Page 175 - 6 Secrets to Startup Success

154 6 SECRETS TO STARTUP SUCCESS

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 col-
leagues at Court Square Ventures were when Mark Kahn raised what
could be considered bad news immediately after finalizing their in-
vestment 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 entrepreneur-
ial 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 suc-
cess is no different. For the most part, value creation is the result of
unglamorous day-to-day toil, not satisfying high-five moments.

American Management Association • www.amanet.org