Here’s a hard truth for entrepreneurs: The people who tell you to “Go all in” have no idea what it means to go all in.
Or, they think they do, but they fail to recognize that “all in” for them included safety nets that most people don’t have.
One of my favorite podcasts is Guy Raz’s “How I Built This.” Raz’s guests — to name a few: Bill Gates, Jimmy Carter, and Condoleezza Rice — tell the stories behind their companies, explaining how they turned empty lots into skyscrapers. Raz never fails to ask his guests about their safety nets — what they knew, consciously or subconsciously, they could fall back on if they failed.
Safety nets have a major impact on entrepreneurs’ risk tolerance. The more safety net an entrepreneur has, the more risk they can take with their companies — and their lives.
Safety nets come in a few different forms:
- Personal runway. “Runway” refers to how many months or years of money you have saved up in the bank. If you’ve got $5,000 of monthly expenses and $50,000 in the bank, you’ve got 10 months of personal runway. Someone working on one month of personal runway is going to act urgently and desperately; someone with 2 years of runway can afford to take their time.
- Generational wealth. Are your parents going to pass on a significant amount of money? Someone whose parents will rely on them for retirement support will think very differently than someone whose parents are financially set.
- Network. Do you know people who can find you jobs, give you seed money, act as your personal advisory board? Where 1 and 2 constitute your financial capital, your network is your social capital — just as essential to entrepreneurial success.
Some people have all of these, some people have one or two, some people have none. Whether you can afford to “go all in” on entrepreneurship depends largely on how many you have. People who tell you to “go all in” — or a more recent trope, “don’t go to/drop out of college” — tend to be people with at least one, if not all three.
To people following entrepreneurial dreams without a safety net, here’s what you can do instead of going all in:
- Hustle. There are those precious few Jay-Zs in the world, who grow up with the exact opposite of a safety net — in the lion cage. For them, it takes sheer, raw hustle to start climbing the ladder — transforming every waking moment into the pursuit of passion.
- Get a good education (and focus on network while you do). Where do great professional networks come from? For people who grow up privileged, they have the built-in advantages of powerful friends and family. For people who don’t, higher education is a key resource. Go to college and/or grad school, and be proactive about building relationships with students and professors you admire.
- Join a company (and focus on network while you do). Another myth about entrepreneurship is that you can’t have a day job if you want to build a company. Speaking from experience, that’s nonsense. Not only did I spend years in nonprofits and politics, but for the first two and a half years that I was building Upscribe, I took an advisory job to pay for the basics like rent and food. So I didn’t have to tap into my six months of personal runway.
- Save and invest — build your personal runway. If you truly want to be a world-changing entrepreneur, you know that it’s your life’s work. Take a thorough audit of what you’re spending money on, and ask: Does this in some way contribute to my life’s work? Or is it expendable? The more personal runway you have, the more time and energy you can devote to your company in those crucial early stages.
If I’d had more than six months of runway, would I have taken the advisory job? Probably not. Would my company have scaled more quickly? Almost definitely. But those weren’t the circumstances. I didn’t have the safety nets that, say, Elon Musk had: family wealth, social clout, entrepreneurial siblings.
If you can absolutely afford to, sure, go all in. But before you listen to the urgings of privileged founders, assess your situation, and see if it makes more sense to accumulate some social and financial capital first.