The
Worst Mistake a Startup Can Make
It has
nothing to do with losing or making money. But if you lose this quality, you
will never survive as a company or a presidency, trust me.
BY HOWARD
TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH
INVESTORS@TULLMAN
Harold Geneen the longtime boss of ITT Corp.,
a famous 20thcentury conglomerate, was a great quotesmith who said
that "the only unforgivable sin in business is to run out of cash."
I'm not sure that I ever agreed with such a broad and all-encompassing
assertion mainly because, in my own experience, money has rarely been the
ultimate determining factor in a given business's success or failure.
Especially in the last 10 years, abundant
funding for even utterly irrational stories -- not to mention outright frauds
-- has been relatively easy to come by, whether or not anyone believed that the
companies would ultimately last and whether or not their business propositions
made any real sense. How else to explain why any bank could have continued to
give Donald Trump loans? The money is always there. It's just the pockets that
change from time to time. If you aggressively chase a clear and compelling
vision, rather than chasing the money, the required funding will eventually
find you. Smart money doesn't lead, it follows. And it bets most of the time on
the jockey rather than the horse.
But even if Geneen's basic proposition made
historical sense and accurately describes the abrupt end of many
companies over the years, it's definitely not the most critical
error that a startup CEO can make. This is true in part because any problem (of
whatever gravity and size) that you can fix with a check isn't really an
existential concern; it's just another expense item that needs to be addressed.
Lethal problems are those that can kill your
company's culture, breach the basic foundations on which the business is built
and imperil its ongoing survival. Money problems, at the end of the day, are
mainly just challenges to your checkbook. In fact, as a general rule, I'd put
weak management, absent product/market fit, and bad timing all ahead of funding
shortfalls on the critical causation list. But none of these are the No. 1 risk
for startups.
Startups, in their early and formative years,
are a lot more like families than traditional businesses. In healthy
businesses, the single most important element, the glue that sticks and holds
the whole enterprise together, is trust. In "sick" businesses, it's
often money, guilt or fear. Success depends on the team trusting and having
confidence in their leaders, but it's just as critical that the leaders trust
and believe in their people as well. Trust in every enterprise is at least a
two-way street. According to the 2020 Edelman Trust Barometer Special
Report on brands, it's actually a three-way intersection,
because 86% of consumers say that trusting a brand is important or critical in
deciding whether to buy or use its products or services.
Trusting and relying on each other is
especially crucial in new ventures, where the path and the future are unknown
and uncertain. A startup is in part a sacred and shared promise -- a leap of
faith bound by the belief that there will be a safe and secure place to land or
that you'll learn to fly. Your faith has to be stronger than your fear. You've
got to believe it to be it, and then you have to execute. As Bruce Springsteen
writes: "But these promises we make at night, oh that's all they are.
Unless we fill them with faith and love, they're as empty as the howlin' wind."
It takes time, patience and a lot of hard work
to develop and build trust throughout a business and only a moment or two of
suspicion, not even proof, to destroy that trust. It's that fragile an idea and
that precious a commodity. Losing the trust and confidence of your team is the
most lethal mistake that any entrepreneur can make. And almost always an
unrecoverable error. Charismatic and narcissistic entrepreneurs often think
that it's all about being loved - even those who've never experienced or expressed
real love share this fantasy. But to be trusted is a far greater compliment and
commitment than to be loved. To be the one who can always be counted on- the go-to
person.
In many ways, political campaigns share the
common characteristics of startups. Intense, feverish activities. Lots of
adrenaline and very little sleep. And an uncompromising belief and dedication
to a shared dream. And much like life in a startup (after it receives serious
initial funding or goes public), the real work of building, managing and
growing the enterprise, whether a business or a country, starts after the
champagne and the celebrations. That's when the rubber really hits the road.
And every aspect of the adventure proceeds from a firm foundation of trust in
the leaders, the team and the dream.
But where do you go if the leader never
expected to win, never wanted to do the essential and unavoidable day-to-day
work required, and never truly believed in the team, the dream, or even in his
own insecure self?
One of our soon-to-be-dumped Liar-in-Chief's
most fundamental and telling flaws is that he has never trusted anyone for a
moment - not even his family - throughout his many shady and suspect ventures.
This is a man who stands accused of consistently cheating his siblings and
relatives alike. Trump's only claim to fame (true or false) was always the
same. He was all about money. Sadly, money doesn't care who makes it. In a
caring world it's people, not politics, that matter the most. Trump never got
it. The best entrepreneurs pride themselves on the many people whose lives
they've improved, and whom they've helped fashion into serious and dedicated
grown-ups, just as much as on the businesses they built.
Trump bragged incessantly about making a lot
of money for people (mostly himself and his sick and sleazy offspring) and
never spoke about helping to make a lot of people better versions of
themselves. Fish and families rot from the head. We can watch this latest
disappointment play out every day as a petty and frenzied Trump fires officials
across the government who are unwilling to maintain his fraudulent façade. And
he holds mid and low-level staffers hostage by insisting that they maintain his
charade and not start looking for their next jobs, lest they be fired.
As we are also seeing every passing day, when
you've lied and cheated to "win" your entire life, you come to
believe that cheating and lying are the only ways that anyone else can win. In
addition, if you are foolhardy enough to create and encourage a lifelong and
multi-generational culture of lies and corruption, where the
"alternative" truth is a fluid and flexible concept, you sow the
seeds of your own demise. You come to learn that people who will lie for you
will eventually lie to and about you.
In the last four years, confronted and
confounded by 20,000 or more documented lies, the question the entire world
asked most often about our government was a simple one. If they don't remember
their lies, how would you ever expect them to remember and honor their
promises? No one ever expected otherwise. We got exactly what we deserved for
electing Trump. Truth decay. And trust in ourselves, our system and our country
are among the saddest casualties.
