Those Who Do Not Risk Cannot Win
A couple of centuries later, the lessons of John Paul Jones still apply….
“It seems to be a law of nature, inflexible and inexorable, that those who do not risk cannot win,” said the so-called father of the US Navy, John Paul Jones. And you may wonder what John Paul Jones has to do during a twenty-first century pandemic, but being an old Navy guy, I can’t help myself. And I do like the simple logic of the military, where life can be pretty binary: “Yes sir or No sir,” (or the occasional, “I’ll find out, sir.”) And I think businesses would benefit from less posturing, less ambiguity, and more decisiveness: yes, no, or “I don’t know – but I’ll find out.”
But back to Admiral Jones (whose bones, incidentally, rest in Annapolis in a crypt below the US Naval Academy chapel). As a young Midshipman, I was taken by Jones’ practical advice on risk versus reward. And while my life in general has had a lot to do with taking risks, unlike the Navy, the consequences of taking risks in business typically don’t include life or death. Today, we can only imagine the terror of the crew of Jones’ newly minted USS Ranger, facing the more heavily armed and better trained ships and warriors of the British Empire: “Well, kids, in order to beat these guys, I’m gonna try some risky stuff. And I hope I’m right, but if I’m not, we’re all probably gonna die.” And the history buffs reading this may recall that when things weren’t going so well for Jones in that battle, his ship and crew alike shattered and bleeding, the commander of the British frigate asked Jones if he was ready to surrender. To which Jones responded with the immortal – and certainly ballsy - words, “Surrender? I have not yet begun to fight!”
For me, risk is what makes life interesting. And yet in my career, I’ve encountered so many who consider risk a four-letter word. People who are afraid to put their name by a decision that may turn out poorly. Who, instead of a simple yes or no, would vote “present.” Or would take extraordinary steps not to have to make a controversial decision that involves risk: “While I tend to agree with you, I think we have to study this issue in greater detail.” Theodore Roosevelt had some words for them: They are “Those cold, timid souls who know neither victory nor defeat.”
If your reading this on Wisdom’s website, you’re probably a risk taker. And Wisdom Warrior I, our current fund and barely a year old, certainly hasn’t won yet. But nobody’s died, either. Our portfolio CEOs have risked a lot. Most have left the safety and security of a steady and substantial paycheck to venture into their own visions. And now, in a recession that places challenges unfamiliar in the past decade of unprecedented economic expansion, they risk far greater uncertainties related to pandemics and civil discourse. Many have had to reduce staff or make dramatic changes to their business models and plans. And I’m proud that despite the difficulties, where others have panicked - CEOs and investors alike - our teams have handled the current crisis’s with a bit of that of that John Paul Jones bravado: “What – a virus? Is this the best you can do?” Meanwhile, at Wisdom, we’ve amped up our activity, accelerating the pace of new investments during a recession which, based on historical data, has produced superior venture capital returns.
A year from now when we’re looking back at 2020, we’ll reflect on all the new risks we’ve taken between now and then. There will be some wins, but losses as well, for loss is inherent with risk. But we hope more of the former than the latter. Because in the end, it’s all about risk: risk taken with as much information as possible within the allotted time.
I’ll close with another naval hero, Captain James Lawrence. Lawrence may not be a household name, but I’m sure you’re familiar with his dying words, “Fight her till she sinks, and don’t give up the ship.” So while I can’t promise you which risks we’ll win and which we’ll lose, I can assure you that we won’t give up on our teams.