A note of caution for restless entrepreneurs

Here are five behavioural symptoms that bright, young founders should minimise, if not avoid

Entrepreneurship is positive for economic development, but the process is at its infancy in India. Hence, a few symptoms of aberrant behaviour among founders are natural. If they persist, they could signal an approaching problem. This article highlights five symptoms that bright, young founders should minimise, if not avoid.

The average age of founders in India is a decade less than that in the US. The relative inexperience of the founders in India, despite their advantage of adaptability and intelligence, shows up in areas such as listening skills, human relationships, coping with setbacks, giving importance to governance etc. Young entrepreneurs should protect against these bugs in the air they breathe. A startup director or funder should have the maturity and wisdom to guide an entrepreneur on how to behave in such situations.

Only one in 10,000 entrepreneurs becomes a Steve Jobs. Emulating the way Jobs dressed or behaved is counter-productive. No entrepreneur sets out to be fraudulent, but some may stray into such paths while intensely pursuing their ambitions. Entrepreneurs reveal prodromal signals — just like dark clouds and gusty winds predict an approaching storm. If certain behavioural signals abound and persist then fund providers and directors need to consider correction. Though cases like Theranos and Juicero are extreme, they demonstrate how events can cascade rapidly into disaster.

Theranos represents an unfortunate case of hubris, lying and opacity as narrated by John Carreyrou in his book Bad Blood. Founder Elizabeth Holmes grew up in a wealthy family; she grew up being obsessive, constantly hearing stories about greatness. Early in her life, she figured that she wanted to make a lot of money. She displayed excessive competitiveness which manifested as tantrums with peers. She had a personal phobia of needles used to draw blood, so she diligently developed a distinctive idea that multiple tests could be done with just a pin prick of blood. Elizabeth dropped out of Stanford, an act that is associated with entrepreneurial brilliance by some! She wore turtlenecks, emulating Steve Jobs.

Being pushy and well-networked, she leveraged her family connections to raise the initial funds. Later, she interacted with VCs and resented probing questions about her technology. She got up and left in a huff when searching questions were posed by MedVenture experts. As Theranos grew, she became unnaturally secretive — even casual visitors to the company had to sign non-disclosure agreements. Jeff Hunter, a technical specialist, on a Walgreens delegation, was literally accompanied to the toilet to prevent his eyes straying around! (Walgreens was being wooed as a potential ally and partner.)

A few employees met the board chairman to express concern about the lack of ethics and the excessive bluster that was prevalent in the company. He had already heard some rumblings. He quickly met co-directors, who reached a consensus that Holmes should step down from the position of CEO because she was too inexperienced. They even communicated the board’s decision to her. Surprisingly and remarkably, she sweet-talked the directors to change their minds. The directors failed in the old adage that when you strike at the king, you must kill him.

Theranos achieved a valuation of $11 billion before it fell on its own sword. Holmes controlled a board of marquee names such as Henry Kissinger, Sam Nunn and William Perry. As events panned out, she was indicted for blatant lying even while her company attracted increasing valuations by frenzied investors. She was a charmer of an exceptional quality.

Juicero, a Silicon Valley startup, was founded by Doug Evans. The founder often compared himself to Steve Jobs. The company was launched in June 2016 and closed down in September 2017 after a flattering profile in The New York Times and funding from the likes of Kleiner Perkins and Google Ventures. It had a self-obsessed, aggressive founder. It remains a symbol of the Valley startup culture that raises huge sums of money for solving non-problems.

Drawing from my own observations and anecdotal experiences, prodromal behaviour of large company CEOs and startup founders bear some resemblance. There are five debilitating signals to be watchful of: (i) unwillingness or inability to simplify, (ii) unwarranted confidence, (iii) slick-talking instead of listening, (iv) name dropping and, lastly, (v) talking down to associates. Caveat emptor.

The writer is a corporate advisor and distinguished professor of IIT Kharagpur 

Email: rgopal@themindworks.me