Got Enough “Skin in the Game”?
Do you know what it means when an investor talks about an entrepreneur having some “skin in the game?”
The idea started in ancient times, when someone who was very sure of a positive outcome would bet his shirt on whether or not something would succeed. This was a serious bet back then because the unfortunate man who lost was at the mercy of cold rain or hot sun.
Today the “Skins Games” in golf have come to mean high risk, high reward.
In the “Senior Skins Game,” for example, the golfer must win a hole outright or the money carries over to the next hole. As the golfers progress, the value of the purse for each hole rises, meaning that each hole is “winner-take-all” and the stakes vary from $20,000 per hole to $100,000. By the time you get to the final hole, there can be $700,000 at stake during a game.
In business, when an investor asks an entrepreneur if he or she has some skin in the game, it means that it’s going to hurt the entrepreneur a lot more than the investor if the idea fails. It also means that the entrepreneur sees the potential rewards as being high enough to take the risk– and put his own skin in the game.
