Harnessing Entrepreneurial Manic-Depression: Making the Rollercoaster Work for You


The sky is falling!

Ever since the media’s Chicken Little response to the tremors in the financial markets, I’ve felt like shouting from the rooftops “now you know how it feels to be an entrepreneur!”

I just lost 9% overnight?! Fill a bathtub and get the toaster. I’ve had enough.
Wait… I actually gained 13% while in the bathroom? I’m f**king Superman!

This is a guest post on capitalizing on — vs. countering — the “entrepreneur’s disease” (manic depression) through 4 cyclical stages. This is done by pairing appropriate activities to specific — though not necessarily positive — emotional states…

The author is Cameron Herold, former COO of 1-800-GOT-JUNK, whose professional resume includes:

-Helping build revenues from $2 Million to $105 Million in 6 years (no debt or outside shareholders)
-Building a PR team that landed more than 5,000 stories in those same 6 years
-Hiring 220 people in 4 months
-Leading the sale, branding, and integration of 450+ franchise locations.
-Teaching his psychological theories at the Entrepreneurial Masters Program at MIT.

I first saw this presentation at an Entepreneurs’ Organization (EO) event in Omaha prior to my successful Warren Buffett quest at the annual Berkshire Hathaway shareholders meeting.

I encourage you all to read this, especially with the fear mongering that is just getting started.

Skip CNN and just watch 4:08 – 5:00 over and over.


Marc Andreessen, co-founder of Netscape, once wrote:

“First and foremost, a start-up puts you on an emotional rollercoaster unlike anything you have ever experienced. You flip rapidly from day-to-day – one where you are euphorically convinced you are going to own the world, to a day in which doom seems only weeks away and you feel completely ruined, and back again. Over and over and over. And I’m talking about what happens to stable entrepreneurs. There is so much uncertainty and so much risk around practically everything you are doing. The level of stress that you’re under generally will magnify things incredible highs and unbelievable lows at whiplash speed and huge magnitude. Sound like fun?”

Many ultra-successful entrepreneurs are even clinically diagnosed as manic-depressive or bi-polar. Francis Ford Coppola has it. So does Ted Turner.

This article is about the emotional intricacies of being an entrepreneur – about what you’re going to feel during the journey.

The concept that we’re going to examine is called the Transition Curve. It resembles a rollercoaster.

Regardless of whether or not you believe you will ride an emotional rollercoaster running a business, you will. You have two fundamental choices: you can hold on and scream, or you can wave your hands in the air and have some fun.

I’m going to walk you through these different analogies, but let’s first look at the various stages of this process, which repeat.

* Stage 1: The first stage of the concept is called “Uninformed Optimism”.
At this stage on a rollercoaster, just getting to the top of the rollercoaster, you experience feelings of an adrenalin rush, characterized by excitement and nervous energy.

* Stage 2: The second stage is called “Informed Pessimism”. As you ride over the top of the curve you now have a bit more information. Feelings of fear, nervousness, and frustration begin to set in. Perhaps you even want to get off of it.

* Stage 3 – The third stage is called “Crisis of Meaning”. You’re past scared. You feel despair. It’s as if you’re standing on the edge of a cliff ready to jump, and you begin to think “Today the rollercoaster’s going off the bottom of the track for the very first time.” You feel helpless and you’re both terrified and frozen.

* At this point, you face a critical juncture. You can come off the bottom of the curve and crash and burn, which is when your business goes bankrupt, you lose your marriage, you start drinking, or you end up in a doctor’s office because of stress. Or you can come around the corner because you’re getting support at “Crisis of Meaning” and you can enter an upward swing call “Informed Optimism”.

* Stage 4 – Informed Optimism.
You’re calm. You’re informed. You might even say you are cautiously optimistic.

Capitalizing on All Emotional Phases — Activity Pairing

Here is the critical point – at each stage of the curve, you can do things to leverage the feelings and energy — positive or negative — that you have at that moment.
Fighting against these phases is like working against a natural force.

Stage 1 – Uninformed Optimism

As an example – at Stage 1 – Uninformed Optimism – it’s both a great place and a dangerous place to be for your business, depending on what you are working on or in at that time.

When you’re starting your business, you have seed financing, some friend and family money, or you’ve just started the business with $50 in your pocket. You can start a business without a lot of money directly because you’re benefiting from uninformed optimism. You can take risks when you’re feeling like this. Because you’re so full of excitement you don’t really know what’s coming yet. So you’re uninformed and your fully optimistic – or you wouldn’t have started.

When you’re at Uniformed Optimism you should be doing things like:

* Talking to the media. Imagine if a newspaper calls you when you’re at that stage of uninformed optimism. How’s your media interview going to go? It’s going to go amazing because you have unbridled excitement and big thinking.

* Talking to potential investors. That’s why everyone was investing through the 90s with the dotcom bubble. The entrepreneurs were so full of uninformed optimism and enthusiasm.

* Doing speeches in public – the audience will love you.
* Recruiting new employees – they’ll all want to work for you.
* Networking for new clients – who wouldn’t want to buy from you?

When you’re at Uniformed Optimism there are also some things you should avoid doing:

* Spending money is a bad thing to be doing at this point. Because when you are really excited and full of optimism you think nothing will go wrong. The last thing you want to be doing is spending all this money because the reality is – at some point, you’ll cross the curve and discover harsher realities.

* You don’t want to be doing business planning
* You don’t want to be working on your budget
* You don’t want to be making buying decisions
* You don’t want to be making hiring decisions
* You don’t want to be doing your accounting, or your bookkeeping.
* Anything that requires you to be making financial decisions or planning logical shouldn’t be done when you’re at the manic energy or uninformed optimism stage.

Remember that when you’re at that uninformed optimism stage, anything that’s outward facing — talking about your company, selling the story, raising money — is well-matched. Simultaneously, at that stage, you don’t want to make buying decisions, or hiring decisions, or planning decisions, or budgeting decisions.


Stage 2 – Informed Pessimism

At Stage 2 – Informed Pessimism – you have more information now. You’re not as excited as you once were. Coffee is helpful to get you started. You are worrying at times. You aren’t depressed or scared – but you’re somewhere in between scared and excited. You’re just a little bit pessimistic now. The great aspect of this stage is that it prevents you from making careless mistakes due to overly optimistic thinking.

When you’re at Informed Pessimism you should be doing things like:

* Planning the next phase of your growth
* Intermediate-term strategic planning
* Budgeting, as you’ll be more realistic
* Purchasing things like advertising – you’ll be careful with where you spend your money and will not over-purchase advertising based on exuberant pie-in-the-sky sales forecasts.

When you’re at Informed Pessimism, there are also a few things you should absolutely avoid doing.

Do not:

* make hiring decisions.
* talk to the media or do speaking events.
* work in roles where being excited would help you get a better result – wait until things turn around emotionally for you.

Stage 3 – Crisis of Meaning

This is a scary stage and can feel like you’re standing on the edge of a building needing to jump. It will feel like all the odds are stacked against you and that everything is going wrong. It will be hard to get out of bed in the morning. Sleeping at night will be close to impossible due to worries and fear. You’ll feel like you’re paralyzed and can do little more than clean your filing cabinet drawers successfully.

When you’re at Crisis of Meaning you should be doing things like:

* Cleaning your filing cabinet drawers – seriously. Doing a few little things can often perk people up.

* Reaching out to your support groups like friends, family, your church, groups like the Entrepreneurs Organization etc. to ask them for help, advice or to just lend an ear.

* Trying to set your TOP 5 daily and only work on the most important items each day.
* Taking breaks and going for walks, getting exercise, getting outdoors.
* Writing lists – lists about what you are strong at, lists about what you love – make lists that, when you read them, will help rebuild your confidence.

* Realizing that many others have been in this exact same place and usually turn the corner, just like you will.
* Remembering “The Little Engine That Could” – I think I can, I think I can – it can take time, but things will rebound.

When you’re at Crisis of Meaning there are also some things you should absolutely avoid doing:

* Don’t talk to others who are depressed.
* Don’t talk to others who are “half empty” types

* Don’t take any “all-in” Vegas poker type risks where you put everything on the line hoping for a big win.

* Don’t try to “rally the troops.” Your employees, the media ,etc. will all smell fear. And your fear will lead to making things worse

* Don’t turn to the bottle. Vices during stages of depression will lead to you spiraling out of control.

* Don’t think that you can “handle it” all on your own. You can’t. And when people “need” others, your true friends really will be there to support you.

* Don’t try to learn more. Reading books and magazines about how to be successful or how to grow your company will only make you feel worse about your current situation. They’ll just make you feel even more bogged down. Reading stuff like this is great when you round the corner though.

Stage 4 – Crash & Burn

I don’t really waste any time explaining this stage or what to do here – because if you slide off the curve, here it really is over – the company is done and/or so are you in the role leading it. Usually this is bankruptcy or forced sale, etc..

Stage 5 – Informed Optimism (or Hopeful Realization)

This last stage is much like when the little engine that could turned the corner – and realized “he did”. You’ll start feeling excited and energized again. You’ll start rebuilding your confidence. And you’ll start to feel momentum working in your favor again. You’ll also have a lot more insights and experiential learning to draw from. You’ll realize you have more competence and confidence than before and everything will start to go your way again.

When you’re at Informed Optimism you should be doing things like:

· Hiring
· Strategic Planning
· Reorganization of your team – putting the right people in the right seats
· Cutting the wrong people
· Generally getting everything in order to really start growing again.

When you’re at Informed Optimism there are also things you should avoid doing:

· Don’t lose focus.
· Don’t let your confidence slip.
· Don’t get cocky or you’ll fall backwards off the curve.


This cycle repeats itself. Enjoy the ride instead of fighting it.

Guest author Cameron Herold’s training modules are used by CEOs and companies in more than 15 countries.

Posted on: October 3, 2008.

Watch The Tim Ferriss Experiment, the new #1-rated TV show with "the world's best human guinea pig" (Newsweek), Tim Ferriss. It's Mythbusters meets Jackass. Shot and edited by the Emmy-award winning team behind Anthony Bourdain's No Reservations and Parts Unknown. Here's the trailer.

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251 comments on “Harnessing Entrepreneurial Manic-Depression: Making the Rollercoaster Work for You

    • I think you can’t actually find balance during these stages…. that’s the point in knowing what to expect because that’s what the entrepreneurial journey requires. One phrase that helps me take the edge off a little is this: If you are going through hell… keep going…


  1. Totally awesome read. I feel that this curve applies equally to any type of emotional/intellectual growth; not just entrepreneurial endeavors.

    (Errata: In Step 5, you wrote “Uniformed Optimism”, possibly in error.)


  2. Nice points in there. I especially like these, mentioned during the ‘Crisis of Meaning’ section:

    * Don’t talk to others who are depressed.
    * Don’t talk to others who are “half empty” types

    Surrounding yourself with positive role models would definitely be important during this stage of the cycle.


  3. Mmmm, this post is like a drink of water in the desert. When you’re zipping downwards and you can’t see the bottom and the ride just keeps getting faster, and faster. But there’s a choice. I can hit the bottom and fail, or turn the downward momentum back into upward momentum.

    Tim. Dude. Thanks. I REALLY NEEDED THIS POST.

    I also like the dos and don’ts at each stage and the reminder that I’m not insane…just on a roller coaster! ;)


  4. Ah yes, the highs and lows of business. Tim you are right, the financial issues we are facing is just like running a business. And as you can see in the media and the people on the streets, not everyone should be business owners. It takes a certain type of person that loves to thrive on stress. It is funny, because you physically have to experience the Transition Curve to really get it. That first time is a B*tch…

    Good Luck,



  5. Being a business owner and entrepreneur of 15yrs I definitely relate to this cycle. Another great source around this topic is Seth Godin’s “The Dip”. He looks at the cycle and shows how to choose which times to bail out or keep digging. It has added a lot of insight into deciding which endeavors I start. And when to get out.

    The main concept is to realize that this cycle relates to everything and to get out of the downswing takes effort and commitment. So decide before you get in if the pay off is worth the effort, time, resources etc.

    Plus, it’s a short book you can read in an afternoon.


  6. Great post about building consciousness in entrepreuring – and a thing to add: Time.

    There is no fixed time, which you can say it takes to run through a cycle of this curve and its emotions. Sometimes you run though it in hours, sometimes it’s days, other times weeks or months – and maybe even years, but I haven’t tried the latter, though. Also, you don’t necessarily stay in the different stages for the same amount of time. Some stages are quickies, other take longer. The bottom-line is, don’t try to fight or skip it, don’t ignore it; respect where you are, by being conscious of which stage you are in, and act according to the great advice given above.

    Enjoy the ride.


  7. Nice ideas Bill. But sometimes you can’t always calculate how well things will go. There is an ever existing mystery to any endeavor you choose to take. Obstacles arrive differently for each and everybody, but how you respond will dictate the payoff. Just look at the commitment Sly Stallone made to acting before the big payoff arrived.
    Cool blog you have btw….



    • I really think there are some parallels. Can you plese paraphrase your thoughts on this a bit more detailed?

      In fitness we build muscles what means you build up fat too. Or we burn fat what means we lose muscles too. So all is cyclic. The key to success here is to build more muscles than fat and too lose less muscles than fat in the phase when it is time for it.


  8. Wow. Wow. Wow.

    What an incredible, articulate way of defining what life is like for a lot of us entrepreneurs. One of the most intriguing aspects of Cameron’s observations – to me at least – is in looking back. Having gone through some of these stages already and seeing him detail it with such exactness is incredible. It’s so dead on, it’s almost scary, really.

    What would really be great though, is if our loved ones could read this post as well, to understand exactly what we’re going through at different points through the journey. So often, people believe that running a company is all peaches and cream, To the contrary it’s far from that, as Tim’s book attests, as does Cameron’s article and the testimonies of millions of entrepreneurs across the globe.

    Thanks for the affirmation, Tim and Cameron. It’s good to know that the struggles and successes of entrepreneurship go hand-in-hand, and are shared by many!


  9. Nice post!!

    I believe that everything is on a “roller coaster” similar to the one described above only slightly more complex.

    Instead of just an up – then a down – then an up again, I think was actually happens in many cases is there is an up then a super bad down (similar to the great depression) then a dramatic up, followed by many seemingly insignificant ups and downs, then a reset and repeat. The only different variable is how spaced out the waves are in time; and the waves can be spaced shorter in some places than in others depending on the endeavor. The bailout package that just passed the house would be a factor that would lengthen the time of a down cycle and possibly shorten the time of any up cycle. It would not be a factor that should significantly change the depth of either. In other words for the next 2 years the DOW might fall 20% and then in 2 months it might gain 20%. This major gain would be a reset and the DOW from there might fall another 20% and then cycle up again. Beyond the next 6 months to a year I cannot say with certainty what will happen, but I do believe we are headed south for the winter (minus any upswing after the election).

    I believe this model can be applied to all things. If you have the cognitive ability to do so, it can very well be applied to investing. Right now, I think the economy could be headed toward a reset. I really think that the next 6 months to a year will be interesting. Too bad politics have to get in the way of the economy. The political system of the economy is one of the most inefficient markets that exists, aside from dealing with females (no offense, but I think you all know that you are fickle creatures). Unlike the stock market, you cannot analyze who is in good standing with whom, or which company the powers that be favor with any significant degree of accuracy.

    The mass media provides us with all these pundits preaching that speculation is bad for the economy. I say the world is beautiful if you can figure out what may happen and you place your money where your ideas are–even if they happen to be wrong. The opposite is the equivalent of saying your are going to do something and not do it.

    These are interesting times, and there is more ahead. I wouldn’t recommend going all in just yet. You might observe the fluctuations of short sided securities for the short term.

    I think I need to get a blog.



  10. Excellent Post! I’ve been through all of those phases and for the first time I bypassed the crash and burn and onto the informed optimism stage. This article really hits the nail on the head and does a great job at describing the process.


  11. Thanks so much for this post. Here I was thinking the manic-depressive feelings were something I should be worried about, when in reality I can use them to my advantage. Like several before me said, this was definitely what I needed to hear right now.


  12. Man, can I relate to this!! It’s taken me years to get over the highs and lows and to achieve emotional stability despite what’s going on around me. The secret for me is to have a crystal clear “why” (dream) or motivation behind what I’m doing. The bigger the “why”, the harder it is to let the lows get you down!


  13. Thanks Cameron.

    I’m finding that reaching Stage 3 – crisis of meaning – in both my career and my life at the same time is like finding a giant turd in the bathwater. I can continue for a while longer but it’s quite unpleasant and a little disturbing.

    I’m currently cleaning out my filing cabinet (and the bathwater).

    A useful article. Thank you.


  14. Great observations and a good post. Serial entrepreneurs will tell you this is the same curve for every of their ventures. It does NOT get any different with time. Only the second / third time around, you are more mature to know that you ought to take things in perspective.