Take risks to grow
If you’re not sure whether to do something, ask yourself, ‘If you were to fail, would you be able to make your rent?’
While you’re likely beyond the days of renting, it’s the principle that matters. When Sprecher started the company, he was worried about the downsides if he failed like not making his rent and not finding another job. So he thought through those two issues.
“A lot of it is calculated risk, because you’ll never have perfect information,” Sprecher says.
So, if he couldn’t pay his rent because his company failed, could he borrow money from family? Also, how long would it take him to find another job, and did he have any friends who may be able to make a job connection for him?
“You go through all of that, which you tend to do when you’re laying in bed and trying to fall asleep and your heart is racing … you get obsessed with these things, and you just work through them,” he says. “You either end up staying up all night because you terrify yourself or you fall asleep because you’ve finally concluded that, even in the worst case, you can live through that.”
The key is when you’re weighing these risks, assess how you would handle the downside in order to calculate the true risk involved.
“The calculation is very much a risk versus reward, and then also thinking about what is the downside if you fail,” he says. “If you spend a fair amount of time thinking about what happens if you fail and planning for that failure, it makes the ability to take the risk pretty easy.”
For example, in 2007, ICE decided it wanted to try to buy the well-established Chicago Board of Trade, which was already entering into a merger. Sprecher did his thinking and realized that even if the company failed in buying it, that it would still survive and probably even still do well, so he went for it — and failed.
“Even though we didn’t end up buying the company, we gained a lot of stature in our industry, and a lot of people started to pay a lot more attention to us, and our core business actually accelerated because we were on people’s radar,” Sprecher says. “We had a very good image coming out of that failure.”
If you do make a decision and fail, make sure that you recognize that it’s failing and change course.
“The trick is not to not take the risk,” he says. “The trick is to make sure you’re honest with yourself that if it’s not going right, you aren’t wedded to the initial position and that you modify your position. If you do that, you can allow the organization to take some risk, and you don’t have to obsess over the initial risk. You obsess over, do you have enough feedback that if you’re wrong, you can modify the behavior.”
The key is to not feel limited by your size, and if you can think about the big pictures and all of these positive and negative consequences whenever you’re making risk decisions, you’re going to eventually come out ahead.
“The idea of a small start-up taking over a big incumbent wasn’t out of our realm of thinking,” Sprecher says. “I don’t know how to say it other than part of the growth of the company has been that we’ve not shied away from taking calculated risks in order to grow.”
How to reach: IntercontinentalExchange Inc., (770) 857-4700 or www.theice.com
