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March 5th, 2018

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Why do entrepreneurs engage in self-sabotage?

(written by lawrence krubner, however indented passages are often quotes). You can contact lawrence at: lawrence@krubner.com

Just to get this out of the way, entrepreneurs engage in all of the self-destructive habits that non-entrepreneurs sometimes engage in: drug addiction, denial, blame shifting, perfectionism, depression, mania, laziness, etc. I’m not going to write about that, because all of that is too obvious, and great essays have already been written about those subjects. Instead I’m going to write about the self-destructive habits that are unique to entrepreneurs. There are 3 patterns that I have seen a lot of:

1.) A product or service begins to gain a following with a small niche. The entrepreneur is heartbroken. They can not see any way to move beyond that niche. They had dreamed that their startup would grow till it was larger than Google, therefore success with a small niche is disappointing.

2.) A startup achieves a success of a conventional type and, therefore, the entrepreneur regards it as boring. Perhaps the site was suppose to pioneer an altogether new style of interaction among humans, and instead the part of the startup that becomes popular is of an old type – for instance, the company blog becomes highly popular. The entrepreneur is then disappointed, maybe even angry, to be the owner of a boring success.

3.) The entrepreneur will have to engage in new areas of activity which make them uncomfortable. For instance, a software engineer comes up with cool software that has real utility for an industry. To achieve success, the engineer must either become a salesperson, or raise money from investors so that they can hire a salesperson. But the engineer is not comfortable with sales, nor are they comfortable talking to investors. What they are comfortable doing is working on their software, so they continue doing that. Afternoons are spent at co-working spaces where clever new features are added. The software gets better and better, but without the structure of a company dedicated to promoting it, it languishes in obscurity.

The above is the summary. Below I’ll expand on these 3 destructive forms of self-sabotage

A product or service gains a following with a small niche

Peter Drucker, perhaps the greatest business guru of the 20th Century, once remarked that innovators are often disappointed by the manner in which their innovations become popular. In his 1985 book, Innovation and Entrepreneurship, Drucker relates the story of Alfred Einhorn, who invented Novocain, which then became popular with dentists as a local anesthetic. Einhorn held a contempt for dentistry, since it was such a small market. He felt that Novocain should be used by surgeons for all forms of surgery. General surgery was more prestigious than dentistry, and so Einhorn waged a campaign against the use of Novocain by dentists. In the end, his innovation was successful despite him, rather than because of him. According to Drucker, this pattern, where a product is undercut by the entrepreneur who created it, is extremely common.

When I first read Drucker’s book I found it hard to believe that an entrepreneur would actively sabotage their own innovation. However, having now spent almost 20 years working with startups, I’ve seen that it is, indeed, a common pattern.

There is a lot of power to be had from starting with a small niche. When Facebook started in 2004, it had no hope of competing directly with MySpace. Being exclusive to universities gave Facebook a niche where it could build up momentum, before opening up to the general public.

I talk to a lot of entrepreneurs who worry that if they focus on a small niche, the market opportunity will be too small to interest investors. My response is “It is better to own 1% of something than to own 100% of nothing.” If starting with a niche means success, whereas going after the general market means failure, then starting with a niche is the right answer. And with tech startups, this applies nearly always.

A startup achieves a success of a conventional type

From 2002 to 2008, I worked with an entrepreneur who was a bit of a dreamer. He considered himself a visionary, someone who understood the future. He read history, pop culture, art, science and tech — he complimented himself on his ability to synthesize different types of information. I credit him with being very creative, but also torn apart by some internal contradictions. He insisted that he was unconventional, and he wanted the world to acknowledge that his creativity grew out of his non-conformism. In particular, he had a need to impress his father, and to get his father to acknowledge that unconventional paths could also be highly successful. We burned through several million dollars on several ideas, any of one of which could have been a success — but each of which felt too ordinary for him, causing him to lose interest. After several years of working together, we had a modest success, when we built the iHanuman yoga site. The site was immediately profitable, and it remains so even now, 9 years later. If you are looking to buy instructional videos about yogo, the site is a wonderful resource. I suggested that we use the same technology to build a whole series of websites focused on different topics, such as cooking and tennis and golf. But my business partner refused to even consider such a strategy. He was angry about iHanuman, which had been his girlfriend’s idea (she was a yoga instructor). We had burned through several million dollars looking for a “visionary” idea, and then in the end we had success with a fairly simple idea, selling instructional videos. If he had been willing to proceed with a boring success, we could have built an empire around that idea. Indeed, just a few years later, the crew behind Revolution Golf was to succeed as we should have, selling instructional videos about golf, and slowly building a whole set of related businesses around that (I think they now have bought 4 other sites relating to golf and sports?).

Many tech entrepreneurs starts companies at least in part because they consider themselves uniquely creative and insightful, and they want the whole world to see them as they see themselves. Often, the project they launch reveals an unexpected truth: their insights are proven false, what works in the end is something surprising.

What is the right way to handle unexpected success? In 1992, when Bo Peabody launched Tripod, he was thinking that the site would offer content aimed at college students. His idea failed. The company was saved because some of the programmers at the company had started a side project that allowed anyone to create their own web pages. This then became the future of the company. In his book, Lucky or Smart, Peabody says it is important to be smart enough to know when you are getting lucky. And then, you have to be willing to accept that luck. This takes humility. What’s needed in an entrepreneur is emotional resilience, the kind of strength that allows a person to show grace when their ideas have been proven wrong. One has to adapt to each surprise.

The entrepreneur will have to engage in new areas of activity which make them uncomfortable

Some of the things you need to do as an entrepreneur: sales, marketing, strategy, hiring, firing, accounting, law, taxes. Were these your specialities? Probably not. Starting a business forces people to engage in a lot of activities that they previously knew nothing about, and which they do not enjoy. But they are necessary activities.

I’ve spent most of 20 years writing software, so perhaps this is the pattern I’ve seen the most: the software developer who starts a company but who wants to continue to write software, because that is where they are the most comfortable. Yet they need to push themselves to do a lot else. Or else they fail.

Very few entrepreneurs start off as professional entrepreneurs. Most of them are something else first: a medical researcher, a Wall Street trader, a software engineer, a school teacher, a plumber, a restaurant server, an accountant. They are working in some specific role when they get their idea for starting a business. But they will need to learn new skills.

Some examples.

Rehearsals are important. I wish I could convince more entrepreneurs of this. Ted Talks, TV interviews, podcasts, MeetUps. I’ve seen entrepreneurs who are invited to speak in public, and they do badly. What should be a triumph becomes an embarrassment. Failure to rehearse is perhaps the most obvious form of self-sabotage.

When you become an entrepreneur, you will have to talk about your fledgling startup all the time. To investors, to customers, to your family, to your workers, to the public. You will be talking about it all the time. You need to do this well.

Speaking well in public is a skill that can be learned. Consider the professionals who spend their lives doing so. It doesn’t matter if your idea of charm is George Clooney or Will Smith or Paul Giamatti. Maybe you are fan of Ellen Page or Taraji Henson. Maybe you swoon over Gal Gadot. They all have an easy grace when speaking in public, because they have spent so many years doing so. They were not born that way.

On Friday I had lunch with an entrepreneur who struck me as unusually well-spoken. I said this to her and she made a self-deprecating joke about her awkwardness. But we discussed the issue for a few more minutes and she revealed that she sometimes used a video camera to record herself talking, and then she watched the video to see how she is coming across. And this is a fantastic technique.

If recording yourself makes you uncomfortable, then talk to a mirror. The important thing is to rehearse.

Mistakes I’ve seen entrepreneurs make when they don’t rehearse their presentation:

1.) they forget important points that need to be made

2.) they go off on unrelated tangents

3.) they attempt jokes that go badly

4.) they stutter

5.) they attempt to tell a story, but ruin it by telling the events out of order

6.) they indulge in mannerisms of which they are not conscious, but which are highly distracting to their audience

7.) they do not appear confident

I have a number of friends who are actors. They are also work with an organization that teaches business leaders how to speak in public. Among the skills they emphasize:

1.) how to hold space

2.) when to use silence

3.) when to use a conversational tone

4.) the importance of simple storytelling

5.) the distracting nature of body tics or mannerisms

One of my friends told me “The most important thing we do is video record them and then show them the video. It is absolutely brutal in terms of revealing body language.”

This kind of work used to be a specialty of the Eagles Flight Institute and though they have moved away from it, they are still a great source of different kinds of experiential learning for business leaders.

A few other names my friend mentioned to me:

Impact Factory

Toastmasters

Simply Speaking

Another failure mode that I have seen entrepreneurs fall into is perfectionism regarding one aspect of the process of establishing the business. Twice I have seen entrepreneurs spend countless hours, over several months, polishing the pitch deck they use to woo investors. In both cases, the entrepreneurs fell into this pattern when things were going badly. They were running out of money and they were feeling a lot of stress. This kind of perfectionism is always a form of avoidance. They felt they could not control the technology, nor the tech team, nor the customers, but they could control their pitch deck, so they poured all of their energy into that. Colors, fonts, images: they would tweak it endlessly. The pitch deck did not necessarily get better, it simply changed. Meanwhile, the business got worse because other essential activities were being avoided. This kind of activity verges on depression, which is understandable when a person is under a lot of stress. It is crucial that the entrepreneur find some healthy way to deal with the stress: go running, find a therapist, take anti-depressants, have long talks with a trusted friend or minister — whatever it takes. If an entrepreneur is in a funk, either they snap out of it, or the business is doomed.

Different entrepreneurs will have different strengths and weaknesses. That is natural. The important thing is to recognize that some activities are absolutely essential. Either hire someone to do them, or learn how to do them. A good entrepreneur doesn’t avoid an activity just because it makes them uncomfortable, or because they find it boring.

Humility and Open-Mindedness

A thought about what it takes to succeed:

No one can accurately predict where the stock market will be in 2 years (otherwise they’d already be a trillionaire). For almost the same reason, no entrepreneur can fully know where their startup will be in 2 years: there are simply too many variables. It is important that innovators be humble about the limits of their knowledge. A fantastic insight in one area can carry you a long way, but it will have to adapt to the millions of small facts that will arise, almost daily, and shape the history of your insight as it passes from concept to reality. If you launch a startup, the odds are against you from the start, and you’re only hope of success is to remain open minded about what might work.

If your startup eventually succeeds, it will likely be for reasons you did not initially predict. You must proceed with the attitude of a scientist conducting an experiment, and when you get back the results, you must not argue with them, but rather, you must adjust your mental model of the world. When Sir Alexander Fleming saw that mold on some bread crumbs was keeping bacteria from growing in a petri dish, he said “Astounding! That mold must be producing some substance that kills bacteria! Perhaps that same substance can be used to kill bacteria in humans?” How many of us would be dead right now if he had rejected the evidence, and said simply “That’s impossible! Mold can’t hurt bacteria!” Over the previous 60 years, two other researchers had already noted the lack of bacteria in the presence of certain types of mold, yet they failed to perceive the importance of this observation. An entrepreneur would do well to emulate Fleming’s open mindedness.

Without open mindedness about the type of success you may encounter, your startup is doomed. And without humility about the limits of your knowledge, your startup is doomed.

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2 COMMENTS

March 5, 2018
11:35 pm

By Sam 'Slowly Siphoning Smelling Salts, Somewhere Someplace Sitting Solemnly, Salary Sacrificed, Skipped School, Sweating Strongly, Startup Sunk, Sickly Stupid, Squatting Stoner, SAVE SAM'S SOUL' Schimmelpfennig

I don’t know who you are, or why your copyright is as out of date as your SSL certs, but good post. Subscribed, shared, starred, and smashed.

Pingback: Self-Destructive Behavior of Entrepreneurs – Robert Schouwenburg

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