Risk and risk assessment

Filed in archive Bootstrapper Profile on April 28, 2010

© Matt Biddulph

Slate is running a series this week on the concept of risk, something that every entrepreneur is familiar with. Appropriately, the third article in the series is about a bootstrapping web startup called Redbeacon. Redbeacon, which competes in the online/local connector space, was formed by three former Google engineers in * and won the 2009 TechCrunch 50 competition.

The interesting thing about the article is that it's more about assessing risks than taking them, although the founders are like all entrepreneurs taking significant personal financial risks. But while bootstrapping is risky, risk is all relative once you make that first big jump. How we deal with subsequent risks in our businesses can look remarkably conservative. Starting with so few resources, few people are so cautious as bootstrappers in their decision-making.

The article is a study in the process behind making those decisions, from determining what market to compete in to deciding whether or not to seek or accept venture capital funding. It's not an unfamiliar process; most entrepreneurs obsess over the degree of risk involved in their decisions, agonizing in the choices available. But the Slate article is a remarkably clear overview of how those decisions are approached in today's environment. It's worth a read by anyone starting up or considering starting up a new business today.