PEOPLES DAILY, TUESDAY, MAY 6, 2014
PAGE 11
Money Sense
Entrepreneurs: Your irrational optimism is necessary
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esearch confirms what feels intuitive; entrepreneurs are an optimistic group, afflicted with the ‘optimism bias,’ a tendency to view the glass as half full backed by the belief that negative events are what happens to other people. This is particularly true, one study found, of serial entrepreneurs, those bootstrapping men and women who we celebrate for persevering in the face of multiple failures. The more times you step up to bat, of course, the greater the likelihood that you’ll hit a home run. But most of us aren’t wired that way. We strike out, so we decide that maybe baseball isn’t for us after all. It’s a reasonable, rational response: we learn from our dismal performance, and are no longer as optimistic about our baseball abilities. Serial entrepreneurs don’t react like this, though. Failure appears to leave them as optimistic as ever. In an interview with Adam Bryant from The New York Times, Shafqat Islam, chief executive of NewsCred, a content marketing platform, talked about the importance of what he calls ‘irrational optimism’: “Certainly as an entrepreneur, but almost in
Money Tip
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mployees are usually the first to know when funding prospects dry up, strategies fail and products don’t sell, so it’s better to be upfront about the risks of joining a young company. But enable new recruits to share in the rewards of business success immediately rather than waiting for their equity to appreciate. For example, one clever way to share risk with your new recruits is to outline a path to increase their base salaries as the business grows. For example, offer to increase a base salary from $75,000 to $100,000 when the company hits certain milestones, then again to $150,000 when profitability is attained. Put this in writing in the offer letter. This compensation plan will cost less than promising to pay out bonuses, which get spent then forgotten, or subsequent equity grants, which get expensive for the company if they are granted many times.
Quote You can only become truly accomplished at something you love. Don’t make money your goal. Instead, pursue the things you love doing, and then do them so well that people can’t take their eyes off you – Maya Angelou
any form of work, I feel like you need to be irrationally optimistic about barriers you can break through, or things you can get accomplished, or projects that you can deliver in a certain amount of time.” He admitted that while this philosophy has its trade-offs, he often takes on too much, and can be “too aggressive, too ambitious… sometimes things are impossible” consistently setting realistic goals doesn’t produce out-of-the-ballpark results. An irrational level of optimism may seem extreme, but it can sometimes help to see the world through rosetinted glasses. Not quite there yet? Here’s a collection of ways to stay positive as well as why an aggressively optimistic outlook can lead to great things.
…optimistic thinking can make you a better problem solver
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egative emotions diminish the brain’s capacity to think broadly and find creative solutions. The vise grip of fear and stress and the emotions they generate anger, blame, panic, resentment, shame limit thought to a narrow field that obscures options. “Positive emotions help speed recovery from negative emotions,” says Barbara Fredrickson, author of Positivity and a professor of psychology at the University of North Carolina, Chapel Hill. “When people are able to self-generate a positive emotion or perspective that enables them to bounce back, it’s not just that you bounce back and then you feel good, feeling good drives the process.” A report Fredrickson co-wrote on bouncing back from business failures finds that highly confident founders of focal ventures are better positioned to start and succeed with another venture, which is why overconfidence in one’s capabilities is so widespread among entrepreneurs. Train your brain to think positively For most of us, (the chronically optimistic aside) negative feedback registers more strongly than positive encouragement. That’s why, when faced with challenges, “it’s important to take stock of what’s going well,” says Matthew Della Porta, a positive psychologist and organizational consultant. As corny as it may sound, positive affirmations help, says Della Porta. By repeating them with conviction several times each morning, you are training your brain to believe them. “Over time, you’ll start to internalize them,” he says. Finding a way to focus on the positive takes time, Della Porta says. “You have to learn and practice.” Success requires tenacity, tenacity requires selfconfidence “Tenacity is No. 1,” says Mike
Colwell, who runs Plains Angels, an Iowa angel investor forum, and the accelerator Business Innovation Zone for the Greater Des Moines Partnership. “So much of entrepreneurship is dealing with repeated failure. It happens many times each week.” But dealing with repeat failure without deciding to hell with it all and getting a day job often requires a seemingly insane amount of selfconfidence. You have to be crazysure your product is something the world needs and that you can deliver it to overcome the naysayers, who will always deride what the majority has yet to validate. Richard Branson is Richard Branson because failure never changed his overall outlook Richard Branson rarely plays it safe, which means he’s experienced a few outstanding failures. Not all Virgin efforts, for example, have disrupted their
target markets: Virgin Cola failed to quench consumers’ thirst for Coca-Cola and Pepsi, and apparel brand Virgin Ware quickly fell out of fashion. Critics also question Branson’s daredevil proclivities, like his attempts to circumnavigate the globe via balloon or his recordsetting English Channel crossing in an amphibious vehicle. “Virgin is an adventurous company because I am an adventurer as well as an entrepreneur,” Branson says. “We were the first to cross the Atlantic in a balloon, and we’ve broken lots of other world records. That’s been part of the spirit of building the brand and building the company, and set it apart from the more staid companies we compete with. On the other hand, one could analyze it and say it’s very irresponsible. But we like to break the rules occasionally.” We’re not all born with Branson level abilities; sometimes it helps to fake it
until you make it “Millions of people, from entrepreneurs to celebrities, have a hard time internalizing their accomplishments,” says Valerie Young, an expert on impostor syndrome and, author of The Secret Thoughts of Successful Women (Crown Business, 2011). “They explain away their success as luck or timing,” Young says. “They feel this sense of waiting for the other shoe to drop.” The ability to appear confident (even if you feel far from it) is a valuable asset. “It’s a skill to be able to walk in and act like you know what you’re doing even if you don’t,” Young says. Allowing yourself to build and applaud that skill without practicing any intentional harm or deceit, will help you feel credible even when you’re out of your comfort zone, opening the gates for the real confidence to flood in. www.entrepreneur.com