Do entrepreneurs like risk? Are they native risk takers?
Popular media says they are; after all, who else is crazy enough to abandon a high-paying job in finance, in consulting, or even in another well-funded startup to go out on their own, especially with an unproven idea?
An alternative view says that they are actually risk-averse, but it depends what kind of risk. Entrepreneurs balance the risks of doing a startup with the risks of missing the quickly-passing opportunity. They are like the rest of the world, but they see both sides: the risks of action and the risks of inaction.
What successful entrepreneurs definitely do not do is spend their time worrying about and focusing on unlikely risks, those that might be serious but have a 1% or less chance of happening. After all, so many things can sink the venture, most of which have a 10%, 20% or higher chance of happening; why worry about the sub 1% problems?
Those bigger issues are things like raising capital, closing deals, hiring good people… which is why CEOs spend most of their time on those items. Then they hire people – normally called lawyers – to look out for those other risks.
Scott C. Johnston, writing in the Naked Dollar, tells people, “Don’t Go To Law School.” Many of Johnston’s brightest classmates went to law school, seeing it as a natural extension of a liberal arts degree. Unlike most engineers, I actually do see the value in a history or English degree, although personally I prefer a science or business degree that includes proper core curriculum courses (like Columbia’s). Ten years on, most of those who went to law school are miserable. As Johnston puts it, “Much to their surprise going to law school actually results in becoming a practicing lawyer.“
But the reason so many of them are miserable is because the practice of law is the exercise of risk aversion. Lawyers spend their time mitigating those 1% risks, endless hours worrying about minutiae. And unless you love legalese as much as an accountant loves seeing 10,000 entries in a ledger balance to the last penny, you are going to be miserable.
There are some who either love the minutiae or get the excitement of actually resolving issues, sometimes adversarially, as a litigator.
Either way, law school, and the practice of law, is about mitigating or entirely avoiding risk. This is what lawyers are there for… and it is the death knell for entrepreneurs.
Unlike Johnston, I don’t think you shouldn’t go to law school because you might hate it, although that might be true. I also don’t think you shouldn’t go to law school because we have too many attorneys; that is true, and is bad for all of them; commoditization will only make it worse (but better for clients). I think you shouldn’t go to law school if you have a single entrepreneurial bone in your body because you need to be comfortable measuring, evaluating and taking risks to succeed as an entrepreneur, not years training to avoid them.