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EVERY SPOKEN WORD
20 min read · 4,225 words- 0:00 – 0:30
Introduction
- DCDalton Caldwell
And you feel like you're strapped to this crazy person. You're like, "Oh, no."
- MSMichael Seibel
[laughs]
- DCDalton Caldwell
[laughs] I'm like, "This... I'm in a car, and the driver of the car is completely insane and is gonna take us all down."
- MSMichael Seibel
Yes.
- DCDalton Caldwell
"What have I done with my life?"
- MSMichael Seibel
[upbeat music] This is Michael Seibel with Dalton Caldwell. Today, we're gonna talk about whether you are being too optimistic or too pessimistic about your startup. So Dalton, set this topic
- 0:30 – 3:09
Stereotypes
- MSMichael Seibel
up. We, we certainly meet many founders who fall in either of these categories pretty regularly.
- DCDalton Caldwell
Yeah, I mean, [sighs] the fact is you need to be both optimistic and pessimistic, okay? And if you're too far on either extreme, you are gonna fail. [laughs] Right?
- MSMichael Seibel
[laughs]
- DCDalton Caldwell
Um, that's, um-
- MSMichael Seibel
Simple
- DCDalton Caldwell
So, so to start with, why don't you... Let's talk about the comical stereotype of someone that's too pessimistic, and we know these people. So what does it... Like, paint me the picture, Michael. Who's the stereotypical too pessimistic founder? What are they like?
- MSMichael Seibel
It is like one painful experience causes them to want to either quit everything or change everything, and fill in the blank on the painful experience. It's like-
- DCDalton Caldwell
Yeah
- MSMichael Seibel
... bad customer call, bad investor pitch meeting, talk to a friend. Like, whatever, whatever it is. Talk to an advisor. But like, one negative experience is getting them to run away.
- DCDalton Caldwell
Yeah, it's like a Eeyore or something. I don't know if that's too weird of a reference, but you know, "Woe is me. Everything, everything bad is happening to me. You know, the world's out to get me." Everything that could go wrong is going wrong, and everything's f- going to shit, and they're screwed. Like, it just, nothing, nothing good can happen to me. That is what talking to a too pessimistic founder is like. How about the comical stereotype type of someone who's too optimistic? What's it like talking to them?
- MSMichael Seibel
So at first, you get really excited. You're like, "There must be something here." But the longer they keep talking, the more you are extremely confused why it doesn't appear like anything has happened, like any value's been created or any insight has been found. And then, like, at some point, you start asking questions 'cause you assume that you're the idiot. But by the end of the conversation, like, you are convinced the person actually has no idea what they're doing. That's never happened to us before, though. That's all theoretical. [laughs]
- DCDalton Caldwell
Yeah, it, it's like talking to someone that's, um, had too much coffee or is medicated or something, where-
- MSMichael Seibel
[laughs]
- DCDalton Caldwell
... everything is great, everything is wonderful, everyone is out to help them. Like, the, the planets are aligning. The, you know, like, their startup is the best thing ever. And then again, yeah, you ask questions and you're like, "Wait, this all sounds kind of bad."
- MSMichael Seibel
[laughs]
- DCDalton Caldwell
"Aren't you concerned about some of this stuff?" And they're like, "No, no, this is all going according to plan. This is like... This is really good." And so again, in both extremes here, there are problems, okay? [laughs]
- MSMichael Seibel
There...
- 3:09 – 5:45
The Two Leaders
- MSMichael Seibel
And not only that, they multiply when you have, God forbid, you have employees, right? Like, then it's, then it's even worse.
- DCDalton Caldwell
I think it's helpful to do this self-diagnosis if you're too optimistic or too pessimistic, to put yourself in the shoes of your employees and imagine who would you wanna work for? Who would you think would be, like, a good leader? 'Cause to, to answer this, I think a good leader is an optimist. They believe. If they don't believe, they're a horrible leader. Like, right, right out of the gate, a pessimistic leader who doesn't believe that things can work, quit.
- MSMichael Seibel
Not gonna work.
- DCDalton Caldwell
Like, that ain't gonna-
- MSMichael Seibel
Yep.
- DCDalton Caldwell
Like, that's a bad leader. So you're, you're, you're off the team, okay? [laughs] On the other hand, though, a too pessimistic, uh, sorry, a too optimistic leader has horrible plans. Their plans are like, involve magical things happening, rainbows and ponies and space-time travel and like, like [laughs] like, like if you listen, if you actually listen to the over-optimistic person's plans, any reasonable employee would be like, "Wow, this person has lost their minds."
- MSMichael Seibel
Yes.
- DCDalton Caldwell
"They have no idea what's going on here."
- MSMichael Seibel
And, and it becomes a little scary when your leader sounds like that. Suddenly you're like, "Oh God," like, "Are we even gonna get the basics right when this person doesn't seem to be tethered to any landmass at all?" [laughs] Like...
- DCDalton Caldwell
Are we... You know, the person said two months ago that our company was great and we were all gonna be rich, and now they're saying, you know, the funding fell through, but they have a solution. Am I... Are we gonna even make payroll?
- MSMichael Seibel
Yes.
- DCDalton Caldwell
Like, you, you lose your credibility in like two seconds.
- MSMichael Seibel
Yes. You make that perfect point, like when you cross over being too optimist, your employees start questioning everything. Like, you, you lose all trust 'cause they're like, "Oh, crap," like, if, if the, if the leader can't see this obvious thing right in front of their face, uh-oh. Like, what, what, like, what else have I not uncovered yet-
- DCDalton Caldwell
Yeah
- MSMichael Seibel
... on what the leader can't see?
- DCDalton Caldwell
And, and you feel like you're strapped to this crazy person. You're like, "Oh, no."
- MSMichael Seibel
[laughs]
- DCDalton Caldwell
[laughs] I'm like, "This... I'm in a car, and the driver of the car is completely insane and is gonna take us all down."
- MSMichael Seibel
Yes.
- DCDalton Caldwell
"What have I done with my life?" So those are the extremes, right? So a- if you're totally pessimistic, it ain't gonna work. It's over. Like, no one... You know, like pack it up. And if you're too optimistic, it's probably over, too. So what do you do? [laughs] Or like how do you self-diagnose, Michael? Like, I'm sure people are always, whenever we say things like this, people are like, "Well, how do I know which one applies to me?" Let's
- 5:45 – 6:28
Pessimistic mistakes
- DCDalton Caldwell
give-
- MSMichael Seibel
Well, let's start with pessimistic
- DCDalton Caldwell
... how do you know?
- MSMichael Seibel
Yeah, so you might be too pessimistic. So this happens all the time in YC. You sent a shitty email to 100 customers that wasn't personalized. You didn't send it to the right person. You sent it in the middle of the night. It had typos. Your call to action was like, "Would you like to join me for a six-hour phone call to discuss this further?" And you only got, like, five replies. Oh my God, the world's coming to an end. We pro- our startup doesn't work because 100 potential customers we emailed didn't produce 100 leads. We get this, like, every batch, and we have to be like, "It's gonna be fine, folks." Like, [laughs] like
- 6:28 – 7:14
Expectation setting
- DCDalton Caldwell
I think it's expectation setting. I think when you... I think you can be too op- you can be too pessimistic if you can't, if you don't, if anything short of absolute unmitigated success right out of the gate doesn't happen, and you're like, you know, you're like, "Oh man, this isn't working out for me. I, I'm really worried." It's, like, poor expectation setting. And so I think a lot of folks just, they don't realize that this stuff is hard, and that even when it's working, you mostly get nos. And so that's a way you might be too pess- pessimistic, is it doesn't immediately work.
- MSMichael Seibel
Who knew these things take longer than immediate to work?
- DCDalton Caldwell
[laughs]
- MSMichael Seibel
So, so there's a lot of variance on this, right? Like, I would argue the next one that I see all the time is,
- 7:14 – 8:24
Faulty feedback
- MSMichael Seibel
"I talked to an investor, I talked to a friend, or I talked to a customer, and they said this wasn't gonna work." And, and I take that to mean, like, I ascribe godlike predictive powers to one of those three people and think I need to quit or do something else because an investor, a friend, or a customer said this wasn't going to work. As opposed to thinking, let's go through the list, your friends are idiots and don't know anything, especially if they would never use your product. Investors are close seconds as idiots, especially if they would never use your product, don't invest in your space, aren't good investors, don't invest in a lot of companies. And then your customer might not be an early adopter, or God forbid, you might have mis- um, misidentified the customer, and you might be pitching someone who would never be a customer no matter what. So, like, you know, just, like, one negative signal is, does not mean you can't build a startup. Like, or this product's not gonna work, or this idea's not gonna work. One last one that I wanna throw in because, uh, I find it really interesting.
- 8:24 – 9:20
Demo day goals
- MSMichael Seibel
We help founders set goals for YC. What's the goal I wanna accomplish by the end of YC? We call it the demo day goal. And I'm constantly seeing founders who don't accomplish that goal thinking their company's dead. "Oh, well, we didn't accomplish our demo day goal. We didn't accomplish our goal for the next three months. Obviously this is a bad company." And they miss the whole point, where, like... And it's really funny now because I actually wrote this in the advice we give the founders in the batch, but they still miss the point. Like, setting the aggressive goal, the purpose was to get you to move fast, to get you to, to go, go, go. Like, it, it was the, it was the juice. Like, if you learned a bunch pursuing that goal, you got value, even if you didn't accomplish it. Um, but, like, so many founders kind of go into the demo day season being like, "We didn't accomplish our demo day goal. Does that mean our company sucks?" And it's like, no. [laughs] Not even a little bit.
- DCDalton Caldwell
It's all some
- 9:20 – 11:22
Energy drain
- DCDalton Caldwell
version of gave up too early or wants to give up. You're too pessimistic if you wanna give up too early or if you expect it to be really easy for you, or you think it's easier for everyone else. You have like a victimization thing. "Well, everyone else has it easier than me. The world's out to get me." You know, I don't think that's, that means you're being too pessimistic. Um, ultimately, you can redirect your energy if things aren't working, but you shouldn't give up fast. [laughs] Like, I, I don't know how else to articulate it. Like, like too pe- founders that are too pessimistic, the way you know they're being too pessimistic is they freaking give up. It's obvious when they're too pessimistic. And they bring everyone down. Their co-founders, like, everyone around them talks to them and feels worse after talking to them, and deflated. [laughs]
- MSMichael Seibel
Yeah.
- DCDalton Caldwell
And, and, like, last thing on this, like, we talk about this sometimes at YC of the difference between being high energy and low energy. It's like the Eeyore thing. Like, you wanna talk to someone and get energy when they're telling you about their company and walk away from the conversation being like, "Yeah, that person's, like, gonna do things. Like, I'm excited to talk to them." If talking to you is deflating, again, this is not pejorative, but it's like that's a sign you're too pessimistic that, like-
- MSMichael Seibel
Yes
- DCDalton Caldwell
... trying to express what you're working on and what problems you wanna solve cause people to feel drained. [laughs]
- MSMichael Seibel
Yes. But let's be clear. I think that the cool thing about being too pessimistic, like, I'd love your opinion on this 'cause I actually think I rather help someone being too pessimistic strangely 'cause usually when I try to help introduce realistic expectations, they can adjust. You know, usually we just need to tell them what's reasonable, and suddenly they're like, "Oh, okay. I guess things aren't as bad as I thought." All right. So like we said, um,
- 11:22 – 14:23
Magical thinking
- MSMichael Seibel
pessimism sucks, but it's curable. Optimism's a little harder. Um, and I might argue maybe the reason why optimism is a little harder is 'cause we're kind of saying that the good point is optimistic. So if you're too optimistic about your startup, you're like way off in the never-never land, and, like, that's a harder thing for us to, uh, to, that's a harder thing for us to cure. So why don't you introduce the, the audience to this concept of magical thinking? This is something you talk about-
- DCDalton Caldwell
Yeah
- MSMichael Seibel
... to the whole batch, and I think it's one of the best talks.
- DCDalton Caldwell
Yeah. I, the term I use is, is magical thinking. Um, I think it's like a, like a psychology term, but Um, and yeah, I think it's used in more of a clinical setting. So this is not the technical, technical definition.
- MSMichael Seibel
[laughs]
- DCDalton Caldwell
This is just my, my founder version of magical thinking.
- MSMichael Seibel
Yes.
- DCDalton Caldwell
Magical thinking is where you start to believe you live, like, in a magical world with magical causes and effects, and that, like, things that aren't rooted in reality are true for you. And so an example of, like, a magical thought is, hey, if I was in an airport and I saw Michael in the airport, and I could, like, approach him and pitch my startup, he would immediately see what a brilliant idea I have and, you know, get out of his checkbook and, like, fly me away from my life and help advise me to become the next Google. Okay? So, like, some people think that way, and that's, like, completely nuts, right? Like, don't do that.
- MSMichael Seibel
Yes.
- DCDalton Caldwell
[laughs]
- MSMichael Seibel
Well, by the way, I think they extend that thought to that's how companies get funded. Like, like they extend that thought beyond themselves to believing that's how the world works. Like, the people who get funding get lucky like that or, like, do that, so I have to do it, too. And they don't bother actually studying how the world really works.
- DCDalton Caldwell
Yeah. Or, or it's like they've watched too many romantic comedies or something. You know, it's like they think their life is a movie and they're the main character, where, like, if they do some really complex act, showy act that's dramatic and like something you would see in a movie, if you literally do that, like, somehow it's gonna work out for you. Y- y- you get what I'm saying? Like, there's lots of versions of this, but it's like someone that's not rooted in actual cause and effect of reality and can't tell the difference between normal cause and effect. Like, hey, the way you meet Michael is you apply to YC on the website, and then, like, we're just normal people and, you know. [laughs] Like, it's, like, actually pretty straightforward. Um, but when you start to believe that there's, like, magical ways to break into whatever, uh, you know. So anyway, that's my definition. And there's, there's more subtle versions of this, but the whole concept of magical thinking is a poor grasp of how the world actually works.
- 14:23 – 16:03
Founder mistakes
- MSMichael Seibel
So let's talk about this in the context of startups. You know, how does this come up when we're talking to founders? W- w- what, how does magical thinking pop its weird head up?
- DCDalton Caldwell
I mean, I think to start with, it's to always have excuses. Like, when you ask people direct questions, everything involves a very complicated answer and excuse about why they can't grow, why they can't get customers, why it's hard for them to get customers, why somehow there's a complicated story. It's other people's faults that they can't do something, and all these other people are plotting against them. And, like, like basically they're telling a story where they're the main character, they're, they're the hero of the story, and their startup is great. And if it weren't for all these danged external parties doing bad things, it would be working, right? Again, like put this into practice of, like, why people can't get a customer, for instance.
- MSMichael Seibel
I think that's a big one. I, I think it al- also comes up in investing a lot. It often comes up in the, "If only I had money like everyone else does, I'd be able to go do this other thing." Like, you know, people like telling the story about other companies getting breaks and them not getting breaks. Um, or telling the story that, like, that break, that magical moment's like one step ahead. We'll go from, like, zero to 100 in just one step. Um, that one's extremely frustrating 'cause it's just, like, it's a complete misunderstanding of how this game works. What else are you, what else are you seeing in terms of, like,
- 16:03 – 17:43
Product mistakes
- MSMichael Seibel
this often happens in product, where, like, someone has a magical version of their product in their head? Like, what do you see in that context?
- DCDalton Caldwell
Yeah. I think in practice, if you can't build a product and you don't have a tech co-founder or whatever, or you have never once built a product and given it to anyone, and you think it's going well, you are too optimistic. Like, it's not going well. [laughs] Like, sorry. A- again, think about how many people over the years that have pitched us, like, "It's a new social network and it doesn't exist, but I, but it's like Facebook and TikTok and it's with your friends, and you can discover me..." You know, they'll just kinda like rattle all this stuff off, but they will have no code. None of it will exist. And they'll get really frustrated that we aren't pumped about that.
- MSMichael Seibel
Yes.
- DCDalton Caldwell
Like, they don't, like they're being too optimistic that the idea, that their articulation of this is somehow valuable or interesting-
- MSMichael Seibel
Yes. Yes
- DCDalton Caldwell
... versus the implementation of it.
- MSMichael Seibel
Yes. That the deck, that the idea has inherent value as opposed to... And it's like s- what's crazy is, like, man, in, in one way that gives us, that shows they have a lot of faith in us, the idea that we can just hear an idea and know if it's gonna work or not. Like, don't you wish you had that power, Dalton? Like, [laughs] like, we need a little more. Like, [laughs] like, we're, we're just not that smart. [laughs] Um, what else falls in this category?
- DCDalton Caldwell
I think
- 17:43 – 18:41
Magical investors
- DCDalton Caldwell
too much optimism, um, around thinking that because you raised some amount of money, whatever that is-
- MSMichael Seibel
Yes
- DCDalton Caldwell
... is gonna save you-
- MSMichael Seibel
Yes
- DCDalton Caldwell
... from things not working, or that your investors are magical and will save you.
- MSMichael Seibel
Yes.
- DCDalton Caldwell
Like-
- MSMichael Seibel
Yes
- DCDalton Caldwell
... somehow they have magical powers. And so because I, you know, because we raised from XYZ And again, in this market, this is more ob- maybe people will believe us more. They, no one believed this a year ago. No one did.
- MSMichael Seibel
No. No. [laughs]
- DCDalton Caldwell
But just because you raise a bunch of money from important famous people does not mean all problems no longer exist. And so you see people being too optimistic, where they just turned off their brain once they raised money, that they would ever... They were just like, "Hey, I'm on easy street, man. Like, we got it. We nailed it. Like, we did it."
- MSMichael Seibel
We got it. Yep.
- DCDalton Caldwell
Um, that is being too optimistic.
- MSMichael Seibel
And, and, and, and if we hadn't done it, why would these folks have given us all this money?
- 18:41 – 19:57
Hiring optimism
- MSMichael Seibel
I love optimism also comes in the form of hiring. We have this really big, hairy, kind of awkward problem we don't understand well, but if we just hire a marketing person, a sales person, a this person, they will come in and solve the biggest problem inside of the company, [laughs] especially pre-product market fit. Like, they will figure out what the product should do or how people should find out about it. As a... And, and what's weird is that, like, it's not like, oh, they'll help you, or together you'll figure it out even. Um, it's that no, they'll do it. That's why you hire people. That's the, like, way too optimism. Like, like, and it's opti- it's, it's too optimistic on multiple fronts. One, the idea that your employees just, like, hand you that, and two, the idea that even if there existed people out there who could, you could hire them in your, like, pre-MVP startup [laughs] or, like, pre-product market fit startup. Like, yee. Like, why, why would the number one marketing person in the world work for you? They, at this stage, they probably wouldn't. You know, and, and the last one that I come up with on the too optimistic front I, that I see a lot is
- 19:57 – 21:46
Doing what's cool
- MSMichael Seibel
let, this is obviously gonna work because it's the cool thing, because it's the trending thing, because it's the thing investors are talking about on Twitter. I should obviously work in this category because it's the hot category. And, you know, probably the one classic example, how many remote startups and video conferencing startups did we see the second that COVID hit? And the thing that was so sad was, like, having to explain to people Zoom was working for years before this moment, so they could take advantage of this moment. They have years head start, technology start, all these advantages. Not that they expected COVID would come, but they, like, they were, they were in the prime position for it. You starting from scratch after COVID comes, you're optimizing for something that probably happens post-COVID, not something that's gonna happen in the next three to six, nine, 12 months. Um, and I think that oftentimes founders, you know, there are a lot of fads that way, where a founder basically, or people get in at the end and think that there's a lot to get, when, like, the reality is that you wanna get in before everyone thinks it's cool, not at the peak of everyone thinking it's cool. Like, the peak of everyone thinking it's cool is usually right before everything hits the shit. [laughs]
- DCDalton Caldwell
Yeah. We sure see this a lot at YC, where you can tell when something has jumped the shark when it is a, one of the more common ideas people apply with. Like, remember chatbots? Everyone was building a chatbot for a couple of years there, and that's when you knew it was over, basically.
- MSMichael Seibel
So to wrap this up, let's come back
- 21:46 – 24:35
Cognitive dissonance
- MSMichael Seibel
to the message kind of in the beginning. Y- how do you have balance in this world? Like, how do you... Like, we say balance, but aren't these, aren't these, uh... My balance is I think this is a good idea, but it's gonna be really hard, and clear evidence for this is, is gonna take a while to develop. These are kind of hard to balance, right?
- DCDalton Caldwell
Yeah. I mean, I talk about the term cognitive dissonance sometimes, which again, it's another, like, psychology term. And cognitive dissonance is when you have two conflicting ideas that you have to hold onto at the same time, and most human beings don't like cognitive dissonance. It makes them-
- MSMichael Seibel
[laughs] Yes
- DCDalton Caldwell
... uncomfortable to hold conflicting ideas that, at the same time. And I think, I think the best founders have techniques, and they can do it, I think, and they can, like, be really good at it. I think something to aspire for as a founder is someone who can know both, "Oh, no," like, "my star employee just quit and says my startup is horrible, and, [laughs] and now I don't know what I'm gonna do. But I'm gonna get on this sales call, and I'm gonna sell my heart out and, like, close this customer." And I have to kind of, like, sit with both of... Like, I have to be able to do this and not go nutso. [laughs] And, like, it's hard, okay? Like, 'cause, like, every day there's gonna be crises of some sort, right? And there's gonna be victories, and the people that screw this up, they, like, they can't handle that dissonance and they go too far. The way they resolve the dissonance is to go too far one of the, one of the directions of either, like, freaking out of the bad things or losing contact with reality more or less, you know?
- MSMichael Seibel
A lot of founders I know, I wouldn't describe them as totally enjoying that experience, but I would say that they figure out how to thrive in that environment. Like, they execute in that environment. And the risk and danger in some ways, um, sharpens them. And how many times do we see founders, like, not bring their true A game until, like, shit's pretty bad? [laughs]
- DCDalton Caldwell
It's like backs you into the wall, huh?
- MSMichael Seibel
Yes. Yes. Um, so there you go. So that's the blueprint, right? Be optimistic. Just don't be magically optimistic.
- DCDalton Caldwell
Yeah. Be rooted in reality, squarely rooted in real reality.
- MSMichael Seibel
All right, man. Great talking.
- DCDalton Caldwell
Sounds good. Thanks. [upbeat music]
Episode duration: 24:35
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