Can You Be A Successful CEO Without Taking Risks?

taking risks

“I told “Ray” not to screw it up,” I said to my friend, “Aric”, at dinner. My family and I were in town, visiting colleges for Avery, so we took the opportunity to have dinner with Aric.

Aric laughed. Four years earlier, Aric introduced me to Ray because he felt I could help Ray build his company. Now Ray’s company is worth $1.5 billion and counting.

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The most successful entrepreneurs avoid taking any unnecessary risks.

My advice to Ray to not screw it up was me saying, “Don’t do anything stupid.” In other words, don’t take any unnecessary risks.

I wasn’t telling Ray to play it safe. I was telling Ray not make any “kill the company” decisions because there was no need to do that.

Now, the start of Ray’s company was one big kill the company decision. Ray had a radical idea for how to upend the technology in a major market.

On paper, the idea looked really sound. More than sound, the idea was brilliantly elegant.


You want to systematically reduce risk as you go forward in your journey.


There’s no bigger compliment I can give a technologist then to say their design is elegant. That means the design is breathtakingly simple.

That’s exactly what Ray’s design was, simple. And the simplicity of Ray’s design unlocked a 100X improvement in performance versus the competition.

If Ray could prove that his product worked as he said, then Ray’s company would win big in a massive market.

So Ray, step by step, proved his idea did work. The first step was showing Ray’s hardware worked in a software adaptation. The next step was building part of the hardware and showing the performance stayed the same.

Each step of the way, Ray showed his investors and customers that his idea worked until the final hardware was presented to customers, again with the 100X improvement in performance. Now Ray was off to the races, but he wasn’t out of the woods, just yet.


You can take unnecessary risks and screw up in non-technology areas of your business too.


For example, one of my investors asked me to build a team in China. On paper, this idea looked great. However, the reality of building a China team, in my industry, would greatly increase the risk of failure.

Ray was presented with a similar dilemma. There was the possibility of picking up a team in another country.

The team was skilled, and Ray had already worked with them. When Ray asked me what he should do, I again advised against hiring the team because I felt it significantly increased the risk.

“Can you build the team yourself?” I asked Ray.

“Yes,” he instantly answered.

“Then you should. It’s (acquiring the other team) is an unnecessary risk. Let the outside team work with you for now, and build up your own team in parallel.”


You don’t have to recreate the wheel.


Building a successful company is hard enough without adding degrees of difficulty to the equation. For example, if there is a revenue model that works in your industry, then there’s no need to come up with something new; especially if the something new is going to increase the risk of failure.

That’s what I love about Ray’s company. The core innovation appears to be risky, but it’s elegantly simple.

The implementation of the product further reduces the risk. For example, the manufacturing partners Ray choose are all high-end, not low cost manufacturers.

The reason Ray made these choices was it’s better to pay a little more, than to have a quality issue that could hurt the company’s brand and kill the company. As long as Ray sticks to that thought process, he will not screw it up.


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