Entrepreneurs Are Taking Big Risks (And Mostly Getting Away With It)

The idea that entrepreneurs take risks is nothing new. However, many commentators have observed they seem to get into trouble far less than they should, given their prominence and incentives to take shortcuts. Why is this? 

The answer to that question really depends on who you ask. For some, it’s almost spiritual. Entrepreneurs are people who push society forward and, therefore, they do so much good in the world that their karma never really catches up with them. 

For others, it’s all because they’re part of the system. Once entrepreneurs get to a certain threshold, it just becomes much more challenging to bring a convincing case against them.

For many people who actually assist entrepreneurs in their day jobs, it’s profoundly practical. 

“A criminal defense attorney near me told us that she was constantly on the phone with her client, at least three or four times a week, discussing various predicaments,” explains Lancaster Law Group. “It almost seems like a constant game of cat and mouse for a lot of clients, which is certainly something that we experience in our practice. The reason so many things stay out of court is that the top entrepreneurs have legal teams behind them who can protect them.”

Karmic Power

Even so, many people romanticize entrepreneurship and see positive karma everywhere. For many, innovators are the people creating progress, driving wealth, and adding new jobs to the economy. 

A lot of entrepreneurs have the halo effect because of this. Their public image is so well curated that people never seem to doubt them. They are high-flyers and aspirational figures that others want to follow. 

Even regulators sometimes take on this view. They know that they can’t really challenge the best entrepreneurs directly because they are so critical for the industries they manage. Many times, they are personal friends, so going after them with the letter of the law is challenging. 

Moreover, the general public has psychological bias. They are much more likely to forgive flaws in people they see as visionaries than they are with regular, run-of-the-mill individuals. The reality of case studies of entrepreneurs who bounced back from scandal is strong evidence on this point. 

“Entrepreneurs can sometimes believe that they are beyond reproach,” explains Lancaster Law Group. “In the short term, this sort of thinking can be helpful because it encourages risk-taking. However, long-term it often catches up with people, as has been the case for several high-profile criminal CEOs in the U.S. That’s why being strategic and ultimately law-abiding is so critical.” 

Systematic Power

Another theory as to why entrepreneurs seem to get away with it more than pure luck would suggest is systemic protection and institutional power. While money can’t buy freedom in all instances, it can certainly make maintaining it more likely. 

For instance, success is a great way to breed insulation. People who are incredibly financially well off have access to top legal and PR firms that allow them to shape public image while building defenses against possible lawsuits. 

At the highest levels, it’s even possible to exercise regulatory and institutional power. A lot of wealthy individuals actually lobby the government, shifting the laws in their favor. 

There’s also the sheer difficulty in prosecuting a lot of financial and tech crimes. Successful judgments are rare indeed, simply because so much work has to be done, the cost is high, and a lot of entrepreneurs are highly secretive about their private financial affairs. They’re able to make it challenging for anyone to establish probable cause, or they simply settle out of court. 

For some entrepreneurs, the “too big to fail” dynamic also comes into the picture. Again, this is something that can affect high-profile founders immensely, changing how society sees their companies. They’ve become part of the living organism and social structure, which makes them hard to remove. 

Twin Perspectives

The spiritual view and structural view of why entrepreneurs seem to be immune from outside influence in a lot of cases is intriguing. It’s still not clear how things are operating on the deepest levels. 

The karmic view is, of course, idealistic. Many entrepreneurs were terrible people in their private lives and yet still venerated by society. Karma might operate on some levels for them, but not on others, as evidenced by characters like Steve Jobs. 

The systemic view is much more cynical and conspiratorial. It says that entrepreneurs are essentially successful because they weasel their way into the powers that be. 

However, overall, this view is more evidence-based. Karma is something ethereal that operates in the background, while you can theoretically track the machinations of entrepreneurs to understand why they’re winning.

Perhaps a combination of these views is the best option. Generally, people who act with integrity tend to do better in the long-term, but they also build systems and teams who can protect them from threats. 

These tactics actually work well together. Someone who is acting ethically and doing things by the book is less likely to receive criminal prosecutions. At the same time, those who protect themselves in a systematic way are also more likely to behave well because they have people around them who can provide the guardrails and advice they need. 

How this phenomenon affects trust in institutions remains unclear. It’s obvious that the general public loves innovation, but they also want to make sure that entrepreneurs behave themselves. 

The risk of the current system is one of moral hazard. Entrepreneurs may see that they are better able to get away with reckless behavior under the assumption of impunity. As such, they are more likely to do things that get them into trouble, perhaps changing the dynamic described above. 

“What entrepreneurs and people at the top of business need is better legal support and accountability mechanisms,” Lancaster Law Group explains. “Putting these in place ahead of time dramatically reduces the risk to reputation and freedom long-term, while enabling the highest level of strategic and legal risk-taking. Entrepreneurs who seem immune from risk aren’t just lucky.”