One of the most interesting debates about selecting early-stage startup teams centers on arrogance in founders. You might also hear it referred to as hubris or cockiness among tech entrepreneurs.
You need a certain level of arrogance to be a successful entrepreneur.
After all, starting a company from scratch to transform an industry or create a new one within a decade inherently involves some arrogance. According to Wikipedia, to arrogate means 'to claim or seize without right.'
You need this kind of arrogance to change the status quo.
However, arrogance explains as many failures as it does successes. It can destroy an organization as effectively as it can fuel its growth. Arrogance can also be a major turn-off for potential investors.
I’ve learned that there is good arrogance and bad arrogance.
Our job as early-stage investors is to discern the healthy level of hubris in founders, distinguishing beneficial arrogance from harmful.
Good Arrogance
Believing deeply in yourself and your team's ability to achieve the impossible is essential. This self-belief gives teams the confidence to swing for the fences… and persevere in hard times.
Good arrogance enables teams to build aggressively, continuing only as long as capital or, ideally, sales, continue to flow in.
The best product founders are often proud of what they build. After all, they sleepless nights obsessing about a word or a frame. They’re often the first to recognize how shitty the previous version was.
I've found that the best founders balance their confidence with self-awareness. They recognize their limitations and hire to compensate for their weaknesses. They respect competitors and unknown unknowns.
Good arrogance grows with wins and market validation.
Bad Arrogance
There's a significant difference between believing you can build something special and believing you are special. We often encounter pitches from the latter group and typically avoid these founders.
Bad arrogance breeds slow learners with fixed mindsets. The beginning of any learning journey starts with recognizing how little you know. Cocky founders assume they learn faster than others and often prove superficial in their understanding.
Cocky founders don't work as hard as their more driven counterparts. Building a significant organization requires both hard and smart work.
Cocky founders experiment less and explore less. They need to be right. They handle rejection poorly and tend to blame others more frequently than more confident colleagues.
Bad arrogance grows with status and social validation.
What About Investors?
I’m sure you’ve been thinking about this all along.
Most arrogance found in investors is detrimental. Yes, we need to believe in our ability to recognize patterns and access deals to improve the tiny chances of hitting home runs in early-stage investing.
That's about it. The rest is just bad arrogance. And, coming from folks that diversify risks and don’t actually build anything, their hubris is intolerable.
As for myself, I’m likely still too arrogant. However, I like to think that with age, I've cultivated my good arrogance and reined in my ego.
One way I've improved is by channeling all my belief and passion not into what I can do but into what the founders I back are capable of achieving. So, when you hear me talk about Hi Ventures’ founders, my arrogance is for them.
