Understanding Risk

When I graduated from university almost a decade ago, I really wanted to go work for a startup but knew I couldn't afford to. Student loan aside, I had to contribute to rent and bills with my family so I had a minimal viable income, I had to earn.

As a Product Leader I've always used inversion to view my primary role as ensuring that,

'we avoid building products nobody wants.'

When working with founders I gained even more appreciation for reducing or eliminating the risk of building products customers don't value. With founders, it can often come at the cost of their business as it can lead to running out of money.

I've come to the conclusion that there are 4 concentrated categories of risk that are:

1. Product Risk:

The goal of product discovery is to learn fast, instead of learning after you ship a product that potentially nobody wants it. Discovery is a time-boxed experiment to address four key risks so that you can decide what to build based on evidence, rather than a hunch.

The four key risks to address are:

1. Value risk: Will a customer use or pay for this product?
2. Usability risk: Can a customer use this product without hand-holding?
3. Technical feasibility risk: Can we technically build this solution given our (founding team’s) capabilities?
4. Business viability risk: Is this product viable from a business perspective? Ie. is this compliant with GDPR?

2. Company Risk: For example, if you invest in a single company and all your money goes down with Blockbusters or Toys R Us when they go bust.

3. Industry Risk: Fore example, Mortgage backed securities in 2008 or dot com crash of 2000.

4. Market Risk: Bull and Bear market where all UK or US stocks fall (alternative asset classes like lending etc).

This is just a short post to re-frame how we understanding and limit downside risks in order to improve the chances of success.