to buy) after you lose.
Most people lose the drive to stick with things long enough to see the reward. Sometimes it is fear, sometimes it's boredom, and sometimes it's just a lack of commitment to an idea. While entrepreneurs do know when to fold, they'll never just give up at the first obstacle, or the second or even the hundredth. They'll fight for what they decided should be done a long time ago, until it's literally no longer an option.
Venture Clout | Elite.