A few years ago, Dileep Rao, a former venture capitalist and financier, asked an intriguing question: What’s best For entrepreneurs: optimism, pessimism, or realism?[1] For me, it was a toss-up between optimism and realism — and apparently I’m not alone. Rao reported that, when that question was answered by 1,736 respondents, 55 percent of them said optimism was best, 44 percent said realism was best, and only 1 percent said pessimism was best. Rao noted, “Many also noted that entrepreneurs need all 3. I agree. I thought of adding that option but wanted to see how respondents prioritized the three.” I also agree that entrepreneurs need to be realistic and be a bit of a skeptic. However, few entrepreneurs succeed if they are not optimistic about the venture they are undertaking.

Ben Bierman, Managing Director at Business Partners, indicates entrepreneurs have often been labeled “Blind optimists.” He explains, “That’s what entrepreneurs have been referred to throughout history — and for good reason. Entrepreneurs have the unique ability to envision a future that doesn’t yet exist and to take steps to make that vision a reality, even though they may be unsure whether those steps are being taken in the right direction.”[2] Victor Perton, CEO at The Center for Optimism, goes so far as to say, “Optimism is the superpower of the entrepreneur.”[3]

The Importance of Optimism

Bierman observes, “Arguably, every entrepreneur is an optimist, in one sense or another. It takes a relentlessly positive mindset and dogged determination to see the opportunities that exist at the heart of the greatest challenges. Knowing one in nine start-up businesses across the world fail within the first five years, some may argue that many entrepreneurs are naïve or short-sighted. But optimism is an essential ingredient for entrepreneurship, especially because of the very real possibility that failure may be the outcome, rather than despite it. It may be that very optimism that allows certain individuals to ‘fail forwards,’ and perhaps even fall — serendipitously — into the next best solution.”

According to Gabriele Oettingen, a professor of psychology at New York University, optimism goes beyond “a relentlessly positive mindset.” She explains, “Optimism goes deeper than positive thinking. … Optimism is defined by an expectancy that you will be able to accomplish certain things.”[4] She stresses that “expectancy judgments” are based on past experience. That means that “optimism takes some effort but carries great rewards. Optimism helps entrepreneurs succeed because it means they are more likely to invest, act, and put effort into achieving what they want to get done.”

Jia Rizvi, an entrepreneur and documentary filmmaker, adds, “Optimism, at its core, is the belief in positive outcomes. It’s a lens through which challenges are viewed as opportunities, failures as lessons, and uncertainties as possibilities. For entrepreneurs, this optimistic outlook transforms the very fabric of their operations, leading to several key advantages. … Entrepreneurship is a test of endurance. Setbacks and failures aren’t just possibilities; they’re inevitable. Optimism fuels persistence — the willingness to keep pushing forward despite obstacles. It’s the difference between giving up after a failure and viewing it as a necessary step towards success.”[5]

Looking beyond the benefits of optimism for business success, journalist Kathleen Davis cites the work of Sue Varma, a clinical assistant professor of Psychiatry at New York University. Varma has written, “Numerous studies involving over 200,000 individuals have found that optimism is linked to many positive outcomes. People who embrace optimism tend to enjoy improved immune function, better heart health, and even more positive health outcomes. They also experience fewer physical symptoms and less pain in general.”[6] Davis adds, “In addition to being healthier, she also points out that optimists are wealthier, live longer, and are more successful in life, work, and relationships.”

Fostering Optimism

If optimism is an essential trait for entrepreneurs, as so many experts believe, can it be nurtured and strengthened? Alyson Dutch, CEO at Brown + Dutch PR, believes it can. She writes, “Being an optimist is not just an attitude; it’s a key skill to sharpen if you want to create a legacy and, in the meantime, create fulfillment for yourself and your team. To develop more optimism in your organization, start by watching your thoughts. If you find yourself ruminating about issues, shift your focus to the potential exciting opportunities that are coming your way.”[7] Davis calls that “reframing your mindset.” She shares a few suggestions from Shawn Casemore, a motivational speaker, that can help foster a more optimistic outlook. They are:

● Flip concerns about risks to a positive question. “What’s the worst that can happen?” becomes, “What are the best possible outcomes?”

● Share your optimistic view with others. “When we repeat things out loud, we override the little green negative person who is on our shoulder whispering pessimistic views in our ear.”

● Surround yourself with optimistic people and news. “Challenge negative comments and viewpoints when you encounter them.”

Being optimistic doesn’t mean you shouldn’t also be realistic. Rizvi observes, “Optimism is an active, strategic asset that shapes how entrepreneurs think, lead, and overcome challenges. It fuels resilience, fosters innovation, attracts talent, secures investment, enhances decision-making, and builds lasting brands. However, it’s important to distinguish between unquestioning optimism and strategic optimism. The latter is grounded in reality, informed by data, and coupled with a clear understanding of the challenges ahead. Strategic optimism empowers entrepreneurs to navigate the complexities of the business world with confidence, creativity, and a steadfast belief in their ability to succeed. Optimism is an entrepreneur’s best asset in the entrepreneurial journey which can be fraught with uncertainties, risks, and challenges.”

Concluding Thoughts

Rizvi’s distinction between unquestioning optimism and strategic optimism is important. There is a difference between being optimistic and being Pollyannish. Andreas Kappes, a lecturer at the University of London, and Tali Sharot, neuroscientist and professor of cognitive neuroscience at University College London and MIT, explain, “Entrepreneurs’ optimistic disposition can be a great asset during the process of establishing a business. An optimistic disposition prompts people to work harder even when faced with obstacles, protects from stress, enhances learning from errors and mistakes, and acts as a social magnet. On the downside, extreme levels of optimism might lead entrepreneurs to persist too long with unpromising endeavors, wasting valuable resources.”[8] Optimism flavored with a healthy pinch of realism is the recipe for entrepreneurial success.

Footnotes
[1] Dileep Rao, “What’s Best For Entrepreneurs: Optimism, Pessimism, Or Realism?” Forbes, 17 January 2023.
[2] Ben Bierman, “Why optimism and entrepreneurship go hand in hand (and why it’s crucial to a growing business),” BizCommunity, 31 May 2024.
[3] Victor Perton, “Optimism is the Superpower of the Entrepreneur,” The Center for Optimism.
[4] Staff, “How Optimism Helps Entrepreneurs Succeed,” Clear View Business Solutions Blog, 12 August 2020.
[5] Jia Rizvi, “Why Optimism Can Be An Entrepreneur’s Best Asset,” Forbes, 17 April 2024.
[6] Kathleen Davis, “How to train your brain to be more optimistic,” Fast Company, 2 June 2024.
[7] Alyson Dutch, “How Entrepreneurs Can Hone The Skill Of Optimism,” Forbes, 21 April 2022.
[8] Andreas Kappes and Tali Sharot, “Optimism and Entrepreneurship: A Double-edged Sword,” Nesta, February 2015.