The Deal Killer Entrepreneurial Personality
The Deal Killer Entrepreneurial Personality and The Evolution Of A Soon-To-Be-Dead Venture, Plus Some Latin.
By Craig Silver
After years participating in successful and struggling ventures, I have observed a curious, but fairly consistent pattern concerning personality traits of entrepreneurs. Some of these personality traits, can, putting it bluntly, put to death a new venture. Certainly these traits can stunt the promised growth of an enterprise. Paradoxically, the very traits that tend to move a person towards the realms of entrepreneur can be the same traits that can artificially dissolve a company. I use "artificially" here because these may be the only issues that are within the total control of the new venture. All other threats tend to be outside the venture, and thus, outside its control.
The typical entrepreneur is usually very intelligent. Unfortunately, pride tends to follow intelligence. It causes the entrepreneur to be impatient. He can't wait for the business world to see how brilliant his work is right now. Therefore, he needs to be involved in each and every detail of the new venture and put his imprimatur on every event. It is not even sufficient to be involved in every detail, but all involved must be engaged in seemingly endless debates until they are convinced that, indeed, the entrepreneur, as the Prime Mover, is correct and yes, brilliant.
As a corollary to the above, since the Prime Mover needs constant affirmation regarding his brilliance, he tends to surround himself with friends and acquaintances whose appreciation for his brilliance has already been established. This leads to the hiring of not the best people available for the venture, but the best people for the Prime Mover's ego.
Pride like Cancer
(Horresco referens-Latin for "I shudder to tell the story") Once the venture has experienced some modicum of success, a most dangerous phase may ensue. Ego, once left unchecked, has now stifled all dissension. The venture is often left without adequate legal protections. The Prime Mover thinks that his handshake is more powerful than the law and the adoration of others makes contracts not only superfluous but even offensive.
The love of the product or invention takes on mythical proportions. Obviously the product should be the most expensive in the market. The product is a value proposition that causes the world to turn on its axis. Therefore, the market will have to wait for a price change, or license arrangement with third parties or a partial sale of the business for raising capital. The product rules! The ego rules!
These events usually are followed by a total deception regarding the uniqueness of the product. The Prime Mover sees distinctions in the product that no one else can see. The Prime Mover sees whole market distinctions that no one else can see. Because of this all-knowing approach, the Prime Mover sees no reason to respond to any outside force or person. Letters go unanswered. Telephone calls go unreturned. Email sits in the inbox.
The Prime Mover may next enter the "fun" phase. This phase allows the entrepreneur to get involved in only the most enjoyable aspects of the venture, e.g. giving interviews, attending conferences, meeting with marketing gurus. The details of running a company are left to flounder. No need to worry about patent protection, legal issues, cash flow, tax issues, personnel needs, documentation, quality certifications, or customer demands. Those issues are not fun.
Honos habet onus
(Lat. Honor is burdened with responsibly). Just like cancer that needs treatment, so does the Prime Mover at this stage. He needs to let go. He should delegate operations to someone who will do the non-fun. He should take a true interest in the daily operation of the business from his direct reports.
Often, the Prime Mover is so taken with himself, that he thinks himself to be above the normal constraints that inhibit other mere mortals. He may start to have personal failings. His marriage may suffer because his ego does not fit into the home setting anymore. He may have affairs, drink too much or suffer health problems. Others will see this although the Mover will not. Fama nihil est celerius. (Lat. Nothing travels more swiftly than scandal.) You can bet on forgetting to register the car.
(Lat. A spoiled child of Fortune). By this time, the friends who were hired earlier are starting to talk behind the Primer Mover's back. Morale in the company really starts to suffer. The prime mover tends to display a curious lack of basic social skills. He lies. He is impolite. He just does not understand that the commercial world buys a product for what it can do - not because it loves the inventor of the product. Soon, the company can get a reputation for having a good product, but it is too expensive. Customers begin to view the company as "they"; "they" are hard to deal with and "they" will not license on reasonable terms and "they" don't return calls anyway.
(Lat. Troy was, but is no more). In the final stages of the venture, assaults on success are coming from within and without. A split may occur in the company. Employees may take the technology and start their own venture. Competitors who were denied licensing arrangements may produce the product in house and enjoy eating the Prime Mover's lunch as they remember their unreturned emails. Facile est inventis addere. (Lat. It is easy to improve what has already been invented.) All of the "non fun" issues now take on mountainous proportions to heights that the venture may not be able to scale.
If the venture is fortunate, the Prime Mover may start to realize that the business is in real trouble. However, instead of listening to voices inside the company, the Ego at the helm may find himself only able to be influenced by an outside consultant who will expensively advise on all sorts of issues and never, for political reasons, flag the one salient wart of all - the personality traits and ego of the entrepreneur himself.
Failure of the enterprise is often the likely result.
Resemblance to any person now living or in bankruptcy is purely coincidence.
Craig Silver is currently the Chief Operating Officer and General Counsel to IT Enclosures Inc.-a start up telecommunication equipment manufacturer. Other experience includes five years of general management of a digital signal processing company and 15 years of general law practice advising, inter alia, start-up high technology ventures. Experto crede (Lat. Believe one who has tried it.)