Biz Doc: It Has Come To This

Risk and Reward

May 2014

Risk_RewardRisk and Reward – There is none of one without the other.

When was the last time you took a risk?

I am not talking foolish risks like eating a yogurt that has been in the back of the fridge since last year or hitting on Aaron Hernandez’ girlfriend, I’m talking about an honest to goodness, carefully calculated risk.

The stories of educated risks turning into personal and financial rewards are strewn throughout the last 100 years.  History is a beautiful teacher – especially if you are not the one who died to make the point.

I grew up in middle class America with little more than the basics.  Since there was no Internet and no cable TV with 300 channels, there was no ‘magic window’ to look through and compare my existence until high school.  When I was old enough, I earned money mowing lawns and used the money to subscribe to magazines which became my window to the world, my inspiration and my mental gym.  Formula 1 racing and the Indy 500 caught my eye and I became a fan, not because all boys seem to choose a sport and have a favorite team, but because I was curious and inspired.

There was glory, competition, technology, drama and tragedy wrapped-up in one exhilarating package.  There also was a high price. In the 60’s and 70’s  you needed to beat death because there was a 1 in 20 chance of a driver being killed each year.  I thought, “Why did these men take such huge risks?”  I learned that the Formula 1 drivers, team owners and designers all had something to prove and their incredible stories became my curriculum:

–          To finish first, you must first finish. – Rick Mears, 4-time Indy 500 Champion
My Life Application: Have resources to get the job done and push hard until the end.

–          I don’t know driving in another way which isn’t risky. Each one has to improve himself and each one has a limit. My limit is simply a little bit further than others. – Ayrton Senna, 3-time Formula 1 Champion
My Life Application: You must improve and find your limit and it is higher than you think.

–          When I raced it was at a time when sex was safe and racing was dangerous. Now, it’s the other way around. – Hans Stuck, 2-time 24 hours of Le Mans Champion
My Life Application:  It’s a funny quote that has a very significant hidden meaning: The game WILL inevitable change and you must react to it.

–          To achieve anything in this game you must be prepare to dabble at the boundary of disaster. – Sterling Moss, 4-time runner up Formula 1 Championship
My Life Application: If you want to be #1 in anything you must accept that massive failure is possible and it might be far worse than just finishing 2nd.  If it was easy EVERYONE would do it.

–          When I started racing my father said, nobody has three balls but some people have two very good ones. – Cristiano Da Matta, Formula 1 veteran.
My Life Application: Be honest about your skills at any moment, but push to make them better.

–          The great ones drive alone but need a good team in the garage. – Me
My Life Application: Self-reliance when pushing to achieve is not the same as going solo.

That’s a collection of some pretty good advice.  In every statement there is an inherent acceptance of the risks associated with racing.  Everyone one of them knew the risk “going in.”

If you were a fan of Formula 1, you came to admire Ferrari.  Enzo Ferrari, dubbed “the old man,” built sports cars to make money so he could compete in Formula 1.  Think about that.  He built a highly successful business in order to make money to endeavor into something where failure and death were common as the sunrise.  Why risk ridicule?  Because Enzo simply knew no other way how to live and had something to prove.

In the beginning, Formula 1 was driven by technology.  Pushing technology meant speed and speed meant winning and winning brought glory.  Ferrari was manic in the pursuit of technology advantages.  In the early 1950’s winning cars were a puzzle: (1) Horsepower made cars fast but; (2) Powerful engines used a lot of gas and; (3) a big gas tank was needed but also heavy which slowed you down.

Ferrari solved the puzzle in 1956 with the D50 (below).  Note the big gas tanks on either side of the sleek car.  Can you imagine what happened if you crashed?  Those gas tanks are essentially bombs. Ferrari just needed someone to drive it.

D50

Juan Fangio was already a 3-time world champion when approached by Ferrari.  As a champion, and the best driver of the day, he had absolutely nothing to prove.  But he understood the risk and said yes because he still felt he had something to prove. How did it turn out?  He won the 1956 Formula 1 World Championship, finishing not lower than 4th in every race except one, when the engine failed while he was leading by a large margin!

Here’s a black & white picture – look around and you will not see any modern safety barriers, just bales of hay.

D50 Racing

Fangio drove the car in 14 races and won 5 which is 35.7%!  That’s like hitting .357!  You would get a 9 digit baseball contract for that ability.

Fangio’s last win came when he was 46 years old and his record of 5 championships stood for nearly half a century until Michael Schumacher won 7 – and Schumacher did it in an era of the all-time highest speeds and the all-time safest cars.  There have been only 2 deaths in Formula 1 over the past 23 years.  Fangio passed away in 1995, living to be 84.

Thanks for reading this far.  My point is not to educate you about racing or how Juan Fangio had something to prove until the last moment he stepped out of a race car and into retirement.  It’s to underline that in 1950, the same human desire to take risks and earn rewards by people with something to prove was as alive and well as it is today.

Let’s find a life application for you.  Today we don’t need to take the risks associated with hopping into a race car with two ‘bombs’ attached.  But the simple rule about risk and reward remains as clear as it was in 1950: you may not have one without the other.

Are you hungry enough for reward to take some risk because you have something to prove?  Today economic rewards in the USA are tied to two things: starting a business or massive inheritances… and let’s leave out the one in a billion lottery winners.  Unless your grandfather is Warren Buffet, or one of his friends, that leaves one choice: do it yourself by building a business.

Starting a part-time business has risk but you can mitigate it with careful management of your time.  You can even keep your day job and test things a bit.  That allows you to taste a bit of failure and get over it.  According to Barbara Corcoran, multi-deca-millionaire real estate mogul, the key difference between basic and extraordinary sales people is, “How well you can take a hit and how long you feel sorry for yourself.  Something to prove is key.”  What do you have to prove?  A part-time business is a great way to see if you are up to the task and find out how far you can go.  Life and progress move fast and there have never been more tools available to help you keep up.  From mobile phones to the Internet, the weapons of communications and efficiency are at your disposal.

There’s also more frequent disruption than ever before and more uncertainty about things like social security.  Self-protection through insurance is more important than ever.  PHP not only offers such insurance from Nationally-recognized tier-1 companies, it provides a ready-made platform from which you can go out and prove something.

Is it time to take a calculated risk and prove something?   Your first effort may not go far, but live moves fast and opportunities don’t stay long.  Think about this: the Wright Brothers flew the first airplane 120 feet in 12 seconds on December 17, 1903 and Neal Armstrong stepped on the moon July 21, 1969.  From first flight to the moon in just 65 years!  If you were 7 years old and in 1st grade in 1903 you heard about the amazing airplane as your teacher read the newspaper to you.  Then, if you lived to be at least 72 you saw man step on the moon – on a TV that was not invented when Wright brothers flew.  Wow!

What’s your calculated risk?  How far will you fly and what do you have to prove?

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