I've been keeping up with the VogelWorks blog. I enjoy it a lot, and I'm glad you're writing it. Finally a blog about things I find interesting. I had a note to make about the discussion you were having with Nartz about confidence and risk mitigation. I think you evaluation of a good entrepreneur as being someone who is confident enough to act independently in such a manner that can be perceived as risky by a risk-averse person, but that is actually well-grounded in a combination of intelligence + experience. The note I wanted to make, which is more of a caution to you, is remember to frame “risk” correctly. That is to say, risk, at its core, is at least loosely correlated with a probabilistic assessment. We are all probability blind, as you know. I'll remind you of that book I read, Fooled By Randomness, even though I'm sure you have plenty of books waiting to be read. It's good for illustrating how most of us smart, successful people aren't so successful when our actions are forced to stand up to many rounds of a Monte Carlo simulation.

Even people that we consider to be successful over a long time-course, making a very small probability of just getting lucky a bunch of times in a row, can't so simply be deemed wise, or probabilitistically rational actors because there is an inherent selection here. The argument that these people are probabilistically rational actors is only valid when viewed against the much larger backdrop of people with similar decision functions (if I can get all game theoretic on your ass). I think in most cases you would find that these “successful” people are simply those that got lucky amidst a sea of unlucky people with the same plan. Of course one might find the contrary in which case I would feel comfortable saying that they have a truly robust ability to discern risk.

Confidence sheds a different light on(perceived) risk that can actually allow a more objective perspective on risk. If most people are risk averse and do have a strong preference to stay within established organizations, they have a distorted view just as a risk-loving individual does. I'd say a confident person that is comfortable acting in a more independent fashion (like a start-up) has the potential for a more objective outlook and can make the rational decision to “cross over” the (perceived) risk line.
This isn't to say that some entrepreneurs aren't risk-seekers. But, I'd guess that the good entrepreneurs are just comfortable with being independent (and have the confidence to so). A big part of building a company is mitigating risk.

It seems that because entrepreneurs consciously make the choice to take on more risk than regular individuals, they must have a certain characteristic that seperates them from the normal group. I believe this is the main reason that people may 'mask their admiration' as you state it — many people want to do something to change their situation, to build something for themself, and to feel 'alive' — yet the risk is too great a deterrant. The question then becomes, what is necessary for one to 'cross over' this risk-line? What do you think Kevin?

I would propose that it could be a number of factors. It could be as simple as the realization that, in the end, taking on this risk will provide you with greater averaged returns. Similarly, it could be that a certain 'cockiness' allows an entrepreneur to handle more risk because the 'cockiness' behavior tends to do three things: bolster one's confidence, keep one focused on the self and the successes of the self, blinding one from negative possibilities or consequences. A 'cocky' individual may therefore be better equipped to handle both the day-to-day ups-and-downs as well as the general increased risk burden involved in a startup. A normal 'non-cocky' individual wouldn't be able to shake off the lows, and would actively compare his situation to a stable one which offered less variation and less risk/stress.

I've been keeping up with the VogelWorks blog. I enjoy it a lot, and I'm glad you're writing it. Finally a blog about things I find interesting. I had a note to make about the discussion you were having with Nartz about confidence and risk mitigation. I think you evaluation of a good entrepreneur as being someone who is confident enough to act independently in such a manner that can be perceived as risky by a risk-averse person, but that is actually well-grounded in a combination of intelligence + experience. The note I wanted to make, which is more of a caution to you, is remember to frame “risk” correctly. That is to say, risk, at its core, is at least loosely correlated with a probabilistic assessment. We are all probability blind, as you know. I'll remind you of that book I read, Fooled By Randomness, even though I'm sure you have plenty of books waiting to be read. It's good for illustrating how most of us smart, successful people aren't so successful when our actions are forced to stand up to many rounds of a Monte Carlo simulation.

Even people that we consider to be successful over a long time-course, making a very small probability of just getting lucky a bunch of times in a row, can't so simply be deemed wise, or probabilitistically rational actors because there is an inherent selection here. The argument that these people are probabilistically rational actors is only valid when viewed against the much larger backdrop of people with similar decision functions (if I can get all game theoretic on your ass). I think in most cases you would find that these “successful” people are simply those that got lucky amidst a sea of unlucky people with the same plan. Of course one might find the contrary in which case I would feel comfortable saying that they have a truly robust ability to discern risk.

Confidence sheds a different light on(perceived) risk that can actually allow a more objective perspective on risk. If most people are risk averse and do have a strong preference to stay within established organizations, they have a distorted view just as a risk-loving individual does. I'd say a confident person that is comfortable acting in a more independent fashion (like a start-up) has the potential for a more objective outlook and can make the rational decision to “cross over” the (perceived) risk line.
This isn't to say that some entrepreneurs aren't risk-seekers. But, I'd guess that the good entrepreneurs are just comfortable with being independent (and have the confidence to so). A big part of building a company is mitigating risk.

It seems that because entrepreneurs consciously make the choice to take on more risk than regular individuals, they must have a certain characteristic that seperates them from the normal group. I believe this is the main reason that people may 'mask their admiration' as you state it — many people want to do something to change their situation, to build something for themself, and to feel 'alive' — yet the risk is too great a deterrant. The question then becomes, what is necessary for one to 'cross over' this risk-line? What do you think Kevin?

I would propose that it could be a number of factors. It could be as simple as the realization that, in the end, taking on this risk will provide you with greater averaged returns. Similarly, it could be that a certain 'cockiness' allows an entrepreneur to handle more risk because the 'cockiness' behavior tends to do three things: bolster one's confidence, keep one focused on the self and the successes of the self, blinding one from negative possibilities or consequences. A 'cocky' individual may therefore be better equipped to handle both the day-to-day ups-and-downs as well as the general increased risk burden involved in a startup. A normal 'non-cocky' individual wouldn't be able to shake off the lows, and would actively compare his situation to a stable one which offered less variation and less risk/stress.