East India Company & Risk

The East India Company became one of the largest companies that ever existed and controlled half of all world trade at one point. It’s beginnings (and it’s eventual success) are based on the innovation of risk taking:

In 1599 Smythe and his associates had decided that, because of the huge expenses and high risks involved (expensive commodities, costly ships, crews, artillery and a delayed return) that ‘a trade so far remote can’t be managed but by a joint and united stock.’

“The idea of a joint stock company was one of Tudor England’s most brilliant and revolutionary innovations. The spark of the idea sprang from the flint of the medieval craft guilds, where merchants and manufacturers could pool their resources to undertake ventures none could afford to make individually. But the crucial difference in a joint stock company was that the latter could bring in passive investors who had the cash to subscribe to a project but we’re not themselves involved in the running of it. Such shares could be bought and sold by anyone, and their price could rise or fall depending on demand and the success of the venture.” 

A completely innovative approach to taking a huge bet with huge risks but also huge reward.


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