When folks ask “Hey, how’s it going?” I usually respond with “Can’t complain” or “Optimistically paranoid!” It is really how I feel. First off, how lucky are all of us — founders, investors, limited partners, journalists, early employees — to work in such a dynamic ecosystem. Second, paranoia feels like a necessary ingredient for not taking the former all for granted, yet we all (or, most of us) are hopelessly optimistic — we believe we will reach our next milestones. And, why not? The industry is made of so many folks who are in the business of betting on themselves over the next guy or gal. And, we all have plans. Many plans. And, in those plans, we make assumptions. Many assumptions. And, the more we repeat them, they begin to take a life of their own. And, in those repetitions, we start to believe it is true. Truly true.
I see this pattern most often right after making a seed investment. The founders are excited about the round closing (and they should be!) and pen email paragraphs with phrases and sentences with “When we raise our A” with such ease it’s as if The Series A will just materialize out of thin air. Often, I like to think it will eventually happen for the teams who deserve it, but it is also important to lace that optimism with a healthy dose of paranoia. “Optimistic Paranoia” is more of a mindset. A company can expect they’ll raise a Series A, but it is also wise to operate daily as if that Series A won’t come.
The Series A is just but one somewhat trivial example of how these forward-looking beliefs and expectations manifest and potentially grow uncontrollably in our minds. I hear companies talking about their pilot customers and their assumptions that those pilots will then just convert to companywide rollouts. I hear investors talking about raising their next fund at double the size in less than three years time. I hear founders talk about the valuations they’d expect for subsequent rounds, or the prices they’d expect to be acquired for. I hear about the marks they place on their portfolio and communicate to potential LPs without proper disclaimers. Nothing is promised — except maybe seed rounds in the Bay Area.
This is why I believe so strongly in optimism laced with paranoia. It is what I look for when I make an investment, in fact. I am looking for people who are hopelessly optimistic in their beliefs and own abilities to create value for others in business, yet who are also not taking for granted the investment they’ve received or may receive in the future and who do not take for granted their customers and/or partners. The optimism helps us all plan and get through the days with hope, but it’s the paranoia that keeps us honest — to make sure every detail is set in place to win the customer, to win the term sheet, to win the next LP’s interest. Our minds are powerful muscles, and the assumptions we create in our minds can, if unchecked, can grow into the harshest kind of gravity.