I’m not unhappy

December 13, 2012

We came across an article which reminded us of a good friend whose stock reply, when asked how he’s doing, is: “I’m not unhappy.”   (“The cult of positivity” holds no charm over our stoic pal.)  It was in the weekend Wall Street Journal and we think it merits a little attention during normal business hours:

The Power of Negative ThinkingBoth ancient philosophy and modern psychology suggest that darker thoughts can make us happier.”

At first blush it may sound a little far afield, but it certainly has applicability for the long term nature of, and ambiguity surrounding, venture investing and managing the inevitable emotional ups&downs associated with it.  The piece’s “defensive pessimism” is an apt description for a good approach towards evaluating business plans and their authors, some of whom have been known to take a nip of their own kool-aid when pitching.

Zeno of Citium

However it’s more than just a means for assessing the downside risks of a potential investment.  The article cites Albert Ellis, the late New York psychotherapist, who recommends the “negative path” as a technique for coping with stress:

He rediscovered a key insight of the Stoic philosophers of ancient Greece and Rome: that sometimes the best way to address an uncertain future is to focus not on the best case scenario but on the worst…  Just thinking in sober detail about worst-case scenarios—a technique the Stoics called “the premeditation of evils“—can help to sap the future of its anxiety-producing power.

One other reason we enjoyed the article:  it mentions research conducted by Saras Sarasvathy, an associate professor of business administration at the University of Virginia – research on the mind of great entrepreneurs we ourselves blogged about just under two years ago.

Research by Saras Sarasvathy, an associate professor of business administration at the University of Virginia, suggests that learning to accommodate feelings of uncertainty is not just the key to a more balanced life but often leads to prosperity as well. For one project, she interviewed 45 successful entrepreneurs, all of whom had taken at least one business public. Almost none embraced the idea of writing comprehensive business plans or conducting extensive market research.

They practiced instead what Prof. Sarasvathy calls “effectuation.” Rather than choosing a goal and then making a plan to achieve it, they took stock of the means and materials at their disposal, then imagined the possible ends. Effectuation also includes what she calls the “affordable loss principle.”

Instead of focusing on the possibility of spectacular rewards from a venture, ask how great the loss would be if it failed. If the potential loss seems tolerable, take the next step.

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