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Whitney Johnson: What is a risk worth taking?

How do you decide what risks to take? Whitney Johnson, cofounder of Rose Park Advisors, recommends using disruptive innovation theory to calculate which risks have the greatest reward.

FAST COMPANY: What is a risk worth taking?

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WHITNEY JOHNSON: When a startup says “there’s a huge market and I’ve got the projections to prove it,” it’s likely that a competitor has scoped out the market and put a stake in the ground. But when they say to me “I can solve a problem that needs to be solved but I don’t know how big the market it” I actually perk up, because market risk is worth taking. In either interest, startups are more likely than not to fail, but according to disruptive innovation theory, when you take on market versus competitive success, the odds of success are six times higher and the revenue opportunity twenty times greater.

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