Perceptions of Risk

If you see a snake that you don’t know much about, your best bet is probably to avoid it.Some snakes can be dangerous. Some snakes bite. Some are poisonous.So avoid them. There’s potential danger, and the return is low. Just don’t touch the thing.That’s a perception of risk.Now take that perception, and compare it to that of someone who’s spent their life studying snakes.With their understanding, with their familiarity of the worlds species of snakes and each of their quirks, the very same snake might easily be identified as harmless.Same snake. Two different people. Two very different perspectives of risk.--Earlier this summer, when I was at home in the US visiting friends and family, a friend of mine mentioned that entreperneurship was “the risky path."He didn’t mean anything by it - it was just in passing, really - but the comment stuck with me because I realized that it spoke to a disparity in perceptions of risk between us.From his perspective, the most likely outcome with starting a new business is failure.Tons of people fail trying to start businesses, so if you it’s financial security you’re after, the least risky thing to do would be to get a secure job with a big, stable company.I understand that perspective, but I see the problem a little differently.From my perspective, I’ve always seen the sustainability and prosperity of my products and businesses as a likely outcome.Once the math of building a $1M/year recurring-revenue business was broken down for me, it just seemed so digestable. So doable. So possible.Not to mention, $1M is a lot of money! Most Americans would be satisfied with a salary 1/10th of that!Maybe it was (or is) youthful arrogance, but I’ve always felt that surely I could build something that would sustain me at at least that level.So I never felt that much risk about this path. I saw a real, direct path to financial security, prosperity, and freedom.And so there was the disparity.Same snake. Two different people. Two very different perspectives of risk.

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