Integrity of communication starts at the personal level with the fun-damental issue of how a founder deals with incoming data and opin ion. The most reliable predictor of your venture’s future climate isyour own outlook and behavior. So, if you aim to set a tone forhealthy communication and minimize the distortion of reality withinyour new business, start with yourself. I have found that a core set ofpersonal attributes, curiosity, humility, candor, and scrutiny, will lay afoundation for truth-telling and create a ripple effect that driveshealthy relationships with co-founders, team members, investors, andother business partners.
Jim Collins, the bestselling author and renowned student of businessleadership, has observed that all creative and entrepreneurial endeav-ors require “the precision of a scientist and the wonder of a child.”9Successful entrepreneurs and investors tend to have ravenous ap-petites for new knowledge and are persistently curious about whatnewly discovered data might mean. They crave objective sources ofinformation, but are curious, too, about the subjective opinions ofother people—their customers, investors, and team members—es-pecially when these opinions clash with their own. Instead of shrink-ing back or tuning out when faced with a differing point of view, thecurious entrepreneur leans forward and invites the speaker to elab-orate.
Their intellectual posture is not one of knowing, but of ques-tioning: What am I missing? What does this person see or understand that Idon’t? What do these data suggest about the path forward? The insatiable na-ture of this brand of curiosity means that the entrepreneurial learningcurve never ends. The more one learns, the greater the appetite tolearn more. Malcolm S. Forbes, longtime publisher of Forbes maga-zine, could have been talking about entrepreneurial curiosity whenhe said, “Education’s purpose is to replace an empty mind with anopen one.
But founders who have fallen in love with an idea are usuallylooking for assurance instead of illumination. In his well-circulatedlist, 17 Mistakes Startups Make, John Osher, seasoned entrepreneur andcreator of hundreds of consumer products, highlights a root cause ofstartup derailment: Seeking confirmation of your actions rather than seeking the truth. “You want to do something,” he says, “so you talk to peoplewho work for you. You talk to family and friends. But you’re only look-ing for confirmation: You’re not looking for the truth. You’re lookingfor somebody to tell you you’re right.
As we saw in Chapter One, most aspiring entrepreneurs collectaffirmations like a teenager collects text messages. Constructive,sugar-free criticism is hard to find, even when you crave it, so if you’relooking for validation instead, you will certainly find it. And when youfinally encounter the rare, no-holds-barred critique of your idea, youmight bristle and defend against it, rather than openly consider itsmeaning.
Lynn Ivey looks back at her early planning for The Ivey and re-members having little patience for people who raised concerns orpointed out risks to her plan. Because she was already locked into apath to construct a world-class facility, her focus was on evangelizingthe concept and raising funds. She couldn’t fully contemplate the pos-sibility that her model might have significant flaws. The train had leftthe station, so to speak, and she needed affirmation and positive ideas,not skepticism or debate.
In particular, she recalls how the former CEO of a major healthcaresystem told her he believed The Ivey would have trouble competingwith the established in-home care services in the area. Looking back,Lynn wishes she had been more curious about his concerns and probedfor more insight, but, at the time, she wrote him off as a somewhat com-bative curmudgeon, someone who didn’t understand her vision.
Humility is the opposite of hubris and serves as its antidote. Noamount of passion and expertise will eliminate your blind spots orprotect you from mistakes. To the contrary, your enthusiasm for anidea is more likely to narrow your field of attention and accentuatethe risk of blindness. You cannot know in your startup’s earliest stagewhat the customer will want, what the markets will reward, how com-petitors will behave, or what unpredictable twists and turns the futurewill bring. Accepting this reality is the essence of humility.
Warren Buffett, regarded as one of history’s best business minds,knows that his own carefully honed judgment is permanently fallible.In his 2007 annual letter to shareholders (the net worth of his firm in-creased by $12.3 billion that year) he outlined a series of mistakes.“And now it’s confession time,” he wrote. “It should be noted that noconsultant, board of directors, or investment banker pushed me intothe mistakes I will describe. In tennis parlance, they were all unforcederrors.” He goes on to explain in detail a couple of questionable in-vestment decisions. “The only explanation is that my brain had goneon vacation and forgot to notify me,” he writes. “One thing is for sure.I’ll make similar mistakes in the future.
The day after J.C. Faulkner and his management team decided toclose down Home Free was an exercise in humility. “It was one ofthose unforgettable moments when I had to acknowledge my mistakeand lay off ninety-five people in one day, which was the hardest thingI ever had to do,” J.C. says. “Then, I got in front of the other hundredpeople[in D1’s home office].
We admitted the challenges in the mar-ket. We admitted the mistakes we had made . . . we just came clean.There was no positive spin. I was obviously concerned that I wouldlose credibility when I explained I was wrong, but what I learned wasthat people appreciated the honesty. They felt good that we under-stood our mistakes; and it kind of humanized us a little bit.
An investor friend of mine once explained to me why he was will-ing to stand behind the expansion plans of a young restaurateur. “He’syoung and passionate; he has great ideas and an incredible work ethic,”he said. “But the thing that sets him apart is his humility. Although heknows a lot about the restaurant business and he has great instincts,you would never know it from how he interacts with people. He is alearning machine, and he is incredibly driven to find out what otherpeople know. He has surrounded himself with highly experiencedpeople, people who have accomplished great things in the industry,and he becomes a student at their feet—teach me, show me, help me un-derstand what I can learn from you.
J.C. Faulkner remembers a very early source of advice about thevalue of honesty: “My grandfather—he was a coal miner—he saidsomething about integrity and truth that I’ve never forgotten. He saidthat the very moment you feel like you have to lie; when you feel likeyou want to be untruthful; when you’re so scared to tell somebodythe truth; when there’s that much at stake, that’s the very momentyou have to tell the truth. The fact you feel like you want to lie vali-dates how important the truth is. It validates that you are dealingwith a real issue, something that is only going to get worse.
Founders who say they value candor will eventually be tested asto whether they mean it. One of the sternest and most unpleasant ex-amples of this is the common need to confront performance problems,to deal with team members who are not cutting it. Nearly every team,it seems, has a member or two who are not performing up to par, orwho have burned too many interpersonal bridges, and whose strugglesare commonly known and discussed throughout the venture (exceptwhen they are around).
Mark Williams remembers the sinking feelingin his stomach when he fully realized that a key team member was nolonger a good fit for Modality’s growth needs. After a period of ago-nizing about how to address the situation, he was able to candidlyshare his thinking with the person and negotiate a fair deal to transi-tion him out of the business. As in many such cases, the exiting teammember appreciated the integrity of the process and was somewhatrelieved to no longer be straining in a role incompatible with his con-siderable strengths.
When it comes to open communication, you may find that yourchallenge as an entrepreneur is less about being truthful with othersand more about ensuring that others are completely honest with you.With partners and team members, you will likely get back what youproject. “I have found that when people see you doing something as aleader over time, that behavior becomes the expected norm,” says J.C.“It’s what people think they are supposed to do. When you as a leaderare completely unedited and candid, about both good and bad things,that candor opens the door for them to follow suit.”
You can also increase your odds of getting the truth by explicitlyasking for it and then rewarding it through listening and taking ap-propriate action. Bob Tucker remembers how J.C. set a tone for un-varnished feedback in their working relationship. “One of the firstthings that J.C. said to me was—and this is one of his favorite expres-sions: ‘I don’t know what I don’t know. If you see me doing or sayingsomething that you think is a mistake or with which you disagree, thenI want to know about it.
I may not agree with you, but I want to knowwhere you see it differently.’” J.C. backed up his request with actionsover time, demonstrating that he really wanted to hear opposing views(his quick dismissal of Doug Crisp’s concerns about Home Free wasa notable exception). For his part, Bob Tucker has seen his share ofleaders who fail to walk their talk. “I can’t tell you how many times Ihave seen business leaders say it’s their objective [to promote candor]when in fact they do nothing to implement it, and I have seen manyof them declare it and create the opposite effect, where anybody whodisagrees with them gets shot down.”
Wise entrepreneurs and investors understand that great ventures areforged, not in retreats or laboratories, but on the field of play, whereofferings and delivery systems are subject to the eye-opening scrutinythat only the marketplace can provide. For this reason, most highlysuccessful businesses end up looking very different from whatfounders intended or expected. The creative dynamic here is oftenlike that of the proverbial sausage factory. Even if the end result tastesgreat, the process for getting there is not always pretty.
As a passionate founder, it is critical that you deal with everydayreality in a way that doesn’t sap your confidence and enthusiasm. Suc-cessful entrepreneurs are resilient, persevering in the face of adversity,and this fact is sometimes mistakenly interpreted to mean that theyrace past obstacles by focusing only on the positive aspects of a situ-ation, by seeing the glass as “half full.” But skillful entrepreneurs pre-vail over problems precisely because they acknowledge and addressthem.
They stare down reality every day, traversing tough passages without losing sight of the higher summit to which they aspire. “Thisis a very important lesson,” says Admiral James Stockdale, quoted byJim Collins in his book Good to Great, “You must never confuse faiththat you will prevail in the end—which you can never afford to lose—with the discipline to confront the most brutal facts of your currentreality, whatever they might be.
In a high-integrity startup environment, everything is open toscrutiny. Founders scrutinize their own thinking and invite thescrutiny of others. This includes the willingness to entertain skepticsand take a systematic look at one’s own doubts and fears. Rather thancausing a downward spiral of increasing negativity, as positive thinking enthusiasts might argue.
I have found this practice of surfacing andevaluating doubts to lead to even higher levels of confidence. It is thebusiness equivalent of a child’s leaving the security of the bedcoversto confirm, once and for all, that no monster is hiding under the bed.As Czechoslovakia’s heroic former president, Vaclav Havel, oncewrote, “Isn’t it the moment of most profound doubt that gives rise tonew certainties?