Posted on / by GEO HITS

5 Ways Mark Zuckerberg Took Risks, for Better or Worse

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See a bunch of geeks gathered around a game board, and you might expect to find a couple of 12-sided dice, a warrior and a wizard. But in the early days of Facebook, Tuesday night was game night — but the game wasn’t Dungeon and Dragons. It was Risk, a game of strategy, gambles and global domination.

Judging by the way Facebook has grown and conquered the world, we shouldn’t be surprised to find that Mark Zuckerberg is a master of Risk — and the king of risk-taking. Here are five lessons that Facebook’s multi-billion-dollar founder can teach you about entrepreneurial risk.

1. Hedge your bets by testing your idea.

In 2004, when Facebook launched, I was discovering what Google AdSense could do for Internet publishers. I totally missed the growth of what would become the Internet’s most important networking and content-sharing tool. Most of us did — and Zuckerberg wanted us to.

One of the first decisions that Zuckerberg made was to require registration using a university email address. It sounds crazy. When you’re developing a product, you want as many people as possible to use it. You want to grow quickly, so you try to make registration as easy as possible. Zuckerberg restricted his audience.

He hedged his bets.

It’s hard to get people to use a new product. It’s even harder to get people to use an old product that’s already disappointed — just ask the latest owners of MySpace. Limiting the audience to students forced new members to use their real identity, but it also meant Zuckerberg wasn’t betting the house on a single launch. It’s better to make lots of small bets than one big one.

2. The earlier you take the risk, the lower the loss and the greater the rewards.

The arrival of virtual reality now looks inevitable. It’s not here yet, but with the release of the first consumer version of Oculus Rift, it’s getting closer. It certainly didn’t look that way though when Mark Zuckerberg laid out $2 billion for it.

Zuckerberg believes that content is going to become increasingly interactive. That’s why his Edgerank algorithm favors video and why video content in news feeds doubled over seven months in 2015. He believes virtual reality will be the next step.

It’s a gamble, and he could have made it one of two ways — he could have waited until the technology got close then bought a virtual reality firm for a high price, or he could have bought early and paid less. He went for the early bet with a higher risk but a smaller stake. There’s a lesson there for all of us.

3. Lose fast, learn and bet smarter.

Not every gamble that Zuckerberg made has come up trumps. As mobile audiences began to build, Facebook’s strategy was to use HTML 5 so that games built for the platform would work on mobile devices without using Flash. It looked like a smart move, but it wasn’t. Mobile growth was slow until Facebook launched its iOS app, and Zuckerberg noticed that users were seeing twice as many feed stories.

So he changed the strategy. Out went HTML 5 and a focus on revenues from game developers. In came the focus on a native app and mobile-ad income. Facebook is now a mobile company that dominates an increasingly mobile Web.

When your risk isn’t paying off, you need to learn from the mistake — and make a new bet fast.

4. Don’t gamble on your employees.

Entrepreneurs gamble every time they take on new staff. A resume lists skills, but it’s much harder to tell whether that employee will work with the passion and commitment the company needs. In Lean In, Sheryl Sandberg describes how Mark Zuckerberg offered her a generous pay package to become chief of operations — which she refused. She listened to her husband, a Silicon Valley CEO, went back and asked for more.

Zuckerberg didn’t blink. He paid her what she thought she deserved. He understood that a great team member is a sure thing, and when you’re holding an ace, you can afford to bet big.

5. Don’t be afraid to make the big bets.

Facebook might have started as a small risk, but one of Zuckerberg’s first gambles came shortly afterwards — and it was huge. A degree from Harvard would have given him any job he wanted and a high income for life. Completing his degree was the safe thing to do. He gave it up to work on Facebook.

Every entrepreneur faces a moment like that. It might be the day you decide to hand in your notice or write the check or take the loan. But at some point, we all have to do it. We have to take the leap. The most important lesson that Mark Zuckerberg has taught us is that the biggest risk is not taking one at all.


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