A real optimist wakes up every morning knowing lots of stuff is broken, and more stuff is about to break.
Big stuff. Important stuff. Stuff that will make his life miserable. He’s 100% sure of it.
He starts his day knowing a chain of disappointments awaits him at work. Doomed projects. Products that will lose money. Coworkers quitting. He knows that he lives in an economy due for a recession, unemployment surely to rise. He invests his money in a stock market that will crash. Maybe soon. Maybe by a lot. This is his base case.
He reads the news with angst. It’s a fragile world. Every generation has been hit with a defining shock. Wars, recessions, political crises. He knows his generation is no different.
This is a real optimist. He’s an optimist because he knows all this stuff does not preclude eventual growth and improvement. The bad stuff is a necessary and normal path that things getting better over time rides on. Progress happens when people learn something new. And they learn the most, as a group, when stuff breaks. It’s essential.
So he expects the world around him to break all the time. But he knows – as a matter of faith – that if he can survive the day-to-day fractures, he’ll capture the up-and-to-the-right arc that learning and hard work produces over time.
So he thinks about opportunities as a function of endurance. He understands the math of compounding means the biggest wins don’t necessarily go to those with the highest returns; they go to those who earn pretty good returns maintained for the longest period of time. Same for careers and personal relationships. He sees no need to be the best at what he does. He just wants to never be forced to quit doing what he does.
He knows cash generates no return when you don’t need it, but infinite return when you do need it. He obsesses over room for error. His Plan B has a Plan B. I read a quote recently. “The minute you have a back-up plan, you’ve admitted you’re not going to succeed.” You know who said that? Elizabeth Holmes.
The complacent is a different breed. He’s a dreamer masquerading as an optimist.
He sees optimism as a noble trait. It’s an innocent position. But he mistakenly thinks optimism means expecting only good news.
He wakes up with a smile, convinced that things are OK. That his team at work will get along. That his investments will perform. People will do the right thing. Risks can be forecast and insured against. It’s an attractive personality. Other people want to be around him. His likeability reinforces his belief that his mindset is ideal.
His flaw is extrapolation and egotism. Whether he realizes it not, he believes he’s smart and in control. His views are shaped during boom times. He understands the world has, at times, been a mess. But he sees that as an aberration, like a car accident – something you’ve heard stories about, but shouldn’t regularly expect to happen to you.
So he takes risks. But he doesn’t think they’re risky. He calls them opportunities. He genuinely believes that’s what they are. The way he frames them in his head helps answer a question asked after implosions: “What were they thinking?” He was mistakenly thinking he was an optimist.
He isn’t prepared for even the slightest setback. When one arrives, his mindset of, “Be optimistic. Everything will be OK,” turns complacency into ignorance. The setback festers, compounds, and – since he has no room for error, no Plan B – eventually forces him into an action he doesn’t want to take. He has to sell his investment. Or quit his job. Scrap his lifestyle.
That makes him upset. Things he loved – jobs, friends, security, dreams – are taken away from him.
He becomes cynical.
And cynicism turns him into a pessimist.
A pessimist sees the same continuous chain of disappointment as the real optimist. But since his experience with setbacks leads him to believe they signal the end of the game, he ignores and misses the gradual up-and-to-the-right arc of progress the real optimist knows occurs over time.
Those are the three types of risk mindsets in the world:
Those who know stuff breaks and attempt to survive the breaks long enough to experience the eventual growth that occurs when people learn and improve from the breaks.
Those who think stuff doesn’t break and are broken when it does.
Those whose experience being broken leads them to believe there’s no such thing as eventual growth.
Optimist, complacentist, pessimist.