What does it take to be a successful company founder? You might think of motivational speeches and upbeat attitudes. Energy and motivation are important. But breakout success as an entrepreneur often requires a personality trait that might surprise you -- pessimism.
Pessimism might not be the first characteristic you associate with entrepreneurial greatness, yet research has found it to be an indicator of success. According to one study published in the European Economic Review, founders with above-average optimism earned 30 percent less than their pessimistic peers. You read that right -- 30 percent less.
That does not mean you need to be entirely pessimistic to build a company. But there are benefits to this so-called undesirable trait. I have seen this play out in my own experiences as a company founder. Two of the companies I founded in the past were acquired by public companies. Today, I am the co-founder and CEO of Aha! -- one of the fastest-growing software companies in the U.S.
I certainly had enthusiasm right away. My co-founder and I knew that our idea could help people build better product. But I would call us "optimistic realists." Our experience taught us that company building comes with enormous challenges. So, we made careful decisions about when to scale the company -- for example, not making our first hire until we had more than 100 paying customers.
Bringing this mindset to our work served us well. And I know it can help other aspiring founders too. Here are six ways entrepreneurs can use a strong sense of skepticism to their advantage:
Make a plan
You would be surprised how many entrepreneurs allow their enthusiasm and overconfidence to guide them without actually validating that their company fills a need in the market. This is not just opinion. CB Insights analyzed 101 startup failures and found that 17 percent of companies that failed did not have a business model at all. And 42 percent of companies discovered after launch that there was no market need for their company's product. Yikes. This is not something you should discover post-launch -- you need to do that work upfront. Ground your business plan in reality (and data), rather than hopes and dreams.
Expect hard work
Starting a company will force you to work harder than you ever have before. Planning, finances, customers, the team -- they all require enormous amounts of effort and attention. Be prepared to give your all and make major sacrifices (i.e. your free time) to make the business a success.
See the problems
Glass half empty? This is usually the case when you are starting a business. You need to be able to look around at every aspect -- from the finances to the company culture -- and determine what is not working. After all, you cannot solve your greatest problems without first recognizing what they are.
Ask hard questions
Once you can see those problems, you need to dig into them. Ask the questions no one else wants to ask. Push yourself to uncover what you could be doing better and whether the company is on track to achieving its goals. And do not assume that your first answer is the correct one. Invoke a healthy sense of skepticism, questioning everything until you land on the right solution.
Temper your dreams
Every entrepreneur hopes for a business that is wildly successful right from the start. But as you know, breakaway success is extremely rare. You cannot plan for it. You will achieve far more if you stay focused on your core vision and the key milestones that will help you realize it. Then as your company starts growing, keep pace with that growth by incrementally improving everything along the way.
Here is some advice that might surprise you -- be grateful for what goes wrong. Because things will absolutely go wrong. Instead of focusing on a missed opportunity or skating over unfortunate circumstances, pay attention to the lesson that is hiding inside each misfortune. You will be better for it and so will your teammates.
You need a sense of optimism to build a lasting business. But that will not get you very far without grounding it in reality.
How has pessimism helped you achieve your goals?