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In politics, the term “third rail” is used to describe something that is untouchable and comes from the charged train lines that supply power, which should never be touched. As entrepreneurs think about the future there are always two growth options:  stay the current growth course or swing for the fences by taking more risks to grow even faster. Notice, as is the case for entrepreneurs, there’s no notion or possibility of shrinking. Entrepreneurs are focused on growth.

There is, in fact, a third option, and for many entrepreneurs it’s an unimaginable third rail in their mind: a shrinking business. Increased competition, commoditization pressure, and changing marketplaces happen all the time. For entrepreneurs thinking about the future, being forever optimistic is the necessary course of action, even blissfully ignorant at times, but at some point is important to think about the third rail and incorporate that into the decision making process.

What else? Is there another third rail of entrepreneurship?

When people think of private equity (PE) firms, they usually think of large amounts of money to acquire and improve the value of private companies (or public companies taken private). After talking to entrepreneurs, executives, and investors over the last few years I’ve learned another fact about PE firms: they’ve decreased the number of technology IPOs. Yes, Sarbanes Oxley has made it much more expensive and laborious to be a public company, and that is the major force of the decline, but let’s look at how PE firms have also decreased technology IPOs:

• PE firms, especially when debt was much cheaper, leveraged up companies as the main source of capital, and that provided the fuel needed for growth in lieu of the public markets
• PE firms, because of US tax laws related to debt and dividends, are able to take a relatively small amount of money, proportionate to the company value, and immediately make money off a deal (imagine buying a $100 million company with $20 million of equity and $80 million of debt, adding $25 million more of debt, then issuing a $25 million dividend to preferred shareholders to get the equity back)
• PE firms have provided liquidity to shareholders (employees, founders, and investors) of fast-growing private companies with substantial enough revenues to go public, so that the company can continue to grow without the scrutiny and distractions of being public

Thus, many technology companies that would have historically gone public for liquidity and growth capital are instead staying private much longer due to PE firms. PE firms have decreased technology IPOs by providing an alternative source of substantial capital.

If you follow the DISC (dominance, influence, steadiness, conscientiousness) personality profiles that attempt to categorize everyone with primary and secondary attributes, almost all entrepreneurs have a “strong D.” According to DiscProfile.com, a strong D:

• is motivated by winning, competition and success.
• prioritizes accepting challenge, taking action and achieving immediate results.
• is described as direct, demanding, forceful, strong willed, driven, determined, fast-paced, and self-confident.
• may be limited impatience and lack of concern for others.
• may fear being seen as vulnerable or being taken advantage of.
• values competency, action, concrete results, personal freedom, and challenges.

Of course, an entrepreneur need not have these characteristics but almost all the entrepreneurs I’ve met do have them.

What else? What are other personality traits of entrepreneurs?