Upside Without Downside
Entrepreneurs don't take risk — they do everything in their power to minimise it. Heads I win, tails I don't lose much.
Before looking at upside, engineer the downside to near-zero. In business: keep the job that pays your rent and start the venture in the spare 128 hours/week; switch only once side income exceeds salary, so you are never without cash flow. In investing: study downside protection first, then upside. Returns become asymmetric, not risky.
- There are 168 hours in a week; your employer wants 40. Build in the other 128.
- Live close to work to kill commute time and free hours for the second venture.
- Never go to a state with no paycheck — replace salary before you quit.
- Look at the downside before the upside on every bet.
Pabrai built his IT services company on the side while employed. He kept his paycheck until, nine months in, three clients produced cash flow exceeding his salary — only then did he quit. He never spent a day without cash flow.
Pabrai ran his IT services company while employed, quit only after three clients' cash flow exceeded his salary (9 months in), and frames every fund bet as low-risk / moderate-to-high-reward rather than high-risk / high-reward.