As a follow-up on our recent discussions of how entrepreneurs think about risk, I want to flag this book excerpt on Tim Ferriss's blog.

In a new book called Leap, author Rick Smith recounts how Bill Gates started Microsoft with a combination of experience, calculation, and luck. Smith argues that the approach is the opposite of big risk-taking: entrepreneurs like Gates spend years validating an opportunity and minimizing their risk.

What’s more, Gates had validation that both he and Allen were highly competent with this new technology, and he could see that the topside potential was huge. ...

Far from being one of the world’s great risk takers, Bill Gates might more accurately be thought of as one of the world’s greatest risk mitigators. And in that, he is not alone. The simple fact is that everyone is afraid of risk at some level, including everyone I interviewed for this book. ...

You don’t have to be fearless to make dramatic changes in your life. Transformative change isn’t propelled by raw courage. It’s “sparked” by a series of events that build exposure and experience, both of which help to create asymmetric risk. Through sparking, the upside opportunity is confirmed while downside risk is mitigated. Ultimately, the leap—when it comes—is not one of faith but of experience, even of comfort, just as it was for Gates.

It sounds simple and obvious to minimize the downside risk while maximizing the opportunity for gain. But how many entrepreneurs actually do that? That might mean keeping your day job for years while working on your business idea. It might mean abandoning a dozen more appealing opportunities because you can't validate them. That idea of asymmetric risk is key. I think most entrepreneurs who successfully build long-term ventures keep that as a guiding principle.