In Praise of Optimism

Stephen DeAngelis

November 5, 2009

In numerous posts about development and entrepreneurism, I have written about the optimistic nature of entrepreneurs. The Lebanese-born, American writer Khalil Gibran, once wrote: “The optimist sees the rose and not its thorns; the pessimist stares at the thorns, oblivious to the rose.” I don’t believe entrepreneurs are unaware of the thorns when they set out to establish a company. They nevertheless remain optimistic. Luke Johnson, chairman of the United Kingdom’s Channel 4 and head of Risk Capital Partners, a private equity firm, wrote an op-ed piece last month about the optimistic nature of entrepreneurs [“Why you’ve got to accentuate the positive,” Financial Times, 14 October 2009. Johnson writes:

“Optimism is the elixir that makes everything possible. It sparks confidence – and that fuels ambition, which in turn triggers action. It leads to new inventions, new companies, new jobs and a higher standard of living. Without this sense of hope in the future, life is a grim affair, a kind of regression back to the Dark Ages. This elemental lust for life is an amazing but intangible force; such instinct cannot be easily understood through scientific endeavour. But it can surely be either nurtured or discouraged, and it is up to us, each and every day, to decide if we want to look forward or back.”

I agree entirely. As I’ve written in the past, entrepreneurs have a great sense of anticipation for the future. They believe it will better because they believe they will be able to shape it to their vision. Just as importantly, successful entrepreneurs are able to motivate others to share that vision. Johnson continues:

“Important initiatives always require a leap of faith. I tend to find that those who are overanalytical struggle with real breakthroughs. They focus so much on the downsides they forget about the potential of the sunlit uplands. When making a big investment, there will always be a moment that you approach the precipice: all the material facts are known; negotiations have exhausted everyone; now for the decision – do you take the plunge or walk away?”

True entrepreneurs, after weighing all the facts and still seeing an upside, almost always take the plunge. It’s not exactly a blind plunge into a dark tunnel, but often the entrepreneur can’t see the end of the tunnel except as he or she envisions it in his or her mind. Robert Frost once wrote a poem entitled “Neither Out Far Nor In Deep.” The title actually says more to me than the poem (which relates to people keeping watch on shore). Entrepreneurs aren’t mere spectators in life. They go out far and in deep. They embrace life and all its opportunities. Johnson continues.

“Most entrepreneurs I know love to believe they are solidly rational, especially when considering dramatic steps such as takeovers or product launches. But the truth is that when it comes to the crunch, entrepreneurs by nature allow the animal spirits to surge and tend to seize an opportunity. After all, no deal is ever a sure-fire thing – every innovation carries the chance of blunder. But for enterprising souls, the desire for gain overwhelms the fear of loss. Unquestionably, the adrenaline rush of momentous events can lead to recklessness. The economic downturn has exposed great swathes of such folly. But winners in the game of capitalism calibrate the odds before they charge, reckoning that they can cope even if it all proves a mistake. I am all for proper enquiry beforehand, and sensible hedging where practical. But never demand a certainty: if you wait for that, you will be on the sidelines for ever.”

Louisa May Alcott once wrote, “I’m not afraid of storms, for I’m learning how to sail my ship.” She may have been a bit too optimistic. A good stiff breeze is essential when learning to sail, a genuine storm is not. Successful entrepreneurs know the difference between winds of change that can carry them forward into a better a future and stormy climates that can sink all hopes. Even amidst gloom, however, entrepreneurs search for light. Johnson continues:

“This year it has been common to feel trapped in an almost universal mood of gloom. And if it’s not doomsayer economists, it’s environmentalists filling us with despair, or a beleaguered media industry delivering tidal waves of bad news. But such depressing predictions do not allow for the relentless tide of human ingenuity, and the sheer power of positive thinking. I cannot account for it, but enthusiasm, willpower and force of personality can achieve remarkable feats. There is no room for complacency, and no one said achievement is easy – but I believe there are solutions to almost any problem. Plenty have suffered setbacks, but they will recover: short of death or prison, such reverses can always be overcome with persistence. Millions have been made redundant, lost their business or seen their investments shrink. But giving up is the ultimate tragedy. As someone once said, unless you have lost a limb and your house is on fire, your difficulties are just inconveniences.”

Good entrepreneurs are not reckless; especially if they are risking capital put up by friends and family. After all, good friends and a loving family are much more important than financial success. And as Johnson writes “money is only part of the answer – more often, what is needed are unbounded conviction, a sense of aspiration, and a constructive approach.” Clear vision, a sound business plan, and hard work are all required along with an optimistic nature. Johnson concludes:

“Plan for failure and you will not be disappointed, but if you concentrate on your strengths and apply yourself, something heroic may emerge. Psychology has an element of self-fulfilment about it; just remember that every year spring returns, that all our troubles turn into valuable experience over time, and that the world is more forgiving than you might imagine.”

Winston Churchill wrote: “The pessimist sees difficulty in every opportunity. The optimist sees the opportunity in every difficulty.” I’ve written a lot about investment opportunities in emerging market nations. A global recession may seem like a strange time to talk about taking risks in unsettled markets, but I’ve found that many emerging market nations share an optimism for the future that seems to have waned in more developed economies. Optimists naturally seek out other optimists and perhaps that is why I find emerging market nations so invigorating. As Daniel L. Reardon noted, “”In the long run the pessimist may be proved right, but the optimist has a better time on the trip.” I believe in the long run the optimist will be right, because the optimist, not the pessimist, is the one willing to work hard enough to make the future a better place.