(NOTE: Here’s another revised excerpt from the new Kindle version of 6 Secrets to Startup Success. I’m excited to announce that we have secured the rights to the book from the publisher, and will be refreshing and repackaging the content/tools over the next few months).
In a startup environment, every choice sets a tone and initiates a pattern.
- What is talked about?
- What is avoided?
- How are tough issues raised and resolved?
These questions plant the seeds of your future culture, which will grow into a force beyond easy control. “As a parent, or as an entrepreneur,” writes Howard Schultz, founder of Starbucks, “you begin imprinting your beliefs from Day One, whether you realize it or not. If you have made the mistake of doing business one way for five years, you can’t suddenly impose a layer of different values upon it. By then, the water’s already in the well, and you have to drink it.”
Instead of surfacing tough issues, many venture teams surrender to a psychological pressure to do the opposite. A kind of beggar’s mentality takes hold of you. Grateful for support from customers, partners, and investors, you shrink from delivering bad news or raising thorny topics. You want to seem—you want to be—on top of things. Your energy goes into posturing instead of seeking the truth. The paradoxical result is that the most critical topics are the least likely see the light of day. As consultant Ken Macher observes, “the thing that people feel most sheepish about bringing up is often the very thing that needs to be discussed.”
Many books and careers have been dedicated to the practice of healthy human communication. Over the next few posts, I’ll outline a few core principles that will determine whether or not you create smart communication and healthy culture:
Feeling Good Does Not Equal Progress
One by-product of entrepreneurial passion—and the hype-driven media that feed it—is that founding teams often behave as if positive emotion means forward movement. If we walk out of a meeting feeling great, the thinking goes, then things must be on track.
People who ask scrutinizing questions are cast as negative or disloyal. Doubt is an enemy to be banished.
But every new venture journey is fraught with real risks and real threats. Doubts and fears, when smartly filtered, lead to problems that desperately need attention. “Startups are right to be paranoid,” says Y-Combinator’s Paul Graham. “But they sometimes fear the wrong things.”
This tendency for positive spin shows up in a familiar shell game between entrepreneurs and investors, in which founders amplify good news and sanitize the bad. But smart investors know that rosy reports don’t equate to value creation. Chris Holden remembers how impressed he and his colleagues at Court Square Ventures were when a startup founder raised “bad news” just after finalizing the investment deal. “One of the reasons his business took off so fast is that he had no pride about coming back to us, five minutes after the ink was dry on our deal, saying I think I might have misjudged this piece of the equation, and we need to change it this way or that way. In many other deals, Chris has has seen the opposite: founders who won’t acknowledge tough issues. “They don’t want to go back to their investors with anything that makes them look like they weren’t perfectly prescient, with perfect foreknowledge, or anything that makes it look like things are shaky underfoot,” he says. “But in reality, what the investor craves is the opposite. Because you know that things are going to be shaky underfoot. You’re on shifting sands always. What you want to see is their reaction.”
So, think of adversity as more than an unwelcome companion on your startup journey. It’s a sign that you are focusing on knotty problems that need to be untangled. Turbulence builds muscle and opens windows into your team’s talent, character, and commitment.
Mastery in any field comes through tough stretches of grinding and problem solving. The path to sustained venture success is no different. Most value creation is the result of unglamorous day-to-day toil, not satisfying high-five moments.
NEXT: Invest Time to Cultivate Integrity