Are startup founders overly optimistic?
Sources:
Yes, startup founders are often considered overly optimistic. highlights that people who start startups tend to be overly optimistic. He refers to Adam Smith's point about "projectors" being overly optimistic, which fits the profile of many startup entrepreneurs today. The skewed rate of return on private investment, where only a few percent of startup ventures make significant returns, supports this notion. Many founders take risks that might not be rational from a purely financial perspective and are often more optimistic than what is beneficial for them personally and economically 1.
also emphasizes that startup founders are selected from the tail end of a distribution of optimism. The inherent failure rate of startups requires founders to have an unusual level of confidence and belief in their potential success, which is not typical of the general population. This selection mechanism naturally results in a prevalence of overly optimistic individuals among startup founders 2.
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