Gentile Jokes (and Startup Optimism)

Striking a balance between optimism and pessimism re: startups

Jerry Seinfeld tells a joke I enjoy (not original to him):

Two gentile businessmen meet on the street. One of them says “How’s business?” The other says “Great!”

I like this joke because of how much lifting is done by the negative space around the joke vs. the joke itself. It also reminds me of my own experience as a startup founder listening to other startup founders talk.

As a rule, startup founders are extremely enthusiastic and optimistic when talking about their companies. This is universally the case when they speak to investors and customers – this is “sales” and makes sense. It’s also the attitude founders project within their organizations, to employees and prospective hires – also understandable, but risky when it crosses into myopia or deception.

I’m more weirded out about how the behavior goes beyond those circles, to a founder’s family, friends and their peers founding other companies.1

Possible reasons why the founders I talk to always seem to be so optimistic:

Whatever the reason, this behavior has always irritated me and is an uncomfortable mode for me to adopt personally. It’s not just my inherent (cultural?) preference for kvetching over kvelling. I also saw years of slow and bumpy progress at Whooo’s Reading and learned to stop telling people we were about to turn a corner.

Over-optimistic founder PR isn’t harmless from a business perspective. Founders, perhaps especially those who buy their own marketing, are likely to incorrectly and asymmetrically interpret information. Ben Horowitz passes this on from Andy Grove:

[H]umans, particularly those who build things, only listen to leading indicators of good news. For example, if a CEO hears that engagement for her application increased an incremental 25% beyond the normal growth rate one month, she will be off to the races hiring more engineers to keep up with the impending tidal wave of demand. On the other hand, if engagement decreases 25%, she will be equally intense and urgent in explaining it away: “The site was slow that month, there were 4 holidays, we made a UI change that caused all the problems. For gosh sakes, let’s not panic!”

My own company made mistakes from undue optimism. We waited 1-2 years longer than we should have before pivoting out of our original business. Pivoting was always going to be a hard call, but after telling investors, employees, family, and friends that everything was going well, we were reluctant to take the reputational hit and change course.

Another pitfall: we consistently made projections and set goals our team couldn’t hit. When we didn’t hit them, we stubbornly set the next round of goals about as high. After this happened a few times (and after the misses were big enough), we lost the ability to use goals to motivate or discipline our efforts. Everyone learned they should just ignore the goals.

I suspect I’ve moved too far toward pessimism. People in the street who ask how business is probably don’t want a breakdown of the three main ways my company is currently underperforming. There’s always aspects of the business I’m feeling positive and excited about, and I could emphasize those without making broad claims about the overall outlook.

I’d like to aim somewhere in the middle of the optimism ↔ pessimism range. I remain allergic to overly sunny forecasting, but I’m going to try harder to recognize and call out positive milestones as they are passed. I’ll try to lead with the positive rather than the negative when talking about work.

  1. Founders come closest to actual candor when speaking with their co-founders. I’d speculate that startups with co-founders are more likely to succeed because, without space to vent some pessimistic steam, solo founders eventually crack under the cognitive dissonance. In my experience, genuine optimism varies extensively from founder-to-founder and from day to day, largely independently of the company’s actual situation. ↩︎