Ego, and why it can make or break your startup

Strangely, the role of ego in startups is barely ever discussed, but it has a profound effect on success or failure of any new venture

The dynamics of ego – and how egos clash, compete or complement one another – is key to understanding why so many startups fail. In this article, I will offer a way to identify and harness our primal “drives” as entrepreneurs and hopefully reduce the frequency of startup failure and the pain this causes. It starts with learning to harness our ego-state and better reading the ego-states of others, and by having authentic, adult-to-adult conversations.

Facing Reality 

The stats don’t look reassuring in the discussion about how startups survive in this VUCA, covid-damaged world. The stark facts are clear:

  • 20% of startups will fail in year 1
  • 50% will fail in year 5  
  • 65% will fail in year 10 

(Investopedia; Startup Playbook)

In the UK, these numbers are lower because of the stigma (and costs) associated with bankrupting a company. So the UK has a much longer tail of “zombie businesses”, unable to generate sufficient income nor able to grow. 

Neither universities keen to maximise employability, nor politicians keen to shift the onus of economic growth on to young founders, tend to mention these things. The stark reality is that even in the UK, the ratio of business births to deaths has deteriorated in recent years, despite the hype around startups.

As a former founder myself and later coach and mentor to many startups over 20+ years, I don’t believe that we’ve ever really got to grips with the underlying reasons for these patterns. Moreover, I think we’ve normed that high levels of business failure are just a “reality” and an acceptable cost to pay. I don’t believe this is the case, and we can do more to increase the frequency of success and mitigate the consequences of failure. 

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Related Articles

What’s the difference between a scandal and a crisis? 

These two words often get mixed up. This conflation is a big problem, as the effective methods of dealing with a scandal and a crisis vary significantly. Get it wrong, and the future of the company is at stake. Most businesses have some crisis management contingency, as this field has been studied to a far greater level. But very few have any actual preparations in place for a scandal. 

A crisis is like rough surf. People with the right skills know what to do. A scandal is a riptide. Far deadlier.


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