Why Uncertainty Is Valuable

Which is more profitable, risk or uncertainty?

There are two terms I’ve been bouncing around in my head for the past few weeks, that is Uncertainty and Risk. Inherently with a business both of those are a part of what we do on a day to day basis. The very nature of starting a business is full of risk, and even more so uncertainty. So when you look at both of them what is the real difference?

Well I’ve come to terms with what they mean to me and how they are correlated with profit and compensation. If we look at the standard securities markets we know there is inherent risk in investing, and that risk is usually easily calculable and quantifiable. They are possible to evaluate and understand their trends and likely growth.

Hedge funds and most investment firms analyze that risk and use their fund to make investments. Typically the higher the risk and more speculative the investment the higher the return.

So a new company or entrepreneurial venture is definitely risky but how does anyone really know what it is going to be worth? How could you predict what Bill Gates or Steve Jobs would create with that thing they call computers. Or Google or Facebook or any one of the other 20 huge companies.

Most of these created markets in and of themselves. They created something unknown, new and unquantifiable. They took something from a nothingness state to a known entity that was worth billions. They essentially looked at an opportunity with an uncertain outcome and risked what they had there to make it happen.

No one could ever have predicted the value they would create, because they created entirely new markets in most cases and added an entire sector to the market. Consumers then began spending money with them instead of other things and ultimately the pie became bigger.

He who takes the most risk doesn’t always reap the greatest rewards. Rather he that embraces uncertainty and creates reality is almost always handsomely rewarded.

In my argument here I’d venture to say that uncertainty is more profitable, it incorporates risk as well as unknown and thus creates a reality far outweighing anything imaginable for compensation.

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