Why All Entrepreneurs Have Founderitis, and How to Control the Green Monster Within
I don’t know if the disease known as “founderitis” is an angel term or just a broad term across the industry. If you are a venture capitalist who comes from a fund or MBA background, you probably don’t understand it. But most angels have it, and certainly all entrepreneurs pitching for money have it.
It starts with an inherent sense of being put on this earth to do something great; it crept into your DNA at a very early age. This in my opinion is not a bad thing, and I think the disease is actually a good one—but like the Incredible Hulk, the ability to manage the green monster within is the difference between the successful entrepreneur or angel and the poor one.
The good ones can become great visionaries and communicative leaders. They can rally the troops with that inherent delusional quality that lets everyone else know it’s going to be okay, and can cut through the most terrible of personal and corporate storms with a laser focus on why this whole thing was started. They can do this even when inside I—oops, I mean the person with founderitis—doesn’t know what the plan is. Finally, they are always able to say “today is not the day we die!”
The good ones also understand it isn’t just words. Communication is spreadsheets, a plan, quality product development to the point of obsession, and managing customer expectations even when you know the customer might be wrong. Most important, it is the ability to listen and adapt.
This ability to listen and adapt is a key element in your pitch as to whether the green monster is under control or not. That and a plan that is well thought out and documented.
Seriously, angels do listen to your pitch for “founderitis” signals. In fact, we watch for this affliction over a number of other business factors. Why? Because you are pitching to a group of individuals who have (usually) managed their green monster and they can easily identify it in others.
A lot of times as the entrepreneur you don’t get the chance to ask why the angel or institutional money isn’t investing in you, let alone ask for a second meeting, even when you have all of the above. Here’s todays angel tip: most of the time the answer is “I don’t know, I just don’t want to work with that person.”
In the last number of years I have seen angels leave the community, mainly because they did four to six deals and ended up feeling screwed. So they went back to doing their own deals instead of someone else’s. Yes, this could be a form of founderitis, absolutely, but I would contend that it was simply the case of a bad experience with giving early entrepreneurs money.
Here are three types of bad experiences angles can have. You need to know that these types of experiences are already in an investor’s head before you pitch. What’s probably even harder to digest is that other entrepreneurs put these obstacles in an investor’s brain long before you showed up with the next big new idea.
- My First Deal: When I saw the pitch, I went “Wow, if we do this and this and this we are going to be amazing.” I knew who I wanted to talk to, the customers I already knew, and where I wanted to go first.
Problem: it wasn’t my company or my plan. The entrepreneur was looking at me as a cheque book, not the new CEO.
Lesson: I have to negotiate my level of involvement, and be comfortable in my understood role before investing. If they just want my cheque book, I have to be able to live with that or walk away.
- The Idea is So Big: I got into a deal wherein I was sure that the founder was un-coachable and didn’t have the monster under control—but the “thing” was a home run, with a board of other people who thought like I did. Maybe all of us and an awesome product can overcome the founder.
Problem: Same as above. Not my company. By the time the legal bills showed up, the founder was off to the Islands with an emptied bank account because “the board” wouldn’t let him execute the “plan,” chalking up to years of wasted energy and time.
Lesson: Laser focus and dogged determination can carry into legal battles and a disregard for corporate governance (see my last article) is as detrimental as it is healthy. Also called “you can’t win a fight with a pig”.
- It was all me: This time the founder for a very successful venture I backed a number of years ago has forgotten about the involvement of both time and money that I invested. Instead this founder now seems to think that that nobody was there to help them when it counted, and none of this would have happened without them because no one else cared. They have nowfound someone new (with a bigger cheque book) to latch onto, someone that believes in them (ugh). FYI, it is rare that angels and VCs get thanked at awards dinners; keep score next time you are at one.
Problem: This has led me to make investments that lead to anti-dilution clauses, options that have longer windows even after I’m not involved, and onerous VC-like terms in all of my deals.
Lesson: No one really does have the green monster truly under control.
So think about your green monster the next time you’re pitching an investor. You might surprise yourself with the outcome if you can control it.
– Anonymous Angel.
Check out Anonymous Angel’s other articles:
• Carving a Pie Where Everyone Gets Fed
• Why Venture Capitalists Don’t Think for Themselves
• What Investor Fatigue Means for Startups
• 10 Things That Prove You’re a Company, Not a Startup
• How Startup Investors Keep Secrets from Their Entrepreneurs
