Why Is It So Difficult To Give Away $12,000?

Last week I announced I was giving away $12,000 to wannabe entrepreneurs. Rather than excitement, it was received with scepticism and hostility. I have called them entrepreneurship grants. 12 no-strings-attached easy-to-apply grants of $1,000 each. I expected the post to be really popular. Like viral, shared everywhere popular. After all who wouldn’t want $1,000? But that’s not what happened. Some people loved it and sent in their applications, but most people treated the announcement with a big dollop of scepticism. Or just downright hostility. Then I started to receive hate mail. I won’t post the worst stuff, but there was a lot along these lines:

WTF am I meant to do with $1,000?! You’re just trying to get suckers to send their business plan to you. How do I know you aren’t trying to brain rape people and steal their ip?

I had made a fatal flaw with my grants. I had made them too good.

If something sounds too good to be true, it probably is.

Someone is giving away $12,000? Rubbish. There must be some catch.

Scepticism is Healthy, Sometimes

Scepticism is healthy. It’s what stops us from falling for scams, or jumping out of plane because someone says we can fly. It is what stops us taking risks. Scepticism is safe. But it’s not always very useful, especially for entrepreneurs. Suspicion, cynicism and doubt keep us from taking advantage of excellent opportunities.

Optimists Finish First

Back when I was at university I started a business with a couple of friends called ‘Student Swag’. The aim was to teach students about matched betting. We went round the university and stuck up hundreds of flyers. It was really lame, a picture of some money and a sentence that went something like this.

Want to earn thousands of pounds while studying at university? Come to our free seminar to learn how to make money from gambling.

Terrible. And absolutely screams scam. But a bunch of people did turn up to the seminar. They were sceptical (too good to be true?) but were willing to hear out the free seminar. And most of them went on to take our course on matched betting. Why am I telling you this story? Well, I am still friends with and keep track of a lot of the people who turned up to that seminar and a lot of them have gone on to found very successful businesses in areas that are completely unrelated to gambling. In fact, if I were to try and rank my university acquaintances by who is doing the best financially, I reckon 7 or 8 of the top 10 were in that room for that seminar. How crazy is that? I think there is some sort link between successful entrepreneurship and the mindset of someone who sees a scammy-looking poster and says “well it could be true”. I challenge you to find an entrepreneur who isn’t a risk-taking optimist. I’m not the biggest fan of Steve Jobs, but sometimes his quotes really hit the spot.

Stay Young, Stay Foolish

Balancing Scepticism And Optimism

But the world is full of scammers and stories of people who have lost everything to fraud or pyramid schemes. So how do you balance scepticism and optimism? Now that is the difficult question. Somehow you need to be simultaneously very sceptical, but also open minded. Analyse the opportunity logically. Look into the people providing it. Does their sales pitch make sense? Do they have a history of integrity? Is their free/easy to access content good? Do other resources back up their claims? What is their motivation? I think that a lack of an obvious motivation was one of the problems with my grants. People couldn’t understand why on earth I would give away $12,000. What is possibly in it for me? Of course there was a motivation. Extra publicity leads to more fans of the blog which leads to extra earnings for me. Like most entrepreneurial decisions it was a risk, will the extra publicity outweigh the investment?  (here’s how this blog makes money). But I didn’t lay that out in my original post. Which left people to fabricate their own reasons. Once you have learnt as much as you can about the opportunity, you need to calculate the risks. What is the worst outcome? What is the best? What are the chances of it working out? And then at some point, if the odds weigh up, you need to take a leap and go for it.