The
View from Initialized

The Founder Mindset You Need

Most founders pursue ideas that are very short term with wild optimism. Here’s why that may not be the path to success.

Most people are optimistic in the short-term and pessimistic in the long-term. What I’ve learned is you actually need to be exactly the opposite of that: true founders need to be pessimistic in the short-term and in the long-term, optimistic.

Short-term Pessimism

One of the things I learned in therapy about myself is that I actually have an incredibly overactive superego — more so than most people. A superego is the part of a person’s mind that acts as a self-critical conscience. I grew up as a child of Chinese immigrants — anyone growing up in a super strict household would have that same response. I have some good news for you if that’s the case; this can be an asset.

“I believe in the value of paranoia. Business success contains the seeds of its own destruction. The more successful you are, the more people want a chunk of your business, then another chunk, and then another, until there’s nothing left. The things I tend to be paranoid about vary. I worry about products getting screwed up, and I worry about products getting introduced prematurely. I worry about factories not performing well, and I worry about having too many factories. I worry about hiring the right people, and I worry about morale slacking off. And of course, I worry about competitors. I worry about other people figuring out how to do what we do better or cheaper, and displacing us with our customers.”

Andy Grove, “Only The Paranoid Survive”

For me, the challenge is to channel this superego — the anxiety, the stress, all of those things— into productive action. It’s not enough to ask, “What could go wrong?” The next step is important, too. It’s to ask yourself, “What do I need to do to prevent that from happening?” If you get frozen in anxiety and stress, you do nothing to help yourself, and your paranoia and pessimism turn into a self-fulfilling prophecy. This is actually the core seed of the Stockdale Paradox, which you can learn more about in this deep-dive video from me.

You’ve got to have faith that you will prevail with the discipline to confront the brutal facts of your current reality whatever it might be. This is also why Charlie Munger famously said, “All I want to know is where I’m going to die, so I’ll never go there.”

Pay attention to your anxiety; don’t throw it away. It’s telling you something that’s very important. Short-term pessimism will lead you to do the right things for your business because it’ll allow you to perceive that which might hold you back; you’ve got to listen.

Short-term Optimism

It turns out — and this is very surprising to me — short-term optimism kills.

The vast majority of people who try to start their startups are overwhelmingly short-term optimists. In January 2019, researchers at the London School of Economics actually tracked the earnings of entrepreneurs from when they were employees for a company until after they started their own businesses. Here’s what the study found:

  • Founders with above average optimism earned more than their pessimistic counterparts when they were employees
  • But, when they made the jump to entrepreneurship, they earned 30 percent less than the more pessimistic business owners

Short-term optimism is necessary, but that’s why it’s also dangerous. This is why many people work on startups, but most of them will fail.

Here’s one of my favorite clips about startup ideas from the 1999 movie “Office Space.”

You have to understand that most people don’t want to tell you that it’s not going to work. What happened in “Office Space” tends to not be what happens to us in real life. Be careful with this.

I’m not saying you should try to become discouraged. I am saying you should pay extra close attention to the criticisms and reasons why things might not work then do your best through product, design and business strategy to actually address those things. This is also why talking with users is the true litmus test; users will vote with their feet. They might tell you to your face that they like it, but if you look down and you don’t have dollars in your hand or a completed transaction, then you have your real answer.

Long-term Optimism

Next, you need long-term optimism, and this is actually pretty hard. Most people really aren’t ready to strap in for the 10 years it takes.

Eighty percent of new businesses fail in the first five years, and another 80% fail in the next five years.

If you can last 10 years, you’re going to be in the top 4% of all companies. Success actually takes forever, and to succeed, you’ve got to be the longest term optimist there is.

Here is one of my favorite Bill Gates’ quotes:

“Most people overestimate what they can achieve in a year and underestimate what they can achieve in 10 years.”

At Y Combinator, we referred to this as the process.

First, you start off with the initial glee of the launch. Then, you go through a long trough of sorrow — a great many of you are in the trough of sorrow right now. The next stage says it all — releases of improvement.

Eventually, you can reach the promised land. As W.B. Prescott said, “In any contest between power and patience, bet on patience.” And that’s the key.

Short-term pessimism will get you to hyper focus on the things that will help you avoid death. But long-term optimism will get you committed for the long haul, so you’ll actually do the things necessary to compound your growth and achieve what, at first, seemed impossible.

Remember, none of this comes naturally. You’ve got to apply conscious attention and focus if you’re to break out of the natural inclinations that hold the vast majority of people back. You’ve got this.

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