Start-ups…The Ultimate Risk-Reward Game.

In my youth I read a Jack London tale about a scruffy teen who hung around the wharf in Oakland. He did whatever work he could find as he was alone, no family or resources. The time line was in the 1930’s. Not a great time in American history. The Great Depression, the Dust Bowl and other circumstances made just living very difficult.

Not all this teen’s activities were above the law. There were many nights when he assisted others who like him struggled to feed themselves and their families by unlawful means. Of course these “down and outers “were easy targets for the truly criminal types.

The teen, we will call him Billy for this blog, often raided the oyster beds South of Oakland. These beds or oyster farms were the property of others. These beds were guarded by men with guns. When the thick San Francisco fog rolled in it was impossible to see let alone guard the oyster beds. That is when the beds could be raided; the oyster racks brought to the surface and emptied of the contents. This was backbreaking, dangerous work that paid very little. The lion’s share of the night’s take went to the owner of the skiff (small boat).

After a coastal storm there were a lot of damaged boats at the wharf. Billy paid $15 for a skiff that had been damaged and was currently underwater. This was a lot of money at the time, and represented many fog filled nights doing dangerous, illegal work. It took him weeks to raise and then repair the damaged skiff, but soon he was using it to steal and then sell oysters.

One day while doing repairs on his skiff in preparation for that night’s foggy foray, Billy was approach by a supervisor for one of the many warehouses that lined the docks. There were many ships in the harbor at that time and a shortage of dock space. The supervisor was hiring any skiff he could find to row freight out to a ship anchored in the harbor. Billy took the day job of hauling cargo out to the anchored ship. At the end of the day’s work he had made as much as he would have made in two weeks of stealing oysters.

Ultimately Billy quit his night job and became a legitimate businessman hauling cargo out and back from ships that could not tie-up at the busy docks. Billy soon had acquired additional skiffs and crews. Fast forward many years and we find that our little wharf rat has become a successful shipping magnate worth many millions of dollars with a fleet of freighters. Billy had taken a chance buying a damaged sunken skiff. Seizing that opportunity and others that followed allowed Billy to build his empire.

Why am I telling you this tale? What has an impoverish teen in the 30’s have to do with you?

Maybe nothing at all. Or maybe Billy’s story is the same story as so many start-ups.

Lessons Learned:

  1. Start-ups are not for wimps.

Sure you mostly likely will not have to deal with guys with guns or potentially going to jail to launch your start-up but there will be many, many times you will want to quit. There will be times when you will be so in the weeds with no visible way out that you will wish you never started. Welcome to the world of Start-ups.


  1. Identify and then act on opportunity.

Steve Blank says that 95% of successful businesses do not look anything at all like the original concept. Pivots come in many colors, shapes and sizes. You will miss them if you are not open and actively looking for opportunities.


  1. You must scale if you want to play with the big boys.

The difference between a successful lifestyle business (small business) and category killer is size. Both are successful. Both are built on repeatable practices and procedures. Both meet customer needs. But one can puts many more times people to work and generates piles of cash. One is obviously many times larger than the other. One scaled, one didn’t. Which business model will you choose for your start-up? Once you make the choice to build a scalable business every decision you make must be in line with that goal. It is very easy to paint yourself into a corner if you are not constantly focused on scaling.


  1. True entrepreneurs will crawl naked over broken glass to launch their dream.

Gut check time. What are you willing to give up, to sacrifice, so you can be successful in your launch? Start-ups are truly in the risk-reward spectrum. It’s a mentality. You either have it or you don’t. In poker it’s called “going all in”. You must be willing to trade the life you have now for a vision you have in your head. The cuts and bruises you will get along the way will not hurt you if you truly believe in what you are doing.


Yes, Billy’s story is extreme, and maybe your story does not include guns and law breaking. But none the less my guess is that you have found some similarities between you and Billy. I will also wager that you are equally passionate about your concept. I will also bet that you probably work really hard at trying to launch your company.

Passion and a strong work ethic will get you out of bed in the morning, but that is not enough to insure you are successful. You need to work smart. And, you need to jump on every opportunity. Yes, that is a risky way to build a business. Not acting on opportunities is also risky and rarely provides the kind of reward entrepreneurs need.

Crash and burn is a way of life for true entrepreneurs. Those failures are very important lessons. Sometimes those failures will light the way to new opportunities that would have remained hidden if it were not for taking a risk no matter what the result.

Jumping off a cliff without a parachute is not risky it is stupid. Doing stupid things will not get you to launch. Don’t confuse risky with stupid. Take risks, learn from risks, make changes, then try again. Risks lead to rewards.

Scary yes…effective yes. Risks sometimes come with collateral damage. You must make that call. Is it a risk that can move you closer to your goal, or is it just risky and maybe a fatal move? Mom used to say, “You can’t make an omelet without breaking some eggs.” You have to take risks in the Start-up Game. Taking smart risks can earn you great rewards.

By Michael Sawitz, Founder


Aug, 12, 2015