What, me worry? How blind optimism benefits startup founders

What, me worry? How blind optimism benefits startup founders

ON NOVEMBER 17, 2013

Building a startup is an emotional roller coaster. Look no further than Paul Graham’s startup curve. If you take as a given the parabolic trajectory, how does a founder handle the ups and more importantly the downs? I’ve developed a systematic strategy that has worked wonders in keeping me upbeat. What’s more, I’ve stumbled across research that shows I might not be (altogether) delusional.So, what’s my “scientific” approach? When Treatings has successes, no matter how trivial, I heap credit on my co-founder Paul and me, and hang on to that positive feeling for as long as possible. In the more common occurrence that we face setbacks, I instinctively deflect it as insignificant and temporary. An external force outside my control that is best forgotten.

I’ve become frighteningly adept at this. It’s not even a case of bottling up negative emotions that are apt to erupt from time to time. A dose of justification, combined with a short-term memory, remedies most adversities.

An investor we meet at a networking event doesn’t think Treatings, a professional networking platform where you can offer to treat strangers to coffee, is a viable business? That’s easily shrugged off because people who give away money for a living aren’t going to want a way to be asked out for coffee. They’re already drowning in such requests. If we had more time to frame the fact that Treatings is aimed at surfacing insights from peers, not connecting with public figures, surely the investor would be won over.

What about when a customer pitch ends in a “no?” Surely this crushes my spirits and sends me spiraling into a pit of despair. Are you kidding? Do you know how many times restaurant owners said no Colonel Sanders when he was hawking his fried chicken recipe? 1,009 times! Seems to have worked out pretty well for him, and I happen to love his product. I could use another notch in my “no” belt anyways.

I’m not oblivious to my optimistic, as I’ll charitably term it, nature. Every day we’re faced with the same rejection and criticism all founders can relate to. I don’t give myself Richard Simmons-esque pep talks to stay positive (except for Tuesday morning spin class). I just reflexively process and discard negative news, while soaking up the victories. Like any true delusional optimist, I’ve stumbled into research that has (in my mind) reaffirmed my behavior.

In “To Sell Is Human,” Dan Pink writes that although only one in nine Americans work in traditional sales roles, we all spend our day selling, whether entrepreneurs pitching investors or parents convincing children to go to bed. He explains that an essential quality in effective salespeople is “buoyancy.” This is the ability to keep your head above water amidst the sea of rejection most of us face on a daily basis, whether it’s investors dismissing your product (hypothetically of course) or your kids refusing to go to bed.

One of the main determinants of buoyancy is your explanatory style, which is what you tell yourself after an experience. What’s an easy way to drown? Have a pessimistic explanatory style – “the habit of believing that ‘it’s my fault, it’s going to last forever, and it’s going to undermine everything I do.’ [This] can diminish performance, trigger depression and turn setbacks into disasters.”

To be buoyant, to bounce back after rejection, Pink advocates an optimistic explanatory style. This is described as the tendency to “see rejections as temporary rather than permanent, specific rather than universal, and external rather than personal.” Not only does a positive explanatory style lead to a sunnier disposition, it apparently leads to more success.

Pink quotes a study conducted by researchers at the University of Pennsylvania, where they studied approximately 100 sales agents from the Metropolitan Life Insurance Company. The researchers completed a psychological assessment to determine the explanatory style of the agents, then tracked their performance over two years, measuring total sales and commissions earned. The results showed that “agents who scored in the optimistic half of the explanatory style sold 37 percent more insurance than agents scoring in the pessimistic half [and] agents in the most pessimistic half ended up quitting at twice the rate of those in the optimistic half.”

Turns out that buoyancy is a fantastic quality to have. Before my hand gets too sore from patting myself on the back, though, what’s the danger of such blissful buoyancy? The nice thing about the characterization is that you can never be too buoyant. That just means you’re a deity and can walk on water.

One thing I worry about is that I’m prone to blind optimism. I shouldn’t brush off all negative signals. Optimism and persistence are celebrated qualities in entrepreneurs. We’re supposed to run through walls and any obstacles that present themselves, in order to bring our vision to fruition. But what if those walls are telling us something we should listen to and let impact our trajectory? We must be headstrong and persistent while also acknowledging the difference between a hurdle and a dead end.

Unfortunately, there isn’t a right answer. It’s a tightrope that must be walked, tempering optimism with realism — a tight-rope I’m confident I’ll never fall off of.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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