There’s an old saying that “cynics sound smart, but optimists move the world.” And indeed, studies show that we typically perceive pessimism as a sign of intelligence. On some levels, this makes sense because it requires intellect to understand something, and then expose its vulnerabilities.
But at the same time, pure cynicism can be inherently passive. It’s an easy armour to wear, one that protects the user from (1) taking risk, (2) being proven wrong, and (3) doing the hard work to determine whether something might actually work. Importantly, cynicism generally creates zero new value. It may protect you from a bad decision, but it also blocks you from the really great ones. Value creation demands action.
Now, blind optimism is not the answer. Risk management is essential. In fact, some of my real estate developer colleagues describe the business purely in these terms: “I manage risk for a living.”
The right answer is a kind of rational optimism. Because the greatest value creation comes when you believe something is true or possible, even if it has never been done before. If someone has already proven the thesis, it doesn’t require the same degree of optimism; it only requires research.
If you’re looking for evidence of this in practice, consider that the most entrepreneurial cities in the world have robust capital markets that are inherently tolerant of risk. Venture capital, for example, is rational optimism scaled across an asset class. It operates on a power-law distribution. The assumption is that most investments will be a failure, but a select few will more than make up for it.
This is an important feature because it rewards bold ideas that can change the world. But for all of this to work, you need a healthy dose of institutional optimism. Without it, these bets go unmade and the future gets created by someone else. Let’s not ignore this key ingredient as we build our cities.
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