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Why the MIT Blackjack Team Became Entrepreneurs
An anonymous reader writes "The MIT Blackjack Team, made famous by the book 'Bringing Down the House' and the movie '21,' learned important lessons about running a business when they were beating casinos in the '80s and '90s. Key members of the team went on to start influential tech companies like SolidWorks and Stanza and invest in startups. Why did they do that instead of becoming, say, hedge fund managers? MIT entrepreneurship leader Bill Aulet moderated a team reunion panel in Boston, and he writes that the themes that carry over from blackjack to startups include staying disciplined, playing for the long term, and not taking unnecessary risks. And, of course, disrupting the powers that be."
Why did they do that instead of becoming, say, hedge fund managers?
Because they wanted to do something meaningful?
Or is it because hedgefund managers are only good at making money for themselves in fees than in actually making money for their clients.
And studies have shown that hedge funds do worse than the market over the long term.
They had the money. I've dabbled some in angel investing myself, for the same reason, and I know others in the same boat.
What's really high risk about starting your own company? Especially when you aren't taking out any loans to do it.
Emotional investment. You are much more likely to throw good money after bad if you are emotionally attached to a bad investment.
You almost always want to use other people's money to start a company; it spreads the risk over a larger pool. Even if you angel yourself to get the ball rolling, if the company fails -- and most do in the first year -- then you'll still have living money, and the ability to angel your next company - or someone else's. Or don't hire yourself to run your own company beyond your level of competence. In fact, I would typically recommend that you angel other people, rather than angelling yourself, and have other people angel you instead. You need this type of interaction to get an external reality check on whether your idea or product or business plan or management ability is crap.
Their big example in the article is SolidWorks, and it was pretty clear that they went with an acquisition exit strategy (they sold out to Dassault Systèmes for $310M), rather than staying entrepreneurial.