#047: The Power of Asymmetric Risk
and why we need more of it
A newsletter dedicated to thoughts, tools, ideas, and knowledge on entrepreneurship, tech, business, psychology, and philosophy to make you a better human every day.
#47 - September 18, 2023
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Hello World,
🧐 Idea — we should all take asymmetric risk
We all know that risk-taking is not everyone’s cup of tea.
In fact, in many cultures and socio-economic environments, the idea of taking any sort of risk is considered taboo and perhaps perceived as a vice.
But here’s the problem.
If no one ever took risks, then we wouldn’t have the many luxuries and experiences we take for granted today. I won’t be exhaustive in providing a list of examples to make my point, but I’m sure you get the idea of what our world could look like if no one took risks.
In general, the way civilization progresses and advances is through a healthy dose of asymmetric risk-taking.
In a nutshell, taking asymmetric risk is about taking/making bets on situations, circumstances, and opportunities with a significant probability of potential upside relative to minimizing the potential downside. Mind you, the reverse can also be true; massive downside versus small upside, but the concept is identical in opposite directions.
For most of us, we tend to trend towards the former so we’ll stick with that.
One perfect example is investing — the most you could lose is the initial outlay on your investment, but the potential gains have unlimited upside.
In principle, the concept of asymmetric risk is straightforward but more challenging to implement in practice.
Here’s how I like to approach it;
Be on the lookout — always be searching for opportunities. They appear everywhere and it just takes a few moments of your day of focus to figure out if there’s something there worth pursuing. If so, double down, if not, then move on with your day and keep searching.
Be logical and prepared— if you have discovered something worth pursuing, then it’s time to put it on paper and really think about the pros/cons of this opportunity. Every decision has risks involved, so if you’re better able to capture those downsides and upsides then it puts you in a better position to make a more informed decision with the information you have at that given moment.
Be honest with yourself — be completely honest with yourself. It’s easy for us to get carried away by overestimating the upsides and underestimating the downsides.
Take action — in the end, if what you discover is that the upsides far outweigh the downsides then perhaps it’s something worth considering. If so, then all you need to do is take action. All of this would have been for nothing unless you take actionable steps. Remember that it’s easy to dream. You need to act to make this a reality.
In line with this, I recently made a video that better helps people make hard decisions.
At the end of the day, risk-taking is part of life. It’s what gets us out of our comfort zone and allows us to grow.
Hope this has been helpful.
Until next time,
B.
💬 Quote I’m thinking about
Tactical stress is the conscious decision to force yourself into a do-or-die situation - knowing that you have the skill to make it work - and have no choice but to overcome your fears. The result is a season of intensity that propels you into the next level of your life. — Dan Koe
I’m not one to always quote famous figures. Wisdom comes in all shapes and sizes and from just about anyone too.
I was particularly struck by this quote from Dan Koe on the idea of deliberately creating stressors in your life in a very tactical way.
A lot of people will tell you that stress is a vice. It’s something you want to minimize, but having no stress is just as bad as having too much stress.
Tactical stress is a special type; it’s a forcing function that creates a controlled environment for you that puts specific pressures on you to perform.
Something to think about for all of us…
🔥My Latest Content
Top 10 Questions Every Founder Should Ask Before Starting a Company — made this video (and podcast too) to help with some of the really neat questions aspiring founders have asked me throughout the years.
If you’re someone in school, college (university), or thinking about leaving your corporate job to build your own startup, then give this a watch/listen. I provide some tips and advice on 10 questions that help better prepare entrepreneurs to build a business effectively.
Here’s a quick snapshot of the timestamps:
Introduction
Juggling 9-5 full-time work with building your business
Do I need to have a co-founder?
Should I fundraise?
What do I need to show investors?
Do I need to have a business plan?
How to stay consistent and disciplined?
How do I create a product customers want?
How do I minimize mistakes?
Building a product without technical skills
How to deal with my emotional state as a founder
🔥Nuggets
Founders Podcast: Alistair Urquhart — an inspiring episode on the story of Alistair Urquhart. Someone you might have never heard of, but after listening to his story, I guarantee you will never forget his name. Here’s a brief synopsis of the episode courtesy of David Senra:
Alistair Urquhart was conscripted into the British military to fight during World War II.
He was 19 years old.
He was sent to Singapore.
The Japanese invaded and he was taken hostage.
He survived 750 days in the jungle working as a slave on The Death Railway and the bridge on the River Kwai.
Most of the time he worked completely naked.
He contracted dysentery, malaria, and tropical ulcers. A lot.
He was transferred to a Japanese hellship.
The ship was torpedoed.
Almost everyone on the ship died. He survived.
He spent 5 days adrift at sea until he was picked up by a Japanese whaling ship.
He was sent to Nagasaki and forced to work in a mine.
Two months later he was struck by the blast from the Atomic bomb.
He was freed by the US Marines shortly thereafter.
He returns home to Scotland and finds out his best friend died in the war and the girl he loved got married and moved to Canada.
At 90 years of age he wrote the book to inspire others to persevere when they are faced with hardships in their life.
This is a great book for entrepreneurs.
The story demonstrates the adaptability of humans, our fierce desire to survive, and puts the stress of building companies into the proper perspective.5 tips on how to speak VC and raise capital — a great article for founders looking to raise external capital from venture capitalists and how to prepare for it properly.
Principles for Dealing with the Changing World Order (5-minute Version) by Ray Dalio — super cool animated video with a voiceover from the man himself on the notion of history repeating itself intertwined with changing geopolitics, and the rise and fall of empires over several hundreds of years of human civilization. Easy to understand but also insightful for just about anyone who’s keen to learn more about history and what it means for our future.
If you're interested in 1:1 startup coaching/advisory - check out my Notion page to learn more
If you're an early-stage startup founder building something amazing and looking for initial seed capital - reach out to the team at Metagrove Ventures.
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