Underwriting Risk, Inspired By Ayrton Senna
Before this week started, I didn’t really know who Ayrton Senna was. Now, as the week ends, I have been thinking about him nonstop. How this came to be is noteworthy. A few days ago, my friend Eghosa wrote this post about having conviction, intertwined with quotes about Senna and his greatness. It is my favorite post written by an investor in 2013. Please read it. In discussing Senna, he linked to a documentary on the former Formula 1 Driver, which I was delighted to discover is available on Netflix (streaming). Here’s the link, and you should watch this, too. I watched it last night and was so engrossed in the story that I didn’t even pick up my phone. I also couldn’t bear to watch the ending, even though I knew what was coming — that Senna was killed in Italy during a race, abruptly ending his life at age 34.
I have never been into car racing. I have never seen a Formula 1 race before. Before this week, I’m not sure I could’ve named a driver in F-1. And yet, late last night, and even into today, I found myself thinking more and more about this tragic story, about someone who grew up modestly and found love in go-karting, took the scary trip to Europe and picked up Formula 1, and eventually turned into not just one of the greatest world champions his sport had ever seen, but a legend, the type of hero I’m sure legions of Brazilians and fanatics worldwide would tell their kids about as a fable, during bedtime stories. What was it about Senna? In the film, there are scenes where all the drivers interact with the F-1 Officials before races and discuss rules and safety. Every driver was so serious, so competitive, but also aware of how dangerous their profession was. In those scenes, Senna especially was passionate. The precision of their craft also had many layers and complexities, not just “how fast” to win a race, but when to boost, when to conserve energy, and when to make a move that could tip the balance of a race, a teammate, or more.
But, ultimately, what’s engulfing my mind, what’s making me sit down today and stop my other work is that it’s really about risk in it’s purest form. In financial transactions, risk can be calculated or predicted, and then can be underwritten in accordance with what the expected outcomes could be. When people typically talk about “taking a risk,” it’s about investing money, or investing their time, or investing their career…rarely, it’s about putting one’s life on the line in the pursuit of their craft. It’s not just about building a space exploration company, but potentially dying in the process because you believe so much in what’s on the other side. This isn’t meant to denigrate the risks we’re used to seeing on a daily basis, but to put them in perspective of someone who pursued a craft for the enjoyment of millions with a risk that no one could underwrite. Too often, people taking risks which they perceive to be big aren’t really that big, when you step back and think about it. Real risk is about falling down in a way where it’s hard to get back up. We should not be fooled by how hard this all is in a day when the word is just thrown around. It is about exploring, about going somewhere (and in some fashion) only a few will know, with no guarantee of a return ticket.
Back in 1986, when the Challenger spaceship exploded in front of everyone’s eyes, then President Reagan delivered one of my favorite Presidential speeches of all time. At the end, which I’ve reproduced here, I think you can put Senna in this category, too.
On this day 390 years ago, the great explorer Sir Francis Drake died aboard ship off the coast of Panama. In his lifetime the great frontiers were the oceans, and an historian later said, “He lived by the sea, died on it, and was buried in it.” Well, today we can say of the Challenger crew: Their dedication was, like Drake’s, complete. The crew of the space shuttle Challenger honored us by the manner in which they lived their lives. We will never forget them, nor the last time we saw them, this morning, as they prepared for their journey and waved goodbye and “slipped the surly bonds of earth” to “touch the face of God.”