Should You Start Something?
On advice, risk tolerance, and going out on your own.
I’ve been reading The Psychology of Money by Morgan Housel over the past few days and man is it worth a read.
Housel, a venture capitalist and former WSJ columnist, describes the book as “20 chapters [on] what I consider to be the most important and often counterintuitive features of the psychology of money” (p. 7).
And you better believe there’s good stuff in there on the psychology of work decisions too.
An example - Housel says, “When a commentator on CNBC says, ‘You should buy this stock,’ keep in mind that they do not know who you are” (p. 172).
I’ve got no interest in CNBC commentators, but equally, when you listen to a podcast or read a book, an article, a tweet, or - dare I say, a newsletter - that offers thoughts / advice about work decisions, remember that the author has no idea who you are. Which is to say, someone else’s rationale for deciding a certain thing may make absolutely no sense in your situation. They likely have different priorities, values, and interests, they may have different knowledge or skills, and likely a different risk tolerance, etc.
What I like about this check on my own thinking is that even ironclad, time-worn advice still needs to be filtered through the lens of my own personal circumstances.
Another thought from the book that’s sticking in my mind - in describing the psychology of risk tolerance, Housel writes about accounting for the “gap between what you can technically endure versus what’s emotionally possible” (p. 141). Building room for error into your decisions can allow you to survive through lows long enough to participate in the highs.
A conversation I often have with people about work is whether / when / how they should go out on their own. There are a few key questions I try to ask in these situations to help pressure test the thought process:
What are you trying to accomplish?
More autonomy?
Financial upside?
Realizing an idea / building something?
Etc.
Can you survive financially?
Solo or co-founder?
What does your spouse / significant other / family think?
I’m interested in getting a sense for how they’ve thought through things like social support, co-founder dynamics, the financial reality, and what is actually pushing them to step out.
What I like about Housel’s thought in this context is that the technical logic may not always line up with the emotional reality. Maybe you can financially withstand not making an income for a year while you get started, but do you have the social / emotional tolerance for it? Maybe you want more autonomy and control over your time, but how will you tolerate the lack of structure?
So should you start something of your own?
Yeah, honestly, you probably should…he says, knowing nothing of your individual circumstances.
But that’s the point isn’t it? You know your circumstances. If you want to start something by all means start something, start lots of things, just do it in a way that makes sense for you.
If you’re more risk-averse, maybe moonlight until you can replace a certain amount of your income. Or line-up a project (or two) so you can get started immediately when you make the jump. If you’re really social, maybe find somebody to work with or a partner. If you’re worried about the highs-and-lows that come with going out on your own (and you should at least be mindful of them), pull together a support system.
All of these things can help you build in some room for error, a little margin that may increase your chances making it work out like you want it to.