"Oh man, oh man, oh man..."

I was talking out loud to no one in particular.

It was a sunny fall day, and I was climbing up a steep embankment. Honestly, it was too steep. Panting and out of breath, I lunged forward as a way to make sure I didn't slip on some loose rocks. I knew the risks were high, because I could see the "risk" right next to me: A drop-off into a river 30 feet below. One false move-or even one that was half-right-and I'd be toast.

I grabbed a tree root and pulled myself up, found my footing, and made it to the top of the cliff. The view was spectacular, but the reward for getting there was even better.

It dawned on me that every successful startup uses the same risk-reward mechanic. Often, it's true that only a major risk can result in a massive reward. It's simple math. The bigger the risk, the bigger the reward. You decide to pull up stakes in your home country and relocate to San Francisco and start over. You make a gadget no one has ever heard of that does something brand new. You teach a car to drive itself. By taking a huge risk, you jump into something that is completely unknown and devise something that is totally unexpected.

Entrepreneurship is a flying leap into the void. It's a high-wire act. No one can really tell you what to expect because no one has ever tried to build a business social network before or make an app that lets you book a room in someone's house. No one has made an app that lets you send a picture that disappears. No one has built a taxi company without taxis.

The algorithm works like this: To start a successful company, you have to assess the risk involved. Let's say you have an idea to run pipes across parts of Africa to deliver water to people in need. OK. There's a ton of risk. Yet, if it works out, the reward is amazing.

In many ways, the risk I took 15 years ago was also a big one. The words you are reading right now are a result. I took a risk by leaving the corporate world and venturing out on my own without a safety net (or health insurance). It turns out that my biggest risk in life turned into my greatest career move. My brother-in-law used to drop off groceries at our door because he knew we didn't have enough money. We were living on nothing at first. It was only by taking a huge risk that I ended up being able to write full-time all of these years (and hopefully for the next 15).

Yet, I also know what happens when the risk is too small. I tried to start an ad agency once. I didn't even sign a long-term lease. I didn't believe in myself enough or my two co-founders. We never even hired a single employee. We attracted a few clients, but the truth is that all three of us were just waiting for another opportunity to come along. The company never grew because we never took enough risk. On the flip side, companies that are willing to invest more cash upfront to build a great product or establish a marketing message tend to be the ones that grow. And succeed. And change the world.

My question for you us simple: Are you taking enough risks? Have you added up the risk and determined if it is high enough to lead to a big enough reward?

Published on: Oct 14, 2015