I am first an investor and thereafter an entrepreneur. I have met entrepreneurs who became investors after selling away their businesses. Having the experience of both domains, we realised that the desired traits for an investor differ to that of an entrepreneur. Even with this awareness we find it difficult to switch the worldview in a new environment.
Borrowing Peter Thiel’s terms, entrepreneurs are definite optimists while investors are indefinite optimists.
As definite optimists, entrepreneurs believe that they are able to plan, execute and change the world. To make a better future, they must do something about it and they have the ability to influence the outcome. You can call it overconfidence but it is a necessary ingredient found in successful entrepreneurs. Else, why would they even go against the extremely low chance of business success?
As indefinite optimists, investors accept that the market is random and one should operate with prudence. There are many things out of their control. They can’t force the market to give them the returns they want, and at the time they want. They can only get what the market is willing to give. But they are still optimists, believing that the future would bring returns to their investments. Otherwise they wouldn’t even be investing.
Entrepreneurs would often bring over their business mentality to investing. They would approach the financial markets as something determinate, and that they have control over the outcome. They are competitive and want to win. They believe they just need to put in effort in the right areas to get a return they want. They believe they can crack the code and master the markets.
Investors would also have the tendency to adopt the same mindset towards running a business. They begin with a lower sense of control. They believe that no matter what they do, there’s an element of luck involved and many things are outside of their control. They will just resign to fate if things eventually don’t go their way. They wouldn’t put up a stronger fight to overcome the challenges.
So no, running a business and investing are different. In fact, they are very different and if you came from one domain and going to the other, you need to be able to adopt the right mindset in order to succeed. Note to self.