I have been thinking about the stark difference between the entrepreneurial and investor’s mindset. I think they are so different that they often contradict each other. Can you do both simultaneously? I’m not sure. But here are some thoughts on the topic.
The Contradictions:
- Optimism vs. Realism: Entrepreneurs see opportunities in every challenge; investors see potential pitfalls in every opportunity.
- Action vs. Patience: Entrepreneurs leap and iterate; investors observe and calculate.
- Vision vs. Evidence: Entrepreneurs are guided by their vision of the future; investors are anchored by historical data and present fundamentals.
- Creation vs. Predicting: Entrepreneurs strive to create the future; investors attempt to predict it.
- Emotional Investment vs. Emotional Detachment: Entrepreneurs ride the rollercoaster of their venture; investors aim to remain stoically analytical.
Let’s dive deeper into each mindset.
Entrepreneur
Optimistic, Action-Oriented, Beginner’s Mind,
Delusional Self-belief, Playful, Growth-minded, Experimental, Stubborn, Idealistic, Marketing, Visionary, Iron-willed
How I think of entrepreneurship – taking the leap, having great time and believe everything will be okay. Novelty and a Brave New World!
The Entrepreneur’s Mindset:
- You breathe optimism. Your mantra? “There’s always a way!”
- You keep a low-status identity. It is not about the ego; It is about making your vision a reality. Looking goofy and having a beginner’s mind is what gives you superpowers.
- You believe in yourself to the point of delusion. With 90% of startups failing, you need to defy statistics with self-belief.
- You’re all about action. Action breeds information. Even if don’t know and you start lame, you’ll iterate to success with feedback from your actions.
- You rock a growth mindset and love experiments.
- You’re a walking paradox: narrow-minded in pursuit of your vision, yet open minded enough to pivot when reality demands it.
- You surround yourself with like-minded folks. Use critics to improve, but don’t let their mindset infect you.
- You need luck. Luck is something you cultivate, by putting yourself out there constantly.
- You WILL things into existence. SO, you need IRON WILL!
To be an entrepreneur, you need OPTIMISM. You BELIEVE IN YOURSELF and know you’ll find a way, no matter what. You live by the mantra – THERE’S ALWAYS A WAY. And you just do it. You believe action produces information, so you keep pushing, getting more clarity in the process. You know you can iterate on every mistake. You use sheer will to push through and make it happen.
You don’t take yourself too seriously. Experiment until you make it. Keep a low-status moat around your identity. Your identity is not tied to “successful” or “smart”. It is tied to being a learner, a doer, someone who makes things happen. You are willing to look foolish, to experiment, to iterate. To be an entrepreneur, you are narrow-minded and a bit arrogant, without taking yourself too seriously.
You’ll need luck to get the timing right, to get in front of the right people, and to catch a tailwind. Otherwise, you might create great things that nobody appreciates or buys because their time hasn’t come yet.
Investor
Realistic, Patient, Observant, Logical, Wise, Probability-focused, Humble, Hypothesis-driven, Psychology-savvy, History studying, Unemotional, Risk-managing, Self-believing
how I think of the investor’s mindset – detached, observing and letting cold logic guide you. This has happened before in history, nothing new.
The Investor’s Mindset:
- You’re a realist. You see things as they are, not as you wish them to be.
- You don’t play social games. You transcend humanity’s folly and bet on it.
- You believe in your ability to make it.
- You don’t take yourself too seriously. The market knows – you don’t. It’s a probability game, not about being right.
- You ask yourself: “Do I want to be right, or do I want to make money?”
- You provide liquidity based on growth potential or people’s delusions. You support ideas with evidence, not blind belief.
- Your ally is patience, not action. You act 1% of the time; the rest is observation and judgment.
- You cultivate a practical and wise mindset.
- You don’t need luck. You need great wisdom, knowledge, probabilistic thinking, and decision-making skills.
As an investor, you let realism and logic guide your decisions. Can’t be optimistic – most ventures fail, and people often succumb to vices and mistakes. You need to know reality. You master people’s psychology and their reactions to fear and greed. You are a scholar of capital markets and human reactive behavior to economic dynamics.
Your status doesn’t matter much; you’re interacting with decisions, not people. Treat investing as a probability game, not a battle of right or wrong. Don’t risk more than 10% of your portfolio on a single investment. Yet, you will not follow that rule. This will bring you into troubles.
You expect to face losses or even go bankrupt a few times. When that happens, you need the believe in yourself to bounce back and learn your lessons.
Conclusion
Can these mindsets coexist in one brain, or do they inevitably clash? It’s like trying to be fire and ice simultaneously. The entrepreneur in you wants to bet big on your vision, while the investor side urges caution and diversification. Does embracing one mindset diminish the effectiveness of the other?