Overoptimism can kill. But in the world of entrepreneurship, overoptimism might very well be the life raft that helps you weather the roughest storms.
While the barriers to entry for startups trying to break into the market can be quite high — from raising enough capital to locating a viable market — there are equally imposing barriers the entrepreneur faces as an individual.
To do well in such a competitive arena, entrepreneurs are not only expected to perform a whole range of tasks, but to also perform them well. They must play the role of a company’s innovators, investors, accountants, leaders, salesman, marketers, visionaries and strategists.
Maintaining the right mindset to handle such high expectations is difficult, which is exactly why entrepreneurs need an unfailing belief in the success and feasibility of their idea to make it work. In fact, a study examining about 3,000 entrepreneurs showed that a third of them believed their odds of success to be 100%.
That level of conviction seems almost prerequisite for overcoming the obstacles of starting a company. As important as intelligence and proactivity are, the quality of emotional resilience may be even more important for handling the unique unpredictability of entrepreneurship.
Having the ability to get back on your feet after investors fall through or product testing fails should not be underestimated . After the fifth, sixth, or twenty-seventh setback of the day, continual confidence in a long-term vision is key to getting back to work the next day without losing motivation.
The flip side is that confidence, especially overconfidence, can be a double-edged sword. It can lead entrepreneurs to overextend themselves, taking on too many tasks and responsibilities, to set unrealistic goals, or to make flawed decisions and overly optimistic interpretations of risk.
The simple psychological concept of confirmation bias can explain this dangerous type of confidence. In the face of contrary evidence, some founders may be convinced that their company is performing better than it actually is. It may be difficult for anyone to take criticism of their work, but it is especially hard for a founder, who may have dedicated her entire life savings and stretches of 80-hour workweeks to her company.
The more effort they have put into their venture, the more resistant entrepreneurs may be to admitting failure. Through the lenses of overoptimism and confirmation bias, signs of failure can be falsely interpreted as positive indicators of progress.
However, blindly plowing ahead with a flawed business plan or product feature is inevitably a wasteful practice, draining a young company of precious resources and time. But this isn’t to say that all entrepreneurs should run at the first suggestions of failure.
Failure takes many forms, and it’s the ability to make practical decisions regarding the many possible types of failure that makes a great entrepreneur. You may be struggling to get along with a cofounder — does that mean you should immediately break ties and find a different person?
Maybe. But maybe not.
Building a business can strain any relationship, and it can be especially tough on the two people building it together. It pays in the long run to work through the miscommunications and disagreements in order to build a healthy relationship with your cofounder. Not to mention that there’s no guarantee that you won’t run into the same issues with the next person you choose.
What about a new hire who isn’t pulling their weight, or a product feature that’s unanimously disliked in focus groups?
This is where the whole idea of fail fast comes in. To fail fast is to examine all the issues and ideas in a company and look for ways to subject them to a fast-paced survival of the fittest. It’s an approach to product development and business management that embraces experimentation and iteration. And ultimately, it’s what keeps any venture afloat in the competitive field of entrepreneurship.
Experimenting with business decisions might look like giving the unproductive new hire more time to prove themselves or giving them more rigorous training. With a weak product feature, it might mean assessing the focus group’s opinions, going back to the drawing board and working on improving the next iteration. Or the best option might be to fail fast, learn from the experiences, and move on.
Key to developing a culture of experimentation is knowing when overoptimism is preventing you from seeing deficiencies and when overconfidence is preventing you from starting over.
It takes a huge amount of optimism and confidence — some might even say an overoptimism and overconfidence — to start and continue building a business. What is seen as a weakness in other fields might very well be a budding entrepreneur’s biggest asset. But in the course of chasing success, entrepreneurs should be willing to approach business as a series of experiments. If something isn’t working, learn to fail fast and move on.
“If something is important enough, you should try even if the probable outcome is failure.” Elon Musk
What do you think? Is overoptimism and overconfidence important for entrepreneurship — and do you agree with the tenet of “fail fast”? We would love to hear your thoughts on this topic!