By Tim Schigel, Refinery Ventures
The mid-1990s through the early 2000s were an exciting time for entrepreneurs and investors as prices for internet startups soared.
Then the bottom fell out of internet stocks and the dot-com bust reverberated through the nation’s economy.
In retrospect, it was probably a terrible time to start up a company connected to the internet economy. But that didn’t stop Larry Page and Sergey Brin from launching their startup, Google, right in the thick of this period, in 1998.
We all know how that turned out.
The truth is that companies that start in the midst of an economic downturn often emerge stronger and more resilient on the other side than companies that have their roots in better times.
It’s because they learn good habits early on. They’re more cautious about their money because they know it isn’t easy to come by, they’re less likely to take big gambles that risk it all and they build teams and processes that are strong enough to survive in any economy, not just when times are good.
Most important, these entrepreneurs know how to use their egos and use it to fuel their dreams, not their images.
For founders, ego is a fine line. It’s something every entrepreneur needs to create a business in the first place and to do everything possible to succeed. But left unchecked, the ego can prevent them from seeing things as they truly are. It’s a paradox, and it takes humility to maintain balance.
When times are flush, as they have been for nearly the past decade, ego doesn’t matter as much. There’s always more capital to be raised, more customers to reach and new markets to develop.
But as we head into 2019 there’s more uncertainty surrounding the economy than there has been in years. It’s time for entrepreneurs to take their egos out of the equation and focus on survival if the expected downturn happens.
Don’t believe your own PR: Good PR is nice, and all founders like to hear about all the great things they’re doing, but it doesn’t always lead to revenue and profit. This goes beyond the CEO and founder, too. Some companies build up a lot of hype and live for that from a cultural perspective. That’s great, and you should celebrate your wins, but it’s equally important not to put too much of a stake in hype alone. Too often there’s nothing really there.
Check yourself as a founder: Be honest with yourself. Why are you really doing this? What’s the driving motivation behind your company? Do you need constant affirmation and ego stroking? Too often, founders want to be recognized for doing great things, and that can lead them to make decisions that feel good rather than those that are best for the business.
Make the tough decisions: Life as an entrepreneur and CEO is often a series of tough decisions and never is this clearer than during an economic downturn. Layoffs, product changes, downsizing: Belt-tightening is never easy. But it’s always better to tighten the belt yourself ahead of time versus letting external market forces tighten it for you.
Don’t overshadow the team: Are you creating an environment where your team feels free to speak up and take action, or is your ego dominating their contributions? This can be tough to diagnose in ourselves, but it’s obvious in practice. Maybe it’s a boss who sits down in a meeting and says, “Wow, I’m excited about this new product and I really want to do this. What do you all think?” What are they going to say? They’re going to go right along with you because you’ve biased their thinking. A better approach is to hold back and let the group determine their preferences before coming to any conclusions.
Know that it’s not about you: Focus on developing a healthy ego, but just make sure it isn’t yours. The egos of the rest of your employees matter far more. That’s because the more successful the team is, the more successful the entire company is going to be. They need to feel confident and empowered, so make sure their egos are getting fed in a healthy way.
No one knows what’s going to happen with the economy next week, next month or next year. But we do know that whatever’s coming, those who are running companies had better get ready. Surviving a downturn isn’t easy, but it is possible for those founders who are prepared to make the tough decisions and create companies that will last the test of time.
It’s time to check your ego at the door.