A week ago, I posted an article titled The Start-Up: Stages, Pros & Cons, & Your Employment Options. I received so much email regarding the issues raised that I knew a follow-up post was warranted. Then today, a reader affectionately known as “Sunshine” posted some pointed questions in the comment section of that article. Thus, I now set out to answer those questions, as well as the issues raised in email.
If you’ve not yet read The Start-Up, it is recommended that you do so first, then come back and join us here. (We’ll wait…)
Welcome back! Now that we all have the foundation upon which the questions are based, let’s dive right in:
“. . . How do you know so much about so many different fields? I wish I had just a smidgen of your smarts. How is that you can understand other people’s motivations? I wish I had that skill. You are able to get in there and see things that just aren’t apparent to other people. How are you able to see what’s in a person’s heart?…what motivates people?…why are they doing the things they’re doing?. . . If this happened with two different companies, what was the common denominator? You were involved with both of them. What was the common theme? Do you think you might have mis-interpreted these situations?
. . . What on earth would motivate people to say such things about you? “
Let’s break those questions down into sub-topics . . .
Sunshine wants to know how I know what I know about people. And I’ll do my best to answer without writing an entire nonfiction book (though I could; it’s a big topic).
I refer to myself as a behavioral specialist, or a “behaviorist” — someone who studies and understands human behavior. I’m not a true behaviorist in the sense that I don’t subscribe to the principle that all human behaviors have a scientific explanation, but I do believe that our behavior is indicative of our feelings, thoughts, beliefs, motivation, desires, and ideals.
By closely observing behavior and accurately interpreting it, we can understand a great deal about a person. And, an accurate level of understanding has the potential to lead to effective communication. Effective communication leads to resolution, progression, achievement, and so forth. [See Leadership: Finding the Best, Being the Best for a discussion on the importance of behavioral analysis.]
Nearly everything we do is somehow dependent upon a relationship with another human being. The better you are able to understand behavior, and the better able you are to communicate, theoretically at least, the better you should be at relating to others. And though there are exceptions, for the most part this is a universally applicable theorem.
Analyzing Behavior & It’s Meaning: A Real-Life Example
Let’s look specifically at the two leaders of the start-up companies I referred to in the Start-Up article. For clarity, we’ll call the first company — a for-profit — “ABC Co.,” and we’ll call its CEO “Fred.” The nonprofit organization will now be known as “XYZ Org.,” lead by “Barney.”
Sunshine wants to know what the common denominator is between ABC and XYZ, as they relate to the unfortunate outcome in each scenario. And, she’d like to know if I perhaps misinterpreted the behaviors of the leaders. To do this, let’s look at the behavior of both Fred and Barney.
Behavior & What it Indicates
Both Fred and Barney each behaved in a way that was very likely “uncharacteristic” (I believe both of them, fundamentally, are “good” people).
For me, the question is, “Why did they behave in an uncharacteristic manner?” What was the motivation?
To answer the question of “Why?”, we need a basic understanding of the causes of uncharacteristic behavior.
When a person acts in a manner that is uncharacteristic, it is usually the result of one of three situations:
- Exposure to a stressor that falls outside of the person’s comfort zone;
- The result of a lack of confidence in general, which translates to fear of and in certain situations;
- Or, a combination of both: an unusual or unfamiliar stressor coupled with fear.
The Similarities Between Fred & Barney
Sunshine was puzzled how a bad situation could repeat itself. As we look at the respective behaviors of Fred and Barney, it helps to have an understanding of the similarities in each situation.
Fred and Barney both:
- Exhibited a passionate dedication to their start-up businesses;
- Struggled with personal financial difficulties and lacked immediate income;
- Were solo acts in need of help from qualified professionals;
- Lacked start-up funding;
- Developed a working pitch that crossed the line of integrity.
Both Fred and Barney needed help. To bring their ideas to fruition, each needed an initial team of qualified talent in operations, finances, IT, and communications — at a minimum. And these folks would want salaries, salaries that neither Fred nor Barney could yet afford, and for which neither of them had ever been responsible prior to this.
At this point, both men found themselves outside of their comfort zone. The stress of solving these issues was stress unlike anything they’d experienced. That stress — coupled with their passionate determination to see their vision to fruition — was the catalyst for the resulting uncharacteristic behavior.
The Uncharacteristic Behavior
Rather than attempting to solicit Board Members and a talented leadership team by providing the 100% truth and reality of their respective situations, they each s t r e c h e d the truth to bolster their credibility. They each knew — either instinctively or by way of practice — that the truth was less than appealing and would likely lead to rejection.
When it came to funding and Board Membership, each man manipulated the facts to paint an enticing picture — but that picture wasn’t real. And in each case, it took time to determine fact from fiction.
They each realized that in order to attract the talent they needed, they’d have to be able to promise an enticing compensation package within the immediate future. Without that enticement, it was unlikely that anyone would be interested in providing the sweat-equity needed to get the businesses launched.
Sweat-equity employment means that an individual works for the promise of future payment. It’s a simple ROI concept: For the investment of one’s time, there will ultimately be a financial payoff that is large enough for one to take the risk involved with a sweat-equity arrangement.
Fred and Barney both exaggerated the truth of their funding situation. Fred’s approach was to outright lie about the status of contracts he had with what he referred to as “partners.” Barney’s approach was to simply delay providing the information — information which, it turned out, didn’t exist.
In addition to exaggerating the truth or lying about funding, Fred and Barney also crossed the line (behaved uncharacteristically) when it came to what they each referred to as their “Board of Directors”and/or people who were “with” the business.
Using their respective sales pitches which each included enticing funding explanations, Fred and Barney began dialogues with VIPs they found primarily via LinkedIn. Then, regardless of the outcome of those dialogues, the person they spoke with was added to their respective list of people “with” the company or “on” the Board of Directors.
For example, Barney sent an email to Kathleen Kennedy (yes, THE Kathleen Kennedy) to introduce his 501(c)(3) and its mission. He did not receive a reply, not surprisingly. However, he then began to use her name — one of many — to bolster his credibility. Rather than saying, “I sent an email to K.K. but have not heard back from her,” he indicated that Kathleen Kennedy’s position on the board was “pending” and that he “expected to hear something soon.”
Fred’s Story: The Specifics
When Fred presented his pitch to me, he intended (and succeeded) to leave the impression that his company had Billions of dollars worth of projects “in the pipeline,” a phrase he repeatedly used. In his initial emails to me, he said:
I’m launching a global enterprise right now. . . . Doing this on a shoestring budget but have serious relationships with leaders of governments and Fortune 500 companies. We should be able to generate serious and permanent cash flow within the next 90 days.
We have people in [another country] right now ready to close business on several deals. We have several billion dollars in capital projects in the pipeline right now.
His business concept was intriguing. I could visualize and understand his vision, and I could see the potential. But, I wasn’t in a position to provide sweat-equity indefinitely. Given his projection of a 90-day window for a ROI in the millions, and having been offered a to-be-determined percentage of ownership along with the title of President, COO, and Board Member, it was an opportunity worthy of further pursuit.
But, I needed to verify everything he was telling me. And that took time. A LOT of time.
I entered into an “Interim Agreement” to protect myself while I vetted the entire operation. Fred sent me hundreds of emails, countless documents to review, and a lengthy list of people who he indicated as being “with” ABC Co.
As it turned out, all of these impressive people who were “with” the company were in fact NOT associated. Though Fred engaged them each in a dialogue regarding his ideas, and while he proposed their involvement at the executive level, no one had yet agreed. No one signed a contract. No one was committed.
As I continued to vet the company and unravel the facts, I provided hundreds of hours of work-product — everything from simply reading the information Fred continued to send to me, to the drafting of contracts and white papers. And, I spent countless hours on the telephone and on Skype, talking to all those people Fred said were “with” the company. After all, I was now Fred’s business partner. We had a signed agreement declaring it. It was no longer just Fred’s business; it was now also partially mine.
From my perspective, my time was a worthwhile investment. Even if the company wasn’t as close to realizing capital gains anytime soon, I still believed in the vision. I could still see the potential for substantial income.
But, I’d lost faith in Fred. Those contracts he said that were “in negotiation” did not yet exist. He needed me to write them. The “serious relationships” with “leaders of government and Fortune 500 companies” likewise did not exist. At best, he had a contact who had a contact with a governmental leader and a Fortune 500 company — in the singular, not the plural — and certainly nothing that even came close to being characterized as a “serious” relationship.
As the picture became clearer, and as I learned the truth, I began to push Fred for an employment agreement that went from “Interim” to “Final”. I was providing an awful lot of work and pushing his company closer to launch, but I didn’t yet have a definitive agreement regarding my percentage of ownership or salary, other than an agreement that it would be consistent with “industry standard”.
Each time I said, “We need to reach an agreement,” Fred found a reason to delay. Finally, after weeks of singing my praises, he said, “This isn’t going to work.” And even though we never reached an agreement as to the percentage of my ownership, unarguably Fred maintained the controlling share. When he severed ties, he did so with legal authority in spite of the lack of character it demonstrated.
And that was that.
I sent him a bill for my time, based on the industry standard hourly rate for someone in my position (which, of course, he’s not yet paid), and added the experience to the list of “lessons learned.”
Barney’s Story: The Specifics
After my experience with Fred, my approach with Barney was much more skeptical. I questioned everything and promised nothing. Under no circumstance was I going to begin providing work-product until I was certain of the real picture, not the picture Barney painted. As a result, I spent far less time and energy unveiling the truth.
When he contacted me initially, his pitch went something like this:
This is a first-of-its-kind nonprofit that will benefit the teachers around the world and change the future of education. We have a lot of great leaders on board, and we have celebrity contacts who will streamline fundraising. We can’t pay salaries yet, but we will be able to begin payroll when we launch next month.
Having spent a good deal of time looking for a leadership role with a nonprofit, and now facing an opportunity to lead an organization with a mission about which I am passionate, and being told that funding would be available within a month’s time, I was certainly interested. But, again, I needed to verify everything first.
When I inquired about the source of funding that he said would be available “next month,” Barney provided a 3-stage fund-raising strategy that included corporate sponsorship, celebrity sponsorship, and employee contributions. When I asked for the specifics of his sponsorship plans, he provided several explanations including the following:
[For Corporate Sponsorship] At the register each cashier will have a button that read ” Ask how you can help to support our teachers?” That person chooses to add $5 or $10 to their bill and in return they will receive a pamphlet for [our organization]. This will show them in more details about us and how they will be able to go on line to join our mission. The percentage of people that will do this is 30%- 35% of all donors.
10,000 pamphlets x $10 each donation received = $100,000 so every 3 days all of the pamphlets will be gone. The 4 months the number of 10,000 boxed pamphlets are 41 times. This equals to 4.1 million a yr from each (1) company but each company we contracted for 50 stores, this equals to 205,000,000. Subtract 10% for recurring visitors and other reasons equals 184,500,000. This number times the three year contract is 553,500,000. Now you take this number and multiply it by the 50 stores 9,225,000,000 in one year; our three year contract 27,675,000,000. . . .
[For Employee Contributions] This number comes out to 3.4 million employees: 1/4 of this will be employees donating $25 a month for 12 months =850,000 employees=$21,250,000
3/4 of this will be employees donating $20 a month for 12
months=2,550,000 employees=$51,000,000. This totals to $72,250,000 a month; $867,000,000 a year;
$2,601,000,000 in 3 yrs; $4,335,000,000 in 5 yrs
Ignoring his obvious struggle with English composition and the likelihood that he was not formally educated — something I tried to overlook and not allow to bias me — the obvious questions were, “How did you determine the percentages?” and “What data supports your estimations?” Rather than providing a direct answer, he replied, “I will explain it to you and it will amaze you.”
I waited to be amazed.
As I waited for something that would never materialize, I continued to unravel all that I’d been told. In doing so, I discovered a number of very serious issues with the potential to cause very serious problems for the organization, both legally and with the media. I advised Barney at every step, and watched as his attitude toward me took a turn for the worse. Hearing that his funding ideas were fundamentally flawed, that his calculations were based on presumptions and wishes rather than factual data (and therefore not viable), and that his choice for the name for the organization was a trademark violation, Mr. Barney decided to blame the messenger.
Some people simply can’t deal with the truth. And if you don’t want to hear the truth, don’t ask me to provide an analysis.
I created a “Directory” of names and contact information for all of the people Barney said were on his Board of Directors. I began contacting them, explaining my position, and discovering where each person stood with regard to the nonprofit. Across the board, I kept hearing, “I spoke with Barney once or twice, but I never agreed to be on the Board.”
The red flags were now overwhelming, and it was time for me to remove this organization from my list of potential employers. I’d spent a week vetting the organization.
Knowing that it was likely that Barney was now also using MY name amongst his list of “Board Members” and even perhaps going so far as to call me the President of XYZ, I needed to protect myself from liability. And, I felt obligated to share with the “board” all that I learned while vetting the organization. I sent an email to everyone.
In that email, I provided a gratuitous summary of the actual status of the nonprofit, outlined the immediate problems and provided a solution for each of them, and I announced a position statement regarding myself. Basically I said, “There are x number of serious problems. To solve the problems, xx needs to be achieved. And, unless or until Barney agrees to address these problems, I will not accept a position with XYZ, nor will I provide any further advisory opinions.”
I concluded the email by saying:
I continue to be impressed with [Barney’s] passion and dedication, and his apparent willingness to learn. He seems to be a very genuine, compassionate person and I have absolutely nothing negative to say about him as an individual. I do believe he is in-over-his-head right now, and he can use all of the support that any of you are willing and able to give. I am, unfortunately, not in a position to donate any more time and talent, but I do genuinely want to see [him] succeed with his mission.
Barney’s response was to begin an email defamation campaign.
Sunshine asked, “What … would motivate people to say such things about you?” It’s simple, really: Pride.
Barney reacted emotionally, not with business sense. I provided a black and white portrait to replace his fantasy — and it angered him. He set out to save face, or at least try to, with the many people he’d tried to engage and employ. He was perhaps embarrassed, as well. Whenever a leader reacts emotionally to something he perceives as a negative, he risks behaving unprofessionally. And that’s what happened here.
In Fred’s case, the limited amount of defamation of which I was aware was also the result of reacting emotionally. I received several reports of comments he made, and most of it was petty, and none of it was believable. But, importantly, he ultimately STOPPED the behavior that I’d pointed out to him was unethical — at least insofar as public statements are concerned. He rephrased his pitch which, though still misleading, now borders more tightly on truth than fiction. Unfortunately, his change of behavior was at my expense.
The Silver Lining
In each situation, I received a good deal of support from the various “board members” and “partners” who appreciated knowing the truth. Being the first person to take the time to unravel the facts, the appreciation for my efforts was overwhelming.
In fact, I made some excellent friends and contacts, people who remain a daily presence in my life. And, I expanded my network to include professionals with whom I otherwise would likely never have crossed paths.
It would be nice to say that my experiences with Fred and Barney were unique, that this sort of thing is rare. It is not. Aside from the email I’ve received with similar horror stories, there is a plethora of information about this type of thing on the internet. It happens. My intention with the original Start-Up article and with this Follow-Up is simply to high-light an existing problem along with the warning signs with the hope that fewer people fall victim to it.
With so many people looking for jobs, many of us are considering options that we might otherwise ignore. A Start-Up Company is one such opportunity. As I said in the first article, there ARE legitimate start-ups out there with legitimate opportunities. If you’re considering joining a start-up, you simply need to be cautious.
My life experiences, and my independent studies, have taught me a great deal about people and what makes us tick. As a result, I tend to be overly understanding — a character flaw that needs some adjustment on my part.
As the red flags began to wave with Fred and Barney, I understood how each person got himself into the situation. It made sense to me. Focusing on the genuine potential of each business concept rather than the lack of leadership ability and integrity on the part of the CEO’s, I thought perhaps I could salvage the situation.
And though I didn’t nor wouldn’t ever condone a lack of integrity such as was exhibited by Fred and Barney, my ability to understand how and why they crossed the line resulted in me sticking around a day or so longer than most.
My mistake was that I didn’t immediately place enough importance on the integrity and leadership factors. When a founder of a start-up lacks the ability to remain true to his principles when he finds himself outside of his comfort zone, s/he is not someone with whom I want to be associated. S/he will perhaps succeed in the mission of the business, but it will likely be at the expense of someone or something important: personal character, business reputation, employee relations, product safety, and so on.
It’s easy to come up with a business idea, register with the state, and slap oneself with the CEO label. But it’s not so easy to sell someone on your idea when you have nothing but a promise to offer in return. And the value of the promise will plummet to an irretrievable depth if the CEO lacks integrity.
And even when a CEO does not lack integrity — when s/he has a moral compass that is as accurate as possible — it does not mean that s/he also possesses the experience, skill, and talent needed to be a leader. Fred and Barney both lacked the skill to lead, and they lacked the humility to hire a CEO who was qualified.
One Last Q&A
One of my readers asked if I perhaps made a mistake in trusting these gentleman. Especially as it concerned Barney — having just been burned by Fred — my reader asked, “Didn’t you learn the first time around?”
Here is the thing about trust: You either do it, or you don’t. There are those who trust someone until or unless they prove themselves untrustworthy. And there are others who are distrustful until or unless one proves himself to be trustworthy.
My approach falls somewhere between these two extremes. I am cautiously optimistic. I work from the premise that a person is trustworthy while I set out to prove to myself that I am not mistaken in that belief.
As with Fred and Barney, my efforts to unveil the truth showed me that neither man could be trusted, sadly. As a result, their unprofessional behavior after I parted ways with each of them was no longer uncharacteristic. It was perfectly aligned with the type of business professional they proved to be.
I am not naive. I know there are plenty of trustworthy, character-driven professionals with whom I would be honored to be associated. It’s sorting through the bad to find the good that is the challenge. The bottom line is that one won’t ever find the winner in the group if s/he doesn’t take a risk. Carefully.
A NOTE ABOUT COMMENTS: Your comments and discussion participation — regardless of your point of view — are encouraged and appreciated. Posts which appear to be legitimately intended to add to or comment on the content of an article are always approved. All spam, however, is deleted by WordPress without consideration by the author. Attempts by one person to comment as many different people using multiple email accounts will automatically be marked as spam.