# Dalton & Michael: The two mindsets that can kill your startup

**Author:** Dalton Caldwell, Michael Seibel
**Type:** Video
**URL:** https://www.ycombinator.com/library/Ic-dalton-michael-the-two-mindsets-that-can-kill-your-startup
**YouTube ID:** lJausFj_Dto

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Dalton Caldwell and Michael Seibel discuss the qualities that make a founder overly optimistic or far too pessimistic
about their startup. Where is the right middle ground?

## Transcript

and you feel like you're strapped to this crazy person you're like oh no i'm like this i'm in a car and the driver of the car is completely insane and it's going to take us all down yes what have i done with my life [Music] this is michael seibel with dalton caldwell today we're going to talk about whether you are being too optimistic or too pessimistic about your startup so dalton set this topic up we we certainly

meet many founders who fall in either of these categories pretty regularly yeah i mean the fact is you need to be both optimistic and pessimistic okay and if you're too far on either extreme you are going to fail right um that's simple 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 is it like paint me the picture michael who's the stereotypical two pessimistic founder what are they like 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 yeah 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 yeah it's like uh 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 going to and they're screwed like it's just nothing nothing good can happen to me that is what talking to a two pessimistic founder is like how about the comical stereotype type of someone who's too optimistic what's it like talking to them 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 values been created or any insight has been found and then like at some point you start asking questions because you're assumed 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 yeah it's like talking to someone that's

um had too much coffee or is medicated or something where everything is great everything is wonderful everyone is out to help them like the the planets are aligning you know like their startup is the best thing ever and then again yeah you ask questions you're like wait this song sounds kind of bad aren't you worried 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

there and not only that they multiply when you have god forbid you have employees right like then it's then it's even worse i think it's helpful to do this self-diagnosis if you're too optimistic pessimistic to put yourself in the shoes of your employees and imagine who would you want to work for who would you think would be like a good leader because 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 not like that ain't gonna like that's a bad leader so you're you're you're off the team okay on the other hand though a two pessimistic sorry too optimistic leader has horrible plans their plans are like involve magical things happening rainbows and ponies and space time travel and like like like like if you listen if you actually listen to the over optimistic person's plans any reasonable employee be like wow

this person has lost their minds they have no idea what's going on here 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 land mass at all 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

yes like you you lose your credibility in like two seconds 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 because 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 on what the leader can't see and and you feel like you're strapped to this crazy person you're like oh no

i'm like this i'm in a car and the driver of the car is completely insane and is going to take us all down yes what have i done with my life so those are the extremes right so if you're probably pessimistic it ain't gonna work it's over like no one you know like packing up and if you're too optimistic it's probably over two so what do you do or like how do you self-diagnose michael like i'm sure people are always whenever we say things like this people like well how do i know which one applies to me

let's give let's start with pessimistic yeah so you might be too pessimistic so this happens all the time in yc you sent a shitty email to a hundred 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 a hundred potential customers with email didn't produce 100 leads we get this like every batch and we have to be like it's going to be fine folks i think expectation setting i think when you i think you could be too up you could 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'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 then even when it's working you mostly get no's and so that's the way you might be pessimistic is it doesn't immediately work who knew these things take longer than immediate to work so there's a lot of variance on this right like i would argue the next one that i see all the time is i talked to an investor i talked to a

friend or i talked to a customer and they said this wasn't going to work and and i take that to mean like i ascribe god-like 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 never use your product don't invest in your space aren't good investors don't invest a lot of companies and then your customer might not be an early adopter or god forbid you might have mis 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 going to work this idea is not going to work one last one

that i want to throw in because uh i find it really interesting we help founder set goals for yc what's the goal i want to accomplish by the end of yc we called the demo diggle and i'm constantly seeing founders who don't accomplish that goal thinking their company is dead oh 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 missed the whole point we're 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 go go go like 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 a demolited gold does that mean our company sucks it's like no not even a little bit it's all some version of

gave up too early or wants to give up you're too pessimistic if you want to 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 like i don't know how to articulate it like like two 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 they're co-founders like everyone around them talks to them and feels worse after talking to them and deflated yeah and and like last thing on this like we talk about the synonyms oic of the difference between being high energy and low energy it's like the eor thing like you want to talk to someone and get energy when they're telling you about

their company and walk away from the conversation be 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 yes trying to express what you're working on what problems you want to solve cause people to feel drained yes but let's be clear i think that the cool thing about being too pessimistic like i love your opinion on this because i

actually think i rather help someone being too pessimistic strangely because 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 pessimism sucks but it's curable optimism is a little harder

and i might argue maybe the reason why optimism is a little harder is because 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 to the whole batch and i think it's one of the best talks yeah

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 that's just my founder version of magical thinking 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 this

well by the way i think they extend that thought to that's how companies get funded 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 yeah or or 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 acts 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 again you know 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

like it's like actually pretty straightforward um but when you start to believe that there's like magical ways to break into whatever 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 so let's talk about this in the context of startups you know how does this come up when we're talking to founders how does magical thinking pop its rear its head up

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 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 that's a big one i think it 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 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 because 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 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 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 like sorry 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 tick tock and it's with your friends and you can discover me you know they'll just kind of like rattle all the 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 like they don't like they're being too optimistic that the idea that their articulation of this is somehow valuable or interesting yes versus the implementation of it yes that the deck that the idea has inherent

value as opposed to and it's like what's crazy is like man 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 we need a little more [Laughter] what else falls in this category

i think too much optimism um around thinking that because you raise some amount of money whatever that is yes is gonna save you from things not working or that your investors are magical and will save you like somehow they have magical powers and so because i you know because we raised from xyz and again in this market this is more uh maybe people will believe us more they no one believed this a year ago no one

did no 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 yep um and if we hadn't done it why would these folks have given us all this money 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 this person they will come in and solve the biggest problem inside of the company 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 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 to optimism like like and it's often 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 or like pre-product market if it's startup like yeah like why why would the number one

marketing person in the world work for you at this stage they probably would you know and the last one that i come up with on the two optimistic front that i see a lot is but this is obviously going to work because it's the cool thing because it's the trending thing because 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 covet 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 kovid 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-covered not something that's going to happen in the next three to six nine 12 months and i think that oftentimes founders you know there are a lot of fads that way we're 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 want to get in before everyone thinks it's cool not at the peak of everyone thinking it's cool like the

peak of everyone thinking school is usually right before everything is the we sure see this a lot of 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 chat bots everyone was building a chat bot for a couple of years there and that's when you knew it was over basically so to wrap this up let's come back to the message kind of in the beginning

how do you have balance in this world like how do you like we say balance but aren't these aren't these my is i think this is a good idea but it's going to be really hard and clear evidence for this is is going to take a while to develop these are kind of hard to balance right 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 on to at the same time and most

human beings don't like cognitive dissonance it makes them 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 is a founder is someone who can know both oh no like my star employee just quit and says my startup is horrible and

and now i don't know what i'm gonna do but i'm gonna get on the 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 and like it's hard okay like because 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 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 in 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 it's like actually yes yes um so there you go so that's the blueprint right be optimistic just don't be magically optimistic yeah be rooted in reality squarely rooted in real reality all right man great shot sounds good thanks

[Music] [Music] you
