Essays/linkedin/23-12-01 uncertainty and risk

💡 Entrepreneurs act on a high degree of uncertainty, while investors calculate risks.

Entrepreneurs are doing things for the first time, and there is no way of constructing a distributions of outcomes with associated probabilities. At the beginning, maximizing learning opportunities is crucial in order to lower the amount of uncertainty.

On the other hand, investors have seen it several times in the past. For them, the perception of the company fits within a distribution with a set of output probabilities. An investor is taking on a varied level of risk and judge proposals in that light.

The mismatch between entrepreneur's uncertainty, and investors risk perception can become a bottleneck for communication.

Entrepreneurs can embrace uncertainty, while thinking about risks.