When Startups Fail (or Why Transparency is Paramount to Success)

One of the key tenets of both leadership and personal integrity is conducting one’s affairs from a position of honesty. Honesty, however, carries many ranging and individualized interpretations, and so perhaps transparency is a term better suited to driving this discussion. When leaders aren’t transparent and fail to include, inform, or advise their teammates of both the good and the bad, disaster is imminent. Withholding information from your team – or worse: from yourself (by ignoring reality) – handicaps your position from the very start because problems are infinitely easier to solve by group effort. That is, new ideas originate, face criticism, and evolve into eventual vetted solutions that wouldn’t have developed otherwise. This, presumably, is why most organizations hire not just those with the most talent, but also those who see the bigger picture – aren’t afraid of taking a different route to get there.

I recently found myself in a position wherein a seemingly positive startup environment suddenly turned wholly toxic. This toxicity had been brewing long before it surfaced; that incubation period represents an extremely unfortunate failure of leadership. Rather than bringing fellow teammates in to brainstorm, the co-founders in question decided to hide the fact that they had long since run out of funding and couldn’t pay to keep the team going. Moreover, one of these “leaders” was quietly attempting to oust the other. To their credit, the team worked hard and churned out a quality product – but we had no idea that our families, livelihoods, and careers were on the brink of debt-laden disaster. To those in the know, cash flow issues are no rare occurrence in the startup world. But there’s a massive difference in knowing that an issue exists ahead of time and finding out not only that your previous invoices might not ever be paid, but also you probably won’t be earning another dime any time soon. (As an aside, this is also a great example of why you should have an emergency fund). Continuing to work for equity in such an environment is a fools game: any remote chance of future success would be in spite of – as opposed to because of – chosen leadership direction.

Being a good leader means doing the right thing and empowering others to be greater than they currently are or greater than they think they can become – even if that means you don’t get what’s best for you in the end. Strong leaders guide teams through times of crises and get out in front of potential roadblocks; they take and deflect blows from reaching their followers. Likewise, teams who both believe in and trust their leaders work together to drive through hardship and don’t run in times of trouble. While I view the entire situation above all else as wholly disappointing, it has proven to be an incredible, priceless, and life-changing learning experience. Additionally, like most endings, better beginnings have sprouted from the ashes, and I’m very humbled, mindful, and thankful for that.

Positional Leaders

I’m currently reading John C. Maxwell’s “The 5 Levels of Leadership” in which he outlines, well, the 5 different levels of leadership achievement he’s encountered in his lifetime. John intuitively argues that the higher the level of leadership exhibited by members of an organization – be it business, social, or otherwise – the higher the chance of not only achieving organizational success, but also improving quality of life for everyone involved. The lowest level of leadership is derived solely from position or title, and the highest level is reserved for those who empower others to become leaders. Check out the book to get all the details in between (it’s a quick read).

I’d just finished the chapters detailing the Level 1 leader when I experienced a wave of repressed memories from past jobs. During the period of time in my life when I dropped out of school, did some serious soul-searching, and eventually worked my way into and through community college, I worked a variety of jobs in the service industry. While there are certainly exceptions, the majority of the companies I worked for exhibited the same negative symptoms – extremely high turnover rates, low morale (no one was excited to come to work), “clock-watching”, and few opportunities for advancement. Those who did move up the ladder – managers, bartenders, certified trainers – clung to their positions of (perceived) power as though they were scared they might lose it. Instead of encouraging, helping, and developing others, these Level 1 leaders intimidated,  obstructed, and distanced themselves from their teammates. These types are more interested in pulling rank and enforcing rules than including others in process improvement or serving those they were tasked to lead. However, these awful traits pale in comparison to the Level 1 leader’s worst characteristic – they fear being usurped by other up and coming potential leaders so much that they actively work to keep others down, thus dragging the performance of entire organizations down to their level of mediocrity.

Many of the companies I worked for many years ago – and certainly myriad others – succeeded in spite of themselves as demand for their respective services or products boomed. But many others failed. Moreover, these organizations deprived themselves and their employees of an opportunity to coalesce into something greater and making a real difference in their communities and the world. In contrast, companies that exhibit and encourage strong leadership foster work environments in which employees are excited and passionate, where innovation is embraced, and where new generations of leaders are groomed. In short, organizations that rely on Level 1 leaders will never reach their full potential.

Do you know any Level 1 leaders? Are you yourself a Level 1 leader in life or work? Strive to take your game – and other’s games – to the next level by working to support those around you, eliminating (as opposed to introducing) obstacles impeding others, and encouraging teammates to follow you because of who you are – not because of your title.

You talk the talk – but are you walking the walk?

If you don’t have integrity, you have nothing. You can’t buy it. You can have all the money in the world, but if you are not a moral and ethical person, you really have nothing – Henry Kravis

In light of the recent unveiling of a former colleague’s less-than-moral behavior, I first felt disappointment, then anger, and finally a tinge of sadness. But after these initial reactionary emotions subsided, I had time to think things through a bit more proactively and decided to point the examining lens inward on myself.

Am I really the person I want and present myself to be all of the time? Am I merely paying lip-service to supporting some of the causes I proclaim to care most about? How can I take actionable steps to bridge these gaps, however small or large? What can I do to actually make a positive difference? Instead of merely condemning others’ shortcomings, the massively difficult habit of (honest) introspection stands to offer the most return value for our efforts.

We all have room for improvement – the hard part is identifying what those things are, specifically. Pointing the mirror at oneself is a great starting point.