(FORTUNE Small Business) – Good entrepreneurs often make bad investors--as James Cramer well knows, having tried both. For company owners to overcome that hurdle, Cramer says, they have to understand that the biases and behaviors that have helped them build companies often hurt them in growing their portfolios. The optimism that drives an entrepreneur to beat the odds--"a distorted view of success that will let him surmount multiple rational objections," as Cramer puts it--runs counter to the dispassionate eye that makes for a successful investor, he insists. The co-founder of online news site TheStreet.com and author of the upcoming book Jim Cramer's Real Money: Sane Investing in an Insane World, says that having sold others on a vision, entrepreneurs will put their money behind an admirable pitch. "Entrepreneurs are gullible by nature because they believe in stuff that doesn't exist," says Cramer, 50.

Entrepreneurs also have a weakness for businesses that look like what they know--namely, startups. So a company such as McDonald's, with multiple products and a long track record, holds less appeal than, say, a hot maker of Buffalo wings. Cramer's deep entrepreneurial plunge, in 1996, revealed his own biases. Thinking like an investor, Cramer considered TheStreet "clearly a loser" when its share price sank below $1 in late 2001. "All the instincts that made me a successful investor betrayed me as an entrepreneur," says Cramer. Today TheStreet's stock has risen past $4 a share. --I.M.