The Art and Science of Entrepreneurial Happiness

Published 3 months ago • 14 min read

I’ve been coaching founders for over a decade. And almost every one of them, when asked, has told me they’re happy. Yet in their explanations, they would often include some sort of caveat.

I’m really busy, but I love what I do.

I’m super stressed out, but I’m chasing my dream.

I’m exhausted, but we’re gonna change the world.

If you’ve also spent time around entrepreneurs, you’ve probably heard similar statements. That’s because entrepreneurs tend to focus on the bigger picture, betting on a future benefit that they believe will exceed that of the short-term. It’s a challenging and often long road toward an uncertain destination, fueled by a belief that their efforts and abilities can create a better future.

While this future-focused mindset is central to what entrepreneurs do, it also carries an emotional downside. Because when we think about the future, we unconsciously set expectations for what we desire that future to be. These expectations, as compared to our lived experiences, are at the roots of what makes us happy.

The Happiness Equation

What is happiness? Think about it for a moment. If you’re having trouble articulating a clear answer, that’s because happiness is a complex emotion with many subjective inputs experienced differently across people and domains. For example, the happiness you feel while relaxing on a holiday is different from the happiness you feel when hanging out with good friends. It’s different from the happiness I feel when surfing a wave or the happiness someone else feels when accomplishing a big career goal.

And although many models have been created to define universal happiness (e.g. Seligman’s PERMA, Deci & Ryan’s Self-Determination Theory, Frederickson’s Broaden-and-Build, Csikszentmihalyi’s Flow), none are particularly easy-to-consume frameworks for busy, everyday people. That’s why I use the simplest, most actionable definition I know when I work with founders. It’s called the Happiness Equation.

Coined by Mo Gawdat - engineer, former Chief Business Officer of GoogleX, and author of Solve for Happy: Engineer Your Path to Joy - the equation is about as simple as it gets.

Happiness = Experiences ≥ Expectations

When our experiences meet or exceed our expectations of them, we find happiness.

Let’s take the example of rain. If you have a garden and your plants are withering, you’ll be happy to see the rain. But if you planned a day at the beach to sunbathe, you’ll be unhappy if it rains. So your happiness is determined by your expectations (getting a tan vs. growing a garden) and your lived experience (the rain).

As Gawdat explains, happiness is not some complex, elusive state determined solely by external factors outside of our control. Rather it’s how our brain processes our experiences compared to our expectations of what they should be – meaning it’s about our perceptions. Let’s break this down.

What are Experiences?

Experiences aren’t objective. They’re defined by how we interpret what happens to us and are influenced by our thoughts, beliefs, attitudes, and past experiences. By altering our perception of an experience, we’re able to change our emotional and psychological responses to it, thus impacting our happiness.

Think about how much perception influences the way we process an experience. Let’s say you’re on a hike that’s particularly long and steep. You’re sweating, out of breath, and your legs are burning. Your brain may tell you that the hike is too difficult and uncomfortable, causing you great displeasure. Or it may tell you that the hike will make you stronger and healthier and that the views are beautiful, causing you great enjoyment in it. These dichotomous experiences are possible because our perceptions are deeply embedded in cognitive frameworks that filter, interpret, and integrate sensory information with our pre-existing knowledge, beliefs, and expectations.

Central to our perceptions of experiences are attention and memory. Our attention to specific aspects of an experience and our subsequent encoding of it into memory are both selective processes influenced by emotional states, past experiences, and future expectations. This selective attention and memory encoding plays a key role in how we construct the narrative of our experiences, often emphasizing certain details while overlooking others.

This way we perceive experiences is rooted in a complex interplay of regions within our brains. The sensory cortices process incoming sensory information. The amygdala assigns emotional value to our experiences. And the hippocampus guides memory formation and retrieval. Together these brain regions integrate the sensory, emotional, and cognitive to form a rich, multidimensional perception of experiences.

Neurochemically, our perception of experiences is modulated predominantly by the neurotransmitters dopamine, serotonin, oxytocin, and cortisol. Dopamine drives motivation and helps to reinforce behaviors by providing sensory experiences of pleasure and satisfaction. Serotonin is linked to a spectrum of cognitive and emotional processes related to emotion regulation, creating more positive moods and relaxed states that positively influence how we perceive experiences. Oxytocin plays a critical role in how we process social interactions, reducing anxiety in social situations and making them seem less threatening and more rewarding. And cortisol dictates our physiological responses to stress, triggering our fight-or-flight response and heightening our negative perceptions of experiences.

The interplay of these neurochemicals can dramatically affect the emotional tone and subjective significance we assign to our experiences. So when an experience is perceived under high dopamine levels, it can be imbued with pleasure and reward, while high levels of cortisol may leave us feeling fear and discomfort.

The 6 Grand Illusions of Experiences

Now it still might sound cliché to say that happiness is rooted in our perceptions of our experiences. Sure, if we perceive a rainy day as nourishment for our garden we might be happier. But what happens when our experience is far more impactful than a single rainy day? How do we shift our expectations and perceptions of experiences that simply don’t have a bright side? According to Gawdat, who lost his teenage son to a routine surgical procedure, even the most unimaginable of tragedies can offer a path back to happiness.

To manage our perceptions of experiences, Gawdat offers The 6 Grand Illusions – a set of deeply ingrained misconceptions that act as obstacles to our happiness.

  1. The Illusion of Thought is that our thoughts are always true and that we are, in essence, our thoughts. But some thoughts are merely mental chatter and don’t represent reality or our true selves. Recognizing that we are not defined by our thoughts helps us avoid negative thought patterns.
  2. The Illusion of Self is that our identity is defined by our labels, roles, and relationships to others. But they are only part of who we are. Clinging to superficial identifiers too tightly can lead to unhappiness.
  3. The Illusion of Knowledge is our belief that what we know is the absolute truth, which closes our minds off to new information and perspectives. Finding our intrinsic desire to keep learning and evolving can lead to greater happiness.
  4. The Illusion of Time is that time is a linear, absolute entity - divided neatly into past, present, and future - that governs our lives. Dwelling too much on the past or worrying too much about the future detracts from our happiness, while living firmly in the present moment is where happiness most exists.
  5. The Illusion of Control is the belief that we have significant control over our lives and the world around us. And although we can influence certain aspects of our lives, most experiences are beyond our control. Accepting our lack of control reduces our anxiety and frustration, leading to a happier existence.
  6. The Illusion of Fear is the anticipation of negative outcomes that may never occur. It prevents us from taking risks or pursuing goals. Recognizing fear as a construct of our mind helps us to face challenges more courageously.

By confronting these illusions head-on, we can be rewarded with clearer perspectives on our experiences, reducing unnecessary suffering, and cultivating a deeper sense of happiness within ourselves.

How Entrepreneurs Overcome These Illusions

Entrepreneurs are particularly susceptible to perceptions that distort reality. Steve Jobs called this his reality distortion field. But this is simply a myth, as we certainly can’t change reality. We can only change our perceptions of it. But by unmasking our perceptions, we can begin to liberate ourselves from the experiences that impede our happiness. This requires us to deeply challenge our illusions toward more grounded and effective decision-making.

The Illusion of Thought: Entrepreneurs must recognize that they are not defined by their thoughts, which can often be hijacked by the high-stress environments rife with uncertainty and doubt in which they operate. To overcome this illusion of thought:

  • Cultivate self-awareness to observe your thoughts without attachment - incorporating practices such as mindfulness, meditation, or reflection to help see through illusions.
  • Separate identity from thought with reminders that thoughts are just one part of who we are and don’t define our entire being. Reflect on daily experiences and what we’ve already accomplished by keeping a journal of their experiences.

The Illusion of Self: Entrepreneurs mustn’t cling too tightly to superficial identifiers that reduce them to nothing other than what they do for work. To overcome this illusion of self:

  • Embrace multiple identities by recognizing that we play various roles beyond being an entrepreneur. We need reminders that we are also family members, friends, community members, athletes, artists, etc. Embody those other identities as frequently as possible.
  • Invest in personal growth by frequently engaging in activities that are unrelated to our business. Participate in sports and recreation, learn something new and unrelated, explore creative outlets, or engage in some other non-work pursuit as often as possible.

The Illusion of Knowledge: Entrepreneurs need to find an intrinsic desire to continue learning and growing, even when they feel trapped in the hamster wheel of high-stakes execution. To overcome this illusion of knowledge:

  • Adopt a learner's mindset and embrace the belief that there's always more to learn. It helps to think of our businesses like a science experiment, where a disproven hypothesis can be just as valuable as a proven one.
  • Seek diverse perspectives by regularly engaging with people outside our usual circles. Establish a personal advisory board of trusted people who are invested in us rather than just our business.

The Illusion of Time: Entrepreneurs too often worry about the future or ruminate on mistakes of the past. To overcome this illusion of time:

  • Prioritize the present and focus on what we can control and influence today, rather than worrying excessively about the past or future. Then celebrate daily wins, even when they’re small.
  • Use time strategically by balancing short-term actions with long-term planning, preventing over-fixation on one or the other. Set OKRs or create goal stacks to align daily tasks with big-picture objectives.

The Illusion of Control: Entrepreneurs want to control their environments, even when there are forces at play outside of their locus of control. This leads to anxiety and frustration. To overcome this illusion of control:

  • Focus on influence, not control, and concentrate on the areas where we can make an impact, letting go of things that are beyond their control. Then work on compartmentalizing stressors in either of two boxes: one that is within their locus of control and another that is outside of it.
  • Practice letting go by learning to delegate and trust others, releasing the need to control every aspect of our business and life. Practice being a facilitator, not just a leader, to enable the success of the people around us.

The Illusion of Fear: Entrepreneurs sometimes make decisions based on unfounded or irrational fears, which trigger cortisol spikes that might lead to mistakes or missed opportunities. To overcome the illusion of fear:

  • Face fears with action by identifying risks and then taking small, manageable steps to confront and overcome them. Run tests, do more discovery, and make smaller bets to get the information needed to make informed and rational decisions.
  • Reframe challenges and setbacks as opportunities for growth rather than threats. Reward ourselves and others for taking big chances and failing. Because those lessons learned and the mindsets created may end up being beneficial to the long-term success of their business.

Through a greater awareness of and reflection on these seven illusions of experiences, entrepreneurs can develop a more balanced, resilient approach to both their personal and professional lives, leading to both greater satisfaction and success.

What are Expectations?

Expectations are beliefs that are centered on the future. They are our preconceived notions about life, people, and ourselves, and they’re defined by society, culture, our past, and our desires. When expectations are unrealistic and not aligned with reality, they can lead to feelings of disappointment and unhappiness.

Think about how expectations permeate our existence. When we’re awaiting expectations, we call it anticipation. When we have expectations of how others should behave, we call them social norms. When expectations aren’t met, we call it disappointment. When something unexpected happens we call it a surprise. And when expectations are met or surpassed, we call it happiness.

Expectations are deeply rooted in our brain's predictive coding capacity, its ability to generate and update models of the world that predict future events based on past experiences. When our sensory inputs match these predictions, our brain reinforces its models. When they don't, our brain updates its predictions. This process of prediction and correction is fundamental to how we innately learn and adapt.

Expectations are predominantly modulated by dopamine, the neurotransmitter that drives motivational salience – or the cognitive process that motivates behaviors towards or away from an object, event, or outcome. One particular dopamine pathway - the sets of neuronal fibers that drive certain cognitions and behaviors – is the Mesolimbic pathway. This is the route by which dopamine travels from its origin in the ventral tegmental area to the ventral striatum – the brain region responsible for the coordination of cognitive processes like planning, decision-making, motivation, reinforcement, and reward perception.

Due to its central role in our brain's reward system, dopamine greatly influences how rewarding we perceive experiences compared to our expectations of them. So when expectations are not met, we see a decrease in dopamine that drives feelings of disappointment. And when our expectations are met or exceeded, dopamine levels increase to create feelings of pleasure. This neurochemical response to our expectations and experiences is central to our motivational drive, which has an enormous influence on the ways we behave and make decisions.

The 7 Blind Spots of Expectations

To manage how we set expectations, Gadawt defines The 7 Blind Spots – a set of cognitive biases and emotional responses that can lead to unhappiness.

  1. Filters: Our experiences, culture, and upbringing create mental filters through which we see the world. These filters can distort reality, leading us to have unrealistic expectations based on a skewed perception of events or people.
  2. Assumptions: We often make assumptions based on incomplete information, leading to expectations that may not align with reality. These assumptions can cause us to misinterpret situations or underestimate challenges.
  3. Predictions: Our tendency to predict outcomes based on past experiences or biases can lead to misplaced expectations. When these predictions prove inaccurate, our anticipated happiness or disappointment is also misplaced.
  4. Memories: Our memories are not always accurate reflections of past events. They are colored by our current emotions and biases, leading us to have distorted expectations for similar future events.
  5. Labels: We categorize and label people, things, and situations to simplify our understanding of the world. However, these labels can be reductive and lead to expectations that don't capture the full complexity or potential of a situation.
  6. Emotions: Intense emotions cloud our judgment, leading to exaggerated expectations. While fear might lead us to expect the worst, excitement might lead us to overlook a downside risk.
  7. Exaggeration: Our tendency to exaggerate, either in optimism or pessimism, warps our expectations. This distortion makes us overly confident in certain outcomes or unnecessarily fearful of others, leading to potential disappointment or anxiety.

By recognizing these blind spots, we can work towards more realistic and grounded expectations, enhancing our overall well-being and happiness.

How Entrepreneurs Overcome These Blind Spots

Entrepreneurs are visionaries who tend to view the world through lenses tinted by optimistic and ambitious expectations. However, these same lenses can also introduce blind spots. By recognizing blind spots, entrepreneurs can gain greater clarity to aid in setting more reasonable and achievable expectations. Here are some actionable examples of how it can be done.

Filters formed through our past experiences can distort entrepreneur’s expectations. To illuminate this blind spot:

  • Seek other perspectives, particularly from people with different backgrounds and from different industries to broaden our view. Create a company advisory board to meet with regularly and spar over perceptions and hypotheses.
  • Challenge assumptions by actively questioning our perceptions and considering alternative viewpoints. Use the Five Whys Technique to ask ourselves “why?” five times and drill down to the root causes behind our assumptions.

Assumptions, or the expectations we set based on incomplete information, are common pitfalls entrepreneurs face. To illuminate this blind spot:

  • Treat assumptions as hypotheses to be tested rather than facts. Design experiments and set up A/B tests to better estimate potential outcomes.
  • Embrace experimentation to validate ideas and let data guide our decisions. Run cohort analyses to identify common characteristics in our data that prove useful.

Entrepreneurs, like everyone, make predictions that are rooted in biases and past experiences, potentially leading to misplaced expectations. To illuminate this blind spot:

  • Focus on flexibility instead of fixating on specific outcomes to better prepare for multiple scenarios. Use tools like SWOT or PEST analyses to identify variables that could affect outcomes.
  • Revisit our goals frequently to avoid overemphasizing future outcomes that can distract from current opportunities. Update OKRs or goal stacks monthly to ensure we’re seeing risks and opportunities before it’s too late.

Memories of past events aren’t always accurate representations of our experiences as entrepreneurs and are often skewed by emotions and biases. To illuminate this blind spot:

  • Establish regular debriefing sessions to reflect on past experiences and articulate lessons learned to prevent ourselves from inappropriately dictating future actions.
  • Create a 'lessons learned' log to document key lessons from our experiences that may inform future decisions without the risk of emotional biases.

Labels are used to define ourselves and others. And entrepreneurs run the risk of forming them without fully considering the other roles that make people whole. To illuminate this blind spot:

  • Challenge stereotypes and regularly break down the labels and categories we apply to people, ideas, and situations. Organize all-hands brainstorming workshops and cross-disciplinary assignments to offer diverse perspectives to activities that might otherwise be reserved for specific personas only.
  • Prioritize activities outside of work to maintain other aspects of their identity beyond business. Embrace being a family member, an athlete, an artist, or some other role that makes us more than just an entrepreneur, creating a frequent reminder that our venture is not the sole source of our identity.

Emotions tend to cloud judgment and exaggerate expectations, which can lead entrepreneurs toward poor decision-making. To illuminate this blindspot they can:

  • Develop emotional intelligence to better manage emotions and understand those of others. Undergo a 360-degree assessment, journal about strong emotions, or take a leadership course to better understand their feelings and nurture their EQ.
  • Seek balance to ensure decisions are informed by both logic and emotion, balancing passion with pragmatism. Use breathing, reframing, and feedback methods to check emotions; and brainstorming, experimentation, and testing to challenge logic.

Exaggeration warps expectations, which can make entrepreneurs either overly confident or unnecessarily fearful of a potential outcome. To illuminate this blindspot:

  • Cultivate a realistic outlook to maintain a balanced perspective that realistically considers both risks and opportunities. Use tools like SWOT, PEST, SOAR, NOISE, VUCA, or Five Forces to examine variables that might otherwise be missed.
  • Practice grounding when facing stress or high emotions to maintain a sense of reality. Incorporate breathing, visualization, affirmations, or simply focus on their five senses to establish a stable footing in the face of adversity.

By actively considering and addressing these seven blind spots, entrepreneurs can better enhance decision-making, foster innovation, and more effectively create models that improve their well-being.

The Entrepreneur's Path to Happiness

In the ever-changing and unpredictable world of starting and running businesses, happiness is both intricate and deeply personal. It's influenced by what we expect and what we experience. And it's about more than just reaching our goals. It's also about valuing the process of getting there.

This kind of happiness comes from being mindful and self-aware, clearly understanding how our expectations and experiences affect each other. That’s why entrepreneurs need to actively work on not being misled by temporary successes or lasting setbacks; instead focusing on finding joy in the relationships we build, the obstacles we overcome, and the impacts we create.

Ultimately, entrepreneurial happiness can be fostered through continuously learning, adapting, and evolving. But as we navigate our entrepreneurial journeys, we must understand that happiness is not a destination, but rather a constant presence within us. By embracing this understanding with open hearts, clear minds, and resilient spirits, we may even find joy while we chase our most challenging of ambitions. After all, happiness is probably the most invaluable entrepreneurial superpower of them all.

Thanks for reading

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