Startup : There is no risk

I think the OP makes some excellent points, but unfortunately he uses the phrase "no risk" instead of, as I'd phrase it, "dramatically less risk." There is definitely opportunity cost. At the beginning you won't have an income. If you're 30, like myself, you'll watch your friends who didn't go down the same road start to pile up "stuff." Cars, houses, whatever. They'll have it and you won't. Even if your startup turns a corner to provide lifestyle income, there are still issues. This is a purely anecdotal example, but yesterday my wife and I went to a bank to talk about pre-qualifying for a mortgage loan, and apparently you need two years of self-employment history.<p>But here was the point that I think got lost in such a binary stated view of risk: right now it's easy to jump back on the totem pole. If I really wanted to buy property that bad, I could get a job making well over my previous salary within weeks. There are not a lot of entrepreneurial endeavors where that is true.<p>Consider something like opening a restaurant. There is not just opportunity cost but <i>real investment cost</i> before you even get started. And if you bomb, and statistically it's very likely you will, there is not nearly the the likelihood you can at least go back to where you started. As another anecdotal example, my friend is a second year lawyer at a firm, one of the few people in his graduating class that got a nice corporate law job so that he actually has a chance to pay off his massive loans. And he pretty much hates his life, but there's a huge chance that if he left to pursue one of his dreams, there would be no "reset" button. There is no easy chance that if he doesn't succeed, he can just go back to being a highly compensated corporate lawyer within a few weeks.<p>So yes, there's obviously risk in starting your own startup. There's always a cost to pursuing a dream, and not everyone wants to pay that cost. The distinction is as a technology startup founder in this current environment, your cost is dramatically lower than anyone else's, and I think that's ultimately what I think the OP is trying to say.

It takes a youthfully incandescent naivete† to believe that your future employment prospects blunt any risk from a failed venture.<p>You can accept the risk that your savings will dwindle to zero; you can in fact stipulate that the chances of that happening are 99.9%. You can tell yourself, probably truthfully, that the life cost of zeroing out your savings is minimal, because you will almost certainly be as (or maybe more) employable when you finish your venture.<p>What you will not ever get back from a failed venture is the time you sunk into it. You will, I am fairly certain, come to realize that lost time is the worst kind of loss; your time is not only effectively money, but also opportunity.<p>Pick what you're working on carefully. Every startup founder in the history of startup founders has told themselves, "even if this thing fails, it will be a great experience". As someone who has failed at a startup: failure is indeed educational. But at 2-3 years of the most productive, least encumbered years of your life, the tuition is expensive; it's a rip-off. Don't buy it.<p>† <i>Ironically, Yoskovitz appears to be exactly my age.</i>

OP tries to persuade that there is no risk at a personal level to the entrepreneur pursuing a startup. He acknowledges that startups have opportunity costs but denies that this is a risk. While I applaud his efforts to encourage his friend to start a company, I think the semantic contortions around the word 'risk' are unproductive.<p>There most certainly is risk that the opportunities forgone could be greater than the benefits (monetary or non-monetary) received. Rather than deny this reality, I'd suggest that it'd be better to sell one's friend on the tremendous upside potential relative the comparatively limited risks of not succeeding (or not even trying).<p>Risk concerns: Do not deny. Refocus.

Whenever I think about "risk" in starting your own business, my mind always wonders to health insurance (living in the US). Individual health insurance is of course an option, but many of the legal protections that are in place for group health insurance plans are not applicable to individual health insurance. For example, when you move directly from one group health insurance plan to another, the latter plan cannot claim a pre-existing condition exemption for an illness that was identified during your previous coverage. If you were moving from an individual insurance plan to a group plan, the same protection is not available.<p>This is a <i>huge</i> issue for me as I value my health above all but my family (certainly leaps and bounds above my career aspirations).<p>I haven't looked very much into this, but I'd be very intrigued to hear how U.S. startup founders address or mitigate the risks associated with health insurance in their early-stage ventures.

The cost of doing a startup has of course fallen over the last decade, but on the flip side, the cost of living has also shot up.<p>Nowadays, you are likely to need more money than ever to to pay for your living accommodation, expenses, potentially large student debts, healthcare costs etc.<p>For this reason, I would say that the personal risks are very real. The consequences for ending up flat broke can actually be quite serious and quite tough to get out of if you crash and burn and are not quickly able to find employment.

Risk and reward are relative to your personal status quo. If you are gainfully employed, then leaving to start your own company has real cost (the opportunity cost of your lost income + the cost of your lost savings) and clear risk (the risk of not recovering that cost, the risk of not finding a new job). But there is also real reward (building your network, gaining experience as an entrepreneur, creating a product or service that is loved by your users) and potential reward (becoming profitable, being acquired, going IPO) that can lead to future reward (starting a next company with OPM, gaining a reputation as a successful entrepreneur).<p>So of course there is risk. As there is reward.<p>And the simple question for every aspiring entrepreneur is: given your personal status quo, are you willing to incur real cost in exchange for real and potential reward?<p>It's a personal calculation and a personal decision.

Stop fussing around with the concrete definition of "risk."<p>Starting a startup is an extreme financial risk. You can drain your savings and pass up hundreds of thousands in foregone wages. Given that we're not all financially secure for life, financial risk leads to personal risk. Trying to spin it any other way is disingenuous.

What Ben didn't point out (which I mentioned in my comment on his blog) is the risk of <i>not</i> starting a company. The risk that you'll live your whole life never taking the incredible opportunity you have to make a difference.<p>Small teams of smart people have more opportunity today than ever before in human history to change the world. The technology, the networks, and the capital are there for people who want to use them.<p>The risk is in waiting for even better conditions than we have right now. Is there going to be even more of a chance to have an impact five years from now? Will five years of doing what someone else tells you to do make you more ready to take that chance?<p>It's foolish to throw away a good hand of cards and gamble that a better one is waiting for you in the deck. You could get hit by a truck in the next five years. You could have a personal financial catastrophe that would make it impossible for you to forego a salary long enough to make a startup work. Worse, you could get too comfortable taking orders and forget what it means to take a chance.<p>If you think you can change the world, there's no time to waste in getting started.

I hear it all the time from friends in the valley. "Do a startup dude, its not risky at all, you'll learn a shitton of stuff, maybe become wealthy beyond your means if you get traction,...."<p>So I say, "Ok. But tell you what. I will join your startup f you let me code in Scala/Haskell/SML/&#60;insert favorite immature fp here&#62;" :)<p>Instantly, they'll say, "No way dude! That's too risky! Lets just do it in php/ruby/python/easy-mature-imperative-dynamic-scripting-language"<p>So you want me to take a risk when it comes to my career/finances/life-situation. But you won't even take a risk when it comes to a simple language choice. Despite the fact that you are a technology startup working out of cutting-edge silicon valley, you want to choose the least risky technology/language/framework.<p>So much for risk.

If you eventually want to start your own company, I think the biggest risk is not taking action when it's easiest to – when you're young, with minimal expenses and few responsibilities.<p>I quit my job at 24 and dedicated a year to bootstrapping my own company. It generates a good full-time income now, but it took a year of hard work to get there. Because I was single and with negligible expenses (less than $1,000 a month), I was able to invest the time to getting my business up and running without worrying about the short-term lack of income.<p>I'm older now - married with a kid on the way – and have a lot of friends who really want to start their own business. But with mortgages and kids of their own, they can't afford to take 3 to 6 months off to get a business off the ground. The drop in cash flow would sink them. Someone really dedicated could save a cash cushion and quit their job, but the pressure would still be much greater knowing you only have X months in cash reserve before you're unable to support your family.<p>If you're an aspiring young / single entrepreneur, the time to start a company a company is NOW. As legions of people will tell you, it only gets exponentially harder as you get older and take on more responsibilities. The real risk is not taking action when it's easiest to do so.<p>For anyone interested in my bachelor startup-story, I detailed it in the post below:<p><a href="http://www.ecommercefuel.com/my-corporate-escape-story/" rel="nofollow">http://www.ecommercefuel.com/my-corporate-escape-story/</a>

There is risk, but I agree in the sense that the risk is not nearly as serious as most people think. The worst thing that happens is that you waste a year or whatever, the company fails, and you find another job.<p>Society casts this black cloud over unemployment. Most people fear unemployment like the plague. But for talented people, finding a new job is not hard.

The author says "The likelihood of success is very low." I hate it when I see such discouraging remarks, especially when they're not meant to be discouraging. The percentage of startups that succeed enough to compensate the founders for their time is low, and the percentage of startups that truly succeed is very low, but that's largely because most founders make a number of bad mistakes. The existence of successful serial entrepreneurs (e.g. Elon Musk or Lachy Groom, that teenager recently talked about on HN) shows that a particular startup can have a high likelihood of success if the founders do a good job. I don't really think people should found a startup if they believe the odds of their particular startup with them as its founders will have a very low likelihood of success.

<i>"Only thing we have to fear is fear itself."</i><p>Business is ultimately managing risk and figuring out how to make it both profitable and (sometimes) fun.<p>If you're hung-up on and/or scared of the risks of starting a business rather than earnestly evaluating each bit of information for it's situational value, and moving agilely ahead... you're probably going to run into issues.<p>Keep risk in mind, but be courageous enough to act/execute without having it pull you down. Be an opportunistic and optimistic realist, with a cynic's backup plan.<p>To put it simply:<p>"Scared money don't make no money."

I think key part of this article is this sentence: "Watching your savings dwindle isn’t a risk, it’s a fact." There's no risk in founding a startup, if you take "risk" to mean "possible downside". There is a _certain_ downside; maybe that doesn't qualify as "risk".<p>If you go into a startup thinking that you'll have dwindling savings, lost time with family and friends, and mental and physical health impact, there's nothing "risky" about it.

There is also the "fear of unknown". This could be one of the many things like "Incorporation" "Taxes" "Is it legal" "What if" and so on...<p>Sometimes, even a good person pulls back just because of this "fear of unknown"<p>The unknown could be the "success" itself. What if I am successful?<p>For them, it is best to join a startup and just watch and learn from others. If they are ready may be they will jump in the next boom cycle.

Entrepreneurship is the quintessential American dream: a way to break out of a mold by your abilities and hard work.<p>If you're talking to someone on the fence, the risk / reward equation basically looks like this:<p>Real world problems creating a business vs making your dreams come true. There's a very obvious side of that equation to massage.

OP makes excellent points. The point is that starting a business is not a risk but it has costs.<p>However, there is one big risk. It is health insurance. Because it is really hard to put sticker price when insurance company tells you that you are 'uninsurable'.

I'll paraphrase Peter Drucker: the job of an entrepreneur or businessman is risk management and risk elimination. The goal is to limit and kill risk, not pretend it's not there. Entrepreneurs are properly risk killers.<p>A lot of this is rather crazy, logically speaking. That is, the author constantly contradicts himself.<p>Like this: "Watching your savings dwindle isn't a risk, it’s a fact." That's nonsensical. Just because it's a fact, doesn't mean it's not a risk.<p>Or saying that there is no risk. There is risk in every single thing you do your entire life: you're 'gambling' with time constantly, and time is your life currency, it's always running out, how you spend it is a risk based equation.<p>If someone spends 30 years of their life on ten startups, and none of them work, how'd that risk equation work out? The business survival odds say that it's very easy to do ten startups and have all of them fail.<p>Lost time is an extraordinarily expensive proposition. You can never get it back, and you get one life to live. There's no greater risk in life than wasting time. The author says that it's not a waste because you're learning; that's not always true first of all (people often repeat mistakes), and second that only matters if some day that knowledge pays off (and that's a massive risk variable).<p>"you can build an incredible network"<p>"can" = risk variable. The potential for something to happen is not a guarantee, which means there's risk there.<p>The entire article is filled full of proofs for there being tons of risk in starting a business.

This article writer (to a certain degree) exemplifies recklessness, irresponsibility and selfishness - It is a rare person and at slim odds that someone can have a successful and happy life and family while following this philosophy. (let me guess what generation he is from).<p>Sure HE may be doing OK SO FAR in life because of many reasons not disclosed in the article. Perhaps he has great people skills or markets himself really well. Maybe he has a very high IQ or possesses one or more of many intangibles or contacts that most people do not have (or maybe just has a large trust fund or his wife has a steady 9-5). Many if not most who follow this philosophy will end up with massive debts and with their family deserting them. (their lives will be in complete ruins). This fate is similar to most aspiring musicians, artists and pro athletes (most never make it big and pay dearly in the end).<p>This scenario reminds me a bit of several friends that I had in my youth. One of the friends used and advocated illegal drugs regularly. He was was a functional (actually successful) person. Several of my other friends thought that they too could have a successful life while doing drugs. They thought that it would not get the best of them. Sadly, all who tried rather quickly failed and succumbed to drug overuse/addiction their lives became shambles. Most of them have never recovered their lives 20+ years later now. Ironically, the functional drug attic that they emulated eventually got clean - largely because he saw what the drugs did to the others and he realized that even he was vulnerable (his drug use carried too much risk).

If the startup succeeds: great! Of course, success or failure depends on whether you have a good idea and can execute it.<p>If the startup fails: you're broke and probably deeply in debt. Hope you can find a church to take you in.<p>If you don't try for a startup: You still have a buffer of money to fall back on for a time. If you were "insanely employable" before thinking about a startup, you are employable now and can get a good job before the money runs out. If not, you would have been in even worse shape if you had tried to launch a startup and it failed.