DON’T CONFUSE GOOD FEELINGS WITH PROGRESS
One by-product of entrepreneurial passion—and the Motivational Media that feed it—is that too many founding teams behave as if positive emotion indicates forward movement. If we walk out of a meeting feeling great, the thinking goes, then things must be on track.
Conversely, people who scrutinize or question progress 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 properly prioritized and evaluated, lead us to issues that desperately need attention. “Startups are right to be paranoid,” says Y Combinator’s Paul Graham. “But they sometimes fear the wrong things.”3
The tendency toward positive packaging gives rise to a familiar shell game between entrepreneurs and investors in which founding teams feel obliged to amplify the good and sanitize the bad. But smart investors know that rosy early-phase reports don’t equate to value creation. Chris Holden remembers how impressed he and his colleagues at Court Square Ventures were when Mark Kahn raised what could be considered bad news immediately after finalizing their 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 countless other deals, Chris has seen his share of founders who won’t acknowledge issues that need to be addressed. “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, and you’re on shifting sands always. What you want to see is their reaction.”
Adversity is more than an inevitable companion in your venture formation process. It is often a sign that you are focusing on knotty problems that need to be untangled. Turbulence builds entrepreneurial 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, and the path to sustained venture success is no different. For the most part, value creation is the result of unglamorous day-to-day toil, not satisfying high-five moments.
