Your Risk Appetite

As part of my 2020 goals, I have made reading widely a daily activity. In January I was reading a book called Measure What Matters by John Doerr (read a summary below). One of the citations he made was for a company called Zume whose initial work was to have pizza made by robots. As I read the book I was fascinated by technology and what young minds are applying it to. Then I sought to learn more about Zume and landed on a video about how it recently pivoted from pizza making and delivery to logistics.

In digging a little deeper about the company, I realized that the investor who has significantly backed Zume Inc., also backed a company called WeWork, which also recently declared bankruptcy and is being shut down. This investor, the founder, and CEO of Softbank, Mr. Masayoshi Son, injected hundreds of millions of dollars in these two companies and they failed.

These, however, are not the only investments he has. They stand out because they were huge falls in the tech world.

As far as risk appetite is concerned, Mr. Masayoshi Son of Soft Bank, has some of these lessons to teach us:

Take your losses in the same stride as your wins

Our reactions to losses and wins are as varied as our personalities. Some are motivated by what would be deemed as failure, some are so elated by the success that they forget to move on. The importance of celebrating your wins cannot be overemphasized. When you take time to recognize and evaluate your wins, your heart and mind are sparked to develop a habit of success around the actions and thoughts that led to that point. The failed attempts are also not an amplifier for self-condemnation. We should take those moments to realistically assess what didn’t work out and why. That way, we are bound to grow and avoid wasting our time and energy on stuff that doesn’t work for us.

Don’t let your failures define you.

I once shared about my $10,000 lesson and the feelings of failure that surrounded it. I think the SoftBank CEO has gone through more than I have, yet he continues to make investments in unproven businesses. We can be quick to say that he has the money to spend, but I believe that is not it.

How he gets a whole board of intelligent business people to approve the millions of dollars speaks of a person who has refused to let failure define him. He knows WeWork failed, he knows Zume needed to pivot away from robotized pizza making and he knows his money is gone. Yet he still turns up for meetings where he evaluates potential investments. 

I believe he is quick to guard his heart against calling himself a failure. He is more likely to say, “the investment failed” than he is to say, “I failed to make good business decisions”.

You stand to lose more when you personalize failure and attach it to your purpose.

Always walk into a deal with a win in mind.

Robotized pizza making was a foreign concept that people scoffed at until it was done. Some of the investors went in just for the fun of being associated with such a pioneer concept. By the time an investor is signing a multi-million cheque for such a concept, they have evaluated and believed that it will be a success.

Going into a deal with doubt is shooting yourself in the foot because you will consistently have something that is pulling you back from giving all of your self. It is information, instinct, and intellect that allows you to have the right mindset for an important decision.

This way, you will always have a level of winning that others can’t enjoy.

Until next week…

In these trying times of #COVID19, it is normal to have fear drive most of our decisions, whether career, business or family.

Our risk appetite reduces significantly because of the unknown future.

If you are indoors, relegated to your couch with devices all around you, take a break and reflect on your risk appetite.

Before the COVID-19 madness descended upon humanity, how was your risk appetite in matters investment, change, relationships, career, etc? How will it be after the COVID-19 crisis?

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