“Is a dream a lie if don’t come true?” — Bruce Springsteen
Consider three entrepreneurs.
Founder 2: Adam Neumann who dressed up the equivalent of Regus as a tech company and successfully raised money at valuations up to $47B before flaming out on the approach to an IPO. (Now seemingly running a similar play with Flow.)
Founder 3: Joe, our friend at BigCo who quit his VP-level job to found a company, spent 10 years sweating it out, pivoted, recapped, and finally threw in the towel for a carve-out in a $30M sale that didn’t clear the preference stack.
Which are they? Were they dreamers or liars?
To try and sort that out, I’d consider three questions:
- Did they truly believe in the dream? It’s hard to know what anyone truly believes  — and we need to separate visionaries from lunatics  — but in many situations you can develop a sense for whether someone is a true believer or a poser. This one’s hard to assess, but important.
- Were they lying about progress? While there is a small gray zone of exaggeration, misunderstanding, and embellishment , for the most part this one is black and white. Were the numbers real? Was the demo faked? Were the milestones hit?
- Were they making big money before realizing the dream? This didn’t used to be possible in Silicon Valley, but a side effect of the recent financing environment  was the rise of secondary sales that made it possible for founders to reap 10s to 100s of millions before a liquidity event that shared success more broadly across investors and employees. Situations where a founder can make “done” (or “lifestyle changing”) money before realizing the dream can present the potential for conflicts of interest.
We ask a lot from founders. And what we ask is often in diametric oppposition. We ask founders to be:
- Unreasonable, but reasonable. Founding a startup against long odds is an inherently unreasonable thing to do. But, aside from that, we want them to be reasonable people.
- Optimistic, but realistic. We want them to believe they can accomplish the nearly impossible, but be realisitic in setting goals and operating plan targets.
- Big-picture, but detail-oriented. We want them to create a disruptive, big-picture vision of the market, but be able recite SaaS metrics from memory.
This alone is a good reason to have both co-founders and a strong executive team. While F Scott Fitzgerald said, “the test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time,” it’s hard to do so in every situation, all the time.
Joe’s employees and investors are disappointed in him and might be mad at him. After all, Joe probably said:
- The company faced an amazing opportunity
- The space had the potential to produce a public company
- He believed they could beat BadCo and WorseCo to win the market
But what did we want Joe to say? Yes, Joe needs to be careful. He needs to speak precisely and make precise claims. He needs to hedge his language and not make promises. But Joe is not only allowed to be optimistic, it’s his job.
As I’ve often said,
“As CEO, even if you’re standing neck-deep in shit, you need to be looking at the stars.”
Put differently, while the CEO needs to be aware of the company’s situation and have credible plans to address it (i.e., the neck-deep part), they must always be focused on and believe in the potential of the company . The day they can’t do that is when they should turn in their badge.
So, going back to Springsteen, “is a dream a lie if it don’t come true — or is it something worse?”
# # #
 I’d argue it’s sometimes easier to know when they don’t — e.g., if they’re telling all their friends they’re running a scam.
 For example, the difference between trying to emulate Steve Jobs and thinking that you have been sent by God as the reincarnation of Steve Jobs.
 Larry Ellison reportedly once said, “sometimes I just get my verb tenses mixed up” when speaking about product capabilities vs. roadmap.
 E.g., higher valuations, longer time to liquidity, higher bar on IPOs.
 My take on what’s known as the Stockdale paradox.