Let’s talk founder mental health…
Written by Sonia Allinson-Penny and Michael Cölle
Investors, boards and their advisors can more proactively work together to destigmatise and reduce the higher than average prevalence of depression and mental health challenges experienced by entrepreneurs.
As advisors on the human factors which underpin success of new ventures, this topic is ever prevalent during our work.
It could also be kept under the surface, if we chose to ignore or avoid it. The better we can partner with all stakeholders and have honest and open debates, the more likely we will be to affect a positive change for these pioneers who bring innovation and boost our economy.
Founders are 30% more likely to experience depression than their counterparts.
Beyond founders themselves, what can investors, boards and we as advisors do to counteract this trend and destigmatise mental health challenges?
To successfully scale a company from a good idea to a thriving business, with founder mental health intact, requires self-awareness, good habits and a support network across the start-up ecosystem, beyond the standard mantra of founder perseverance being the key.
“77% of founders say running a business has affected their mental health”.
Sifted, ‘Safe spaces for founders’, 2019
Founders, boards, investors and their advisors all paying attention to mental health can be the difference between healthy success, exhausted success or no success at all.
In this blog we explore contextual factors unique to the start-up industry, the personality preferences that this tends to attract, the impact that this combination may be having on mental health challenges and what founders, advisors, boards and investors can do to work together on more openly tackling the very real experiences of anxiety, fear, imposter syndrome and depression that can come with the territory.
It’s a unique context
Entrepreneurs are typically bringing something new and innovative to the table. By definition they are pioneering. Even if they’ve scaled a company before, have raised funding or had a successful exit, that was very likely in a different context. A different product, a different economic reality, different investors, a different leadership team, the overall mix is never the same. It’s ok therefore for new or even serial founders to tell themselves “I don’t have imposter syndrome, I am an imposter”! That’s because they haven’t done this before, no-one has. That’s what makes it so exciting, so challenging and, so prone to failure.
“Only half of new firms started remain in business for five years, and less than one third last ten years".
6 Secrets to Startup Success, John Bradberry (2011)
As they launch their start-up, most founders know they face a high-speed roller-coaster and they go in with their eyes wide open. However, optimism and self-belief alone are unlikely to see them through. Think about it like high performance sports coaching: should they be training themselves for the 100m sprint (to the quickest exit) or the half marathon (to sustainable, profitable, growth)? Investors, boards, advisors and founders themselves all have a role to play in successfully navigating the emotional part of the journey, whether the goal is a sprint or a marathon.
Let’s start with the founders themselves. What do we know about the characteristic profile of those attracted to choosing a less conventional path?
Entrepreneurial personality traits
There is no perfect entrepreneurial profile. No optimal blend of characteristics that will predict success. However, there are combinations of traits which are a) more prevalent in those that pursue an entrepreneurial venture and b) lend more to entrepreneurial success than others.
As with all personality types, there are both upsides and downsides of the blend of characteristics that make up a more typical entrepreneurial profile.
The upside of typical traits of entrepreneurial founders
Davcik and Gligorjevic (2015) found five personality traits that are especially relevant for entrepreneurs: innovativeness, risk-taking, proactiveness, autonomy, and competitive orientation. These traits can contribute to entrepreneurs' success by helping them to recognize opportunities, take risks, be proactive, and pursue their goals.
A study by Judge, Hurst and Winter (2008) found that narcissistic personality traits are more common among successful entrepreneurs than unsuccessful ones. The authors argue that narcissism might be necessary for entrepreneurs in some ways, as it promotes a certain level of self-assuredness and self-motivation.
The downside of typical traits of entrepreneurial founders
The characteristics that some entrepreneurs display may become exaggerated strengths, including Machiavellianism, and psychopathy (in extreme forms). An excess of these extreme personality traits, unchecked, can have negative impacts on the founder’s business. For example, an excessive degree of narcissism can lead the entrepreneur to be overly risk-taking and not heed the concerns of others. Neuroticism has been linked to higher entrepreneurial motivation in some studies, whereby neurotic individuals tend to seek new opportunities due to insecurity and anxiety.
There are some indications that these strong personality traits are more common among entrepreneurs than in the general population. This could be due to entrepreneurship being a risk-intensive and competition-oriented environment that favours certain personality traits. Given the highly pressured context of start-up world, a risk of exaggerated strengths and a drive stemming from insecurity for some, a picture starts to emerge that somewhat explains a higher rate of depression amongst founders.
Personality alone is of course not sufficient to guarantee a business's success or failure. Other factors such as environmental conditions, product-market fit, access to resources, and strength of networks also play a crucial role. However, from the human side of scaling a successful venture, the simplest rule of effective leadership is to manage yourself before you attempt to manage others. How a person thinks affects how they feel, how they feel affects how they behave. These thinking patterns therefore determine how a founder shows up for themselves and others. It can be tempting to fall into negative self-talk when a founder hits a challenge, where they allow fears and doubts to dominate. Being more consciously aware of their thinking patterns, their inner voice, and whether they are falling prey to ‘limiting beliefs’ (thoughts or convictions that hold a person back and prevent them from pursuing goals) for instance, can support founders in reframing how they are perceiving challenges and unlock new ways of solving their problems, or divert their energies to more positive places.
Check out the Entrepreneurial Core Characteristics Profile (ECCP)
https://www.founderprofile.com
As John Bradberry, author of ‘6 Secrets to Startup Success’ highlights, an entrepreneur’s stamina may occasionally seem like the only thread holding their venture together. In these times the most vital questions have little to do with their business model and everything to do with the founder. How much gas is left in their tank? How do they refuel and recover? Are they still operating with enthusiasm and a sense of purpose or with a growing weight of inescapable responsibility on their shoulders? Of those that do succeed, a differentiator is that they understand who they are and how their personality matches with the phase of their start-up venture. These founders find and collaborate with people whose personalities and capabilities complement their own.
Focus on ‘earned optimism’
Bradberry suggests that the primary reason for dismal statistics concerning start-up success is that too many passionate founders confuse their optimism with readiness. At the very point at which personal and professional stakes could not be higher, emotions can escalate and passion takes over. The solution is not in ratcheting down passion but in elevating awareness. Bradberry terms this earned optimism, which he signals will not only boost founder performance but help them to sleep at night. Earned optimism rests on the rock of clear, honest assessment and wilful preparation. He outlines that a founder needs to fully comprehend their purpose, goals, skills, personality, relationships, resources and needs, as these will either enhance or diminish their ability to achieve their start-up dreams and, more importantly, will determine the founder’s level of happiness as they pursue them.
Overcome fears and doubts
Whilst some entrepreneurs are more hard-wired for persistence than others, Bradberry highlights that there are strategies available to all founders to remain on an even keel, regardless of core personality characteristics. Healthy entrepreneurial stamina is not just about the refusal to quit, which can cause stubbornness and attachment to a non-viable concept, but is grounded in ongoing learning and improvement. He offers four principles to help increase staying power for the good of the founder and their venture:
Feed your fire – ask yourself why do you continue to care? What is it about the business that most energises you? In what ways are your expertise and passion best utilised? Delegate those tasks that drain your energy and focus on those that refill your energy levels
Focus on achievable goals – entrepreneurs tend to be overconfident. They overestimate their abilities and their business goals and hence experience dissatisfaction instead of satisfaction. Wu, Matthew and Dagher (2007) recommend that entrepreneurs set achievable goals and should reframe this from shrinking from adversity and abandoning a vision, to focusing on the difficult but achievable steps necessary to deliver on their ultimate vision
Balance performance with recovery – follow in the footsteps of peak performers across sports, medicine, business, law enforcement and other fields and balance intense periods of focus and effort with intermittent periods of recovery and development (oscillation as the performance psychologist Jim Loehr would call it). Do an inventory on the basics of sleep, exercise and nutrition, these are the non-negotiable good habits that could prevent mental health challenges from arising. Founders envisioning themselves as a tough, stoic warrior will lead to physical and emotional rebellion. As Alisa Cohn, a start-up coach and author of ‘From Start-Up to Grown-Up’ (2022) would advise, “your physical health connects to your mental health, and maintaining your mental health is essential for your company’s success”. Go for depth over breadth, devoting your best thinking time on a few essential opportunities and problems each month. Focus on those items that require deep attention and effort and which will move the dial for the business, rather than a hundred superficial distractions
Persevere without attaching – essentially let go of ideas if they are no longer viable, find your way to be at peace with pivoting and moving on
Michael Cölle, a mental fitness executive coach using the methodologies of www.positiveintelligence.com, endorses that mental strength training can ensure the right degree of risk-taking and to stay in a pro-active positive mode. Mental strength training can equally help founders to stay calm and focused in difficult situations. At the same time it leverages the power of the unconscious mind to spot difficulties and consciously bring oneself into a mode of growth, learning and pro-active action. “Mental strength is the core of leading yourself and this is a foundation to leading others or even leading organisations” he says.
Cohn would recommend that you need to create a ‘highlight reel’, where you gather evidence of your actual competencies, not just what your inner critics tell you. In addition to challenging your doubting voices when they appear, you can pull up a story or several from your highlight reel from time to time, to start your day off reminding you of your wins, not just the issues ahead.
Back to the sports analogy, Cohn reminds us that Olympic athletes work not only on their skills but also on their mindset, much of which has to do with replacing negative self-talk with positive. This becomes ever more crucial when the degree of loneliness reported by founders is considered.
Lonely founders
Serial founder Christina Richardson interviewed hundreds of founders in 2018. “I was fairly shocked to find that every single person used the word lonely,” she says, “almost all of them were able to reference symptoms that are identifiers leading to more serious mental health problems, like sleeplessness, anxiety and feeling down.” 86% of those surveyed by Richardson said they’d feel better if they knew that other founders had similar experiences.
Validating this finding, in Sonia Allinson Penny’s work with founders, as an advisor during the due diligence process via www.humanfactorhealthcheck.com, she has found that the single most helpful strategy that founders disclose to her about staying on top of their mental health, is to spend time with other founders who can relate to what they are going through. This not only makes them feel less alone, where talking things through is helpful in and of itself, it also helps the founders to reframe how they are thinking about certain opportunities and challenges and gives them additional ideas, tools and networks to explore.
Wary Founders
“24% of founders
said that having better relationships with their investors would have helped them personally and professionally".
100 stories of Growth – Insight from Entrepreneurs Report (2018)
Regardless of what investors say publicly about being supportive of mental health challenges, founders remain wary of the impact on investment decisions of being too open. This inevitably leads to a reluctance to disclose any personal challenges. This is where the role of management and organisational due diligence advisors can play an important role, where sensitivity can be deployed and trust can be earned, effectively building a bridge between the investment company and the portfolio company that is seeking funding. So to the role of advisors.
Advisors watch out for the ‘Know-Do Gap’ and push for psychological safety
When Allinson-Penny interviews founders of portfolio companies during the due diligence process, she typically covers coping mechanisms, as she goes about probing top team resilience levels. It’s common for founders (unprompted) to highlight an awareness of the benefits of meditation, self-affirmation and physical exercise for instance, however when she probes about the frequency of them actually doing these things in practice, most admit that it’s an intent and an ad hoc activity in reality and not a regular habit. When a founder is being pulled in many different directions by multiple stakeholders and under the pressure of deadlines, they can suffer from the ‘know-do gap’. This means that in reality they are not getting the very tangible benefits from adopting good mental health habits in practice, even if they are generally aware of the upsides.
Psychological safety is the belief that one will not be punished or humiliated for speaking up with ideas, questions, concerns, or mistakes.
Dr Marcia Goddard (Neuroscientist and founder of Contentment for Business) highlights that high performance and wellbeing are inextricably linked. She makes an appeal for no more lunchtime mental health webinars, suggesting that wellbeing in the workplace isn’t about yoga, mindfulness or breathwork. It’s about leadership, team dynamics and psychological safety instead, where an environment is created in which people feel comfortable telling others in the power dynamic that they are uncomfortable.
Whilst advisors can assess for factors related to mental health and have a professional obligation to remain independent and objective, the situational judgement and maturity with which they handle such topics when they arise can make a difference. One founder recently disclosed that he felt a prior management due diligence advisor was looking for a scapegoat, in order to justify their fee to the investor. The founder, his co-founder and the leadership team were understandably reluctant to therefore fully open up in the due diligence process for their next funding round, until trust was earned on the part of the advisor that full disclosure would be met with human-centric consideration and a balanced perspective in weighing up the power dynamics.
However, advisors can’t plot this course alone. Trust equally needs to be built between the investment team and the advisor, in order for the advisor to know what is appropriate to disclose and not. Will reporting that a founder is feeling overwhelmed at times, uncertain, alone or is struggling under extreme stress be met with compassion and support mechanisms or instead result in a failed funding round? So to the role of boards and investors.
Boards and investors can lead the way and break taboos
This is where the board, its Chair and/or investors can also step in post a successful funding round, to show interest in and encourage good habits and to break the taboos. These stakeholders ultimately benefit if they establish psychological safety, gaining more than the good news stories and (overly) optimistic forecasts than can prevail in the early phases, before solid and trustful relationships are formed and a more candid picture can emerge.
Showing a genuine interest by the investor and/or the Chair in mental health doesn’t need to turn into a counselling session. Asking a few questions beyond the numbers, or the product, sales and marketing strategies can make all the difference to moving beyond some of the bravado that can exist and to operate on a more human, one-to-one level. After all founders, boards and investors are human too!
Basic questions can serve as door openers to the broader mental health topic, such as how do you feel your role is evolving as the business is growing? Do you feel a difference from being the founder to now the CEO? Are you still connected to your initial drivers and passion for launching the company? How are you managing your energy levels? What are you finding gives you energy and what drains it? How has this changed over time? Do you feel that you are getting to focus on the elements of highest priority for both you as an individual as well as what the company needs? Are you finding enough time to decompress? How do you know this is working? How can we further support you as you handle these challenges?
Check out the case study of Alpha Bridge Ventures, who pride themselves on taking a humanistic approach to their investments, courtesy of a program hosted by Econa, the global center of excellence for entrepreneur mental wellness.
https://econa.net/toolsforfounders/healthy-ambition-defeating-the-dark-side-of-audacious-goals-april-22-2021/
Some forward thinking investors are betting that overworked, unhealthy startup founders are bad for the bottom line and make funding contingent on CEOs setting aside some of the investment to seek out professional services which aid with hitting goals like sleeping enough, working out physically and eating healthily.
Sticking our heads in the sand is, after all, not a great investment strategy, neither is driving for growth, regardless of the human cost to achieve it. Boards, investors and their advisors working together, more openly showing awareness about mental health and breaking the taboos, beyond leaving founders to cope on their own, will position the portfolio company well for healthy and sustainable growth.
Sonia Allinson-Penny is the Founder of the Human Factor Health Check, a management, team and organisational due diligence methodology used to support investor decision making regarding the human factors underpinning successful businesses as they scale.
Michael Cölle is a qualified Positive Intelligence coach and leadership expert, bringing entrepreneurs to the next level of leading themselves, others and their organization.
Sources:
‘From Start-Up to Grown-Up’, Alisa Cohn (2022)
"Entrepreneurial Behavior and Psychological Traits" , by Nebojsa S. Davcik and Mirjana R. Gligorijevic (2015)
‘6 Secrets to Startup Success: How to turn your entrepreneurial passion into a thriving business’, John Bradberry (2011)
“Need for Achievement, Business Goals and Entrepreneurial Persistence”, Sibin Wu, Linda Matthews and Grace K. Dagher, Management Research News 30, no 12 (2007): 937
“The Big Five Personality Traits and Entrepreneurial Motivation" , by Wai-Keung Wong and Chung-Yin Ho (2018)
"Entrepreneurial Personality: The Role of Narcissism" , by Timothy A. Judge, Charlice Hurst, and Simon C. Winter (2008)
"Entrepreneurial Behavior and Psychological Traits" , by Nebojsa S. Davcik and Mirjana R. Gligorijevic (2015)