One by-product of entrepreneurial passion—and the Motivational Media that feed it—is that too many founding teams behave as ifpositive emotion indicates forward movement. If we walk out of ameeting feeling great, the thinking goes, then things must be on track.
Conversely, people who scrutinize or question progress are cast asnegative or disloyal. Doubt is an enemy to be banished. But everynew venture journey is fraught with real risks and real threats. Doubtsand fears, when properly prioritized and evaluated, lead us to issuesthat desperately need attention. “Startups are right to be paranoid,”says Y Combinator’s Paul Graham. “But they sometimes fear thewrong things.
The tendency toward positive packaging gives rise to a familiarshell game between entrepreneurs and investors in which foundingteams feel obliged to amplify the good and sanitize the bad. But smartinvestors know that rosy early-phase reports don’t equate to valuecreation. Chris Holden remembers how impressed he and his col-leagues at Court Square Ventures were when Mark Kahn raised whatcould be considered bad news immediately after finalizing their in-vestment deal.
One of the reasons his business took off so fast is thathe had no pride about coming back to us five minutes after the inkwas dry on our deal, saying ‘I think I might have misjudged this pieceof the equation and we need to change it this way or that way.’” Incountless other deals, Chris has seen his share of founders who won’tacknowledge issues that need to be addressed.
They don’t want to goback to their investors with anything that makes them look like theyweren’t perfectly prescient, with perfect foreknowledge, or anythingthat makes it look like things are shaky underfoot,” he says. “But inreality, what the investor craves is the opposite. Because you know thatthings are going to be shaky underfoot, and you’re on shifting sandsalways. What you want to see is their reaction.
Adversity is more than an inevitable companion in your ventureformation process. It is often a sign that you are focusing on knottyproblems that need to be untangled. Turbulence builds entrepreneur-ial muscle and opens windows into your team’s talent, character, andcommitment. Mastery in any field comes through tough stretches ofgrinding and problem solving, and the path to sustained venture suc-cess is no different. For the most part, value creation is the result ofunglamorous day-to-day toil, not satisfying high-five moments.