Entrepreneurs launch when they think rivals are less optimistic

It turns out entrepreneurs only launch a new company when they believe their own optimism is higher than what their competitors expect. This means that if everyone knows about a good idea, fewer people will actually pursue it.

Being optimistic is not enough to start a company. Founders need to believe they are more optimistic than their rivals. This means that if everyone gets the same information about an opportunity, it can actually discourage new businesses from forming.