The revealing "Financial Rewards v/s Risk" chart from the startup POV

Charts are fancy but they often put things into perspective and yesterday, during a chat with Ambarish Gupta, Founder of Knowlarity, something truly eye-opening emerged- The amazing "Financial Rewards v/s Risk" chart. Reward v/s risk has often been a topic of discussion but when looked at from the POV (point of view) of startups, some fundamental things clear up.

Here's the chart:

The Breakdown

Let's cut the chart into four sections:

• The bottom left is the safest: Take a job
• The top right one is the wackiest: Say "I'll build a network, ask people to vote hot or not, the whole world will come online and it'll all be great for me." That's Facebook for you.
• The bottom right and the top left are truly unconventional: High risk and less reward is to joining a street crime gang- Very less returns when placed against the risk of getting stabbed. And the less risk, more reward one if the best one- make sure your spouse is rich.

Now, this is the broad level breakdown of how a person thinks and most of the audience chooses either of the extremes on the bottom left to top right diagonal. Leaving aside the ones picking a regular job, let's dissect the other things on the diagonal.

Understand the glamour

Consumer facing startups are glamorous and they are talked about because they are sexy. These products attract eyeballs and people like talking about them but the success rates are exceptionally low. A 1000 Facebook's die before one emerges. So, don't fall for the trap.

Apart from these consumer facing products, there are a zillion other things that can be financially rewarding. Many of us tend to ignore the three professions in yellow. These are big rewarding spaces which are not talked about because they're not sexy. They tend to be effort intensive and stories of blood but are not talked about of when compared to a glamorous consumer product.

The Real Thing

Another interesting area to focus on is the reason for doing what one is doing. If you ask people at random what they want in life, more than 80% say that it is happiness. This happiness can be derived from money, family, independence or anything else! As Ambarish put it, the function of life is:

Max(Sum(Daily happiness))

To maximize the sum of happiness for the number of days remaining in a person's life.

And if this comes from freelancing for your entire life, so be it!

Starting a services company is looked at with a derogatory eye many a times, but these are companies that really provide employment, generate revenues and create value. This is not denying the fact that one consumer startup can earn more than 10 successful services put together but there's always a higher probability of a services company becoming successful.

Starting a franchisee or running a system integrator business is another area which is overlooked and not respected enough. These are tough sectors with high rewards and people learn some really hard core entrepreneurial lessons here.

Conclusion

This post is not a discourse against starting up a consumer facing company but a kind of a redemption for all other businesses that are very viable options but often ignored when a person is looking to enter the exciting world of startups.

So, what is your spot?