Founder and chairman emeritus of E*Trade Group, in Menlo Park, Calif., and cofounder and chairman of International Securities Exchange, in New York City

I've made a lot of mistakes, but probably my biggest one was with Commercial Electronics Inc., a company I started in the late 1960s. I was a technology guy just learning about leveraged financing.

In the early '70s, the company had about 250 employees, most of whom were manufacturing a shoulder-mounted backpack color-TV camera. It was the first of its kind.

In 1974 an order came in from one of the major TV companies for 200 cameras at about $20,000 each. That one order instantly became 70% of our business. Then the '74 recession hit. The customer canceled the contract. At the same time, interest rates went up and the stock market dumped. There just wasn't any capital available. So there I sat with a lot of work in process, no money to finish it, and no one to sell it to.

There were a few weeks there when I actually couldn't meet payroll. I had substantial layoffs. And I had to sell stock in the company at a very low price. The company lost its momentum and was ultimately acquired by a major TV company.

My mistake: I should have sold more equity earlier on. It would have diluted everyone's stake, but it would have run the company during the crisis. Instead I had overleveraged the company. I didn't sufficiently appreciate that things could go south as well as north.

I think many people today may have that problem with the stock market. If you're highly leveraged to play the market and it goes south, you can lose big-time. So a little conservatism goes a long way. It's far better to get a small piece of a big pie than a big piece of no pie. --Written with Ilan Mochari