VC Cliché of the Week

You often hear that a CEO is “betting the company” on some new product or some acquisition.  It’s generally a negative connotation. And if you are running a Fortune 500 company, betting the company is probably not something you want to be doing.

But in a venture stage company, you should be betting the company every day. There isn’t much point to managing to the downside because to be honest most venture stage companies don’t have a business that’s worth protecting on the downside.

It’s all about the upside in the startup business.  It’s about taking risks and getting somewhere – value creation.

I think this is why many (most?) big company managers fail as venture stage CEOs.  They are taught to mitigate risks, to plan, to protect. They don’t want to fail and so they do.

Entrepreneurs are risk takers by definition. They enjoy betting the company and do it regularly. It’s not that they are cavalier or reckless about it. They understand the risks they are taking, they know how to assess probabilities, they know what they are doing. But at the end of the day, they pull the trigger, put it all on the line, and come up winners more often than not.

So if you are working in a startup, make sure you are betting the company on a regular basis. If you aren’t, you are more likely to fail.