Rome was not built in a day but Hiroshima and Nagasaki were destroyed in a day. - Vijay Kedia
We all are psychologically wired to rags-to-riches stories. The Oscar-winning rags-to-riches story Rocky which was written by its star, Sylvester Stallone propelled him out of poverty in real life. Stallone was a struggling artist before the film, he refused to take any offer for his script if he wasn’t allowed to play the titular character. His perseverance landed him a far smaller paycheck than what he could have earned just for his screenplay, but the risk was well worth the reward: Rocky ultimately ended up making Stallone a global star and a billion-dollar movie franchise.
An important point to take a note is when it comes to the business of movies or any other field for that matter the chances of a risk leading to a reward are far lower. We only get to know about the people whose risk paid off and we have very little clue on the rest.
In stock markets only over 5% of the investors make money. And the remaining people lose their money including new and seasoned investors.
Let’s define ‘Risk’ - its the chance that an outcome or efforts/investments actual gains will differ from an expected outcome or return. It includes the possibility of the entire effort/investment biting the dust.
You may be the smartest person to have lived but still, all your risks need not pay off. Take the case of Isaac Newton who was a genius, but he lost millions in the stock market.
When most of the risk might not lead us to rewards, why do we take risks?
The closer you are to death, the more alive you feel. - James Hunt (Rush, 2013)
Mountaineering is one of the deadliest sports in the world and climbing Mount Everest is undoubtedly the riskiest of all, over 288 people have died attempting. But every year people from all over the world, knowing the risk that they may never return, attempt the climb. And it is expected Everest will become more crowded over the years.
Fundamentally we take risks, because of the rewards we seek. The reward can differ for each individual for some its recognition, others its purpose and for many it can be the massive upsides.
Recognition - The risks we take might help us get noticed. Imagine if Sylvester Stallone hadn’t taken that risk with Rocky we might have never known him and maybe Rocky would have never been made.
Purpose - To bring a purpose to our lives. Going back to the movie Rush where Niki Lauda says, ‘Twenty five drivers start every season in Formula One, and each year two of us die. What kind of person does a job like this? Not normal men, for sure. Rebels, lunatics, dreamers. People who are that desperate to make a mark, and are prepared to die trying.’
Massive Upsides - Risks propel us to bigger opportunities. Elon Musk after selling X.com (which became PayPal) for 165 million dollars could have very well retired for life but he decided to bet on Tesla & SpaceX breaking all barriers.
The story of how the Founder Of FedEx managed to save the company from bankruptcy by his trip to Las Vegas and gambling all the little money that was left is quite popular. Frederick W. Smith the founder of FedEx went all out to keep his business alive for one more week. We are attracted to stories like these and make it part of our folklore. Though we might understand that most of the time risks don’t always lead to rewards. We get captivated by stories like these which are rare and if they were common we wouldn't be discussing them.
Mark Twain, the Great American author tried to get rich quick, again and again, ended up bankrupt by the age of 59. The 19th-century startups cost Twain his fortune, he lost money on an engraving process, on a magnetic telegraph, on a steam pulley, on the Fredonia Watch Company, on railroad stocks. He even once turned down a chance to buy Bell Telephone even though he had one of US’s first residential phones.
Just like how most success is not overnight. Failure as well is not overnight it is a result of few errors in decisions repeated over a period of time. In reality, there is no ‘get rich quick’ scheme. You need to have patience and take calculated risks to earn rewards. Many a time the risks we end up taking might not be worth the reward.
Patience is underrated.
“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.” - Warren Buffett
But, we do get better at taking risks the more often we take, as the failures tend to leave a deep scar within us and we might be better positioned at calculating the risk to reward ratios.
Remember, it’s also risky not to take any risk.