Vulnerability and Entrepreneurship

I was browsing through the new Tattered Cover store in the recently renovated Union Station in Denver a few weeks back and found myself standing in the Business Psychology section of the store. For some reason, I have a habit of finding that section without trying – gravity seems to pull me there. In any event, I started thumbing through a book by Brene Brown, named Daring Greatly. The subtitle of Daring Greatly reads: “How the courage to be vulnerable transforms the way we live, love, parent and lead.” There aren’t many books that stand-out to me as having altered my world view; Daring Greatly definitely did.

I had not heard of Brene Brown’s work before I picked up the book. Brown is a researcher professor at the University of Houston Graduate College of Social work and has spent the past the past ten years studying vulnerability, courage, authenticity and shame. This is pretty delicate subject matter; the kind of stuff our culture causes us to fear talking about an open, authentic and empathetic way. But her work strikes me as incredibly important as we struggle to counter-balance cultural cues which cause us to suppress self-doubt and hide insecurity in favor of bravado (false bravery). The book also includes important insights for entrepreneurs and leaders.

There are so many great takeaways from the book and one has to read it to get the full picture. For me, several concepts stood out.

  • Vulnerability and weakness are not one in the same, despite the fact that our culture confuses the two. Expressing vulnerability is a constructive process, not a character flaw.
  • Shame is the greatest barrier that impedes our willingness/ability to make ourselves vulnerable. Fear of shame causes us to hide our vulnerability from others.
  • Shame and guilt are not one in same. Shame says: I am [bad, lazy, fill in the blank] and there nothing I can do about it. Guilt says: I did something bad and, I don’t want to do it again and it is within my power to change the behavior that led to the bad act. Shame hides in a corner trying to stay out of sight, guilt is self-correcting.
  • We admire vulnerability when we see it in others, but we abhor seeing it in ourselves. We are blind to the fact that coming to grip with our vulnerabilities makes us stronger.
  • We all have shame… yes you too. Shame is the enemy. The way to defeat shame is through dialogue. Shame hates being outed, so in order to defeat shame, we have to talk about it.
  • One cannot be courageous until they are willing to make themselves vulnerable. Vulnerability is the root of courage. You have to be willing to make yourself vulnerable before you can dare greatly.

It helps to look at this through the lens of an entrepreneur. Entrepreneurs take on incredible risk when they start a business, because the risk of failure is so high. Our society abhors failure and as a result fear of a failure is a huge shame trigger for most people. Entrepreneurs must to overcome this fear of failure (and the social stigma associated with failure) before they even start. They must be able to say to themselves:

I am passionate about what I am doing. Although I will strive to succeed, I might fail. But if I fail, I will do so knowing that I have the pursued my passion, given my best and that is enough for me, regardless of what others think.

IMHO, there is no shame in failure for an entrepreneur. Quite the contrary, entrepreneurs should take great pride in their accomplishments regardless of the eventual outcome of their work. This philosophy which permeates healthy entrepreneurial cultures is well summed up by a quote from President Theodore Roosevelt’s Man in the Arena speech.

It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.

- Theodore Roosevelt

If you don’t have the time or inclination to read Daring Greatly, I’d encourage you to listen to Brene’s TED talk on vulnerability. I’m betting hearing her speak will cause you to want to read the book.

Kudos to Brene Brown for going to the uncomfortable places in human psychology. It is no surprise that a thoughtful look at what makes us most uncomfortable can lead to so much insight.

Posted in Books, Entrepreneuriship Tagged with: , , , , , , , ,

We Sell the Ultimate Commodity – Money

venture-capital-adLast week I participated in a panel discussion at Denver University organized by Maclyn (Mac) Clouse. Mac is a long-time educator and supporter Denver’s entrepreneurial community. I was joined by Peter Adams, Executive Director of the Rockies Venture Club. Mac’s setup for the discussion was “dangerous” because he offered both Peter and I the opportunity to speak for 15 minutes (thankfully without slides) about the angel, venture capital and growth equity investing landscape. No-one who knows me would ever give me that air time…

Peter led off and did an great job talking about the angel investing landscape and the do’s and don’ts of approaching angel investors. Peter is the co-author of Venture Capital

Posted in Growth Equity, Lessons Learned, Raising Capital, Venture Capital Tagged with: , , , , ,

Improv at the Office: Yes, and…

imgresWhen I get really busy, I communicate less effectively. Truth is, I don’t listen as well, I get short in my responses and I cut off conversation prematurely, because I’m so focused on getting onto the next thing. I’m not proud of it, but it happens.

The First Rule of Improv

When I was in B-School, I participated in a business communication workshop that was entirely based on improvisational comedy. We practiced improv skits for an hour a week. Improv is really, really, really hard. It takes a quick wit, creativity and a willingness to surrender to wherever the skit goes – and they go everywhere and anywhere. No-one is in control. Everyone is in control!

Posted in Communication, Lessons Learned Tagged with: , , ,

Founder Liquidity and Growth Equity

Founder LiquidityI’m seeing more and more growth equity financings come to market with an over-sized component of the financing allocated to existing shareholder liquidity. I’ve seen enough of these transactions to consider it as a trend and to wonder what is motivating it.

Founder Liquidity in Context

Whereas liquidity isn’t typically a feature of venture financings, it is  often – but not always – a feature of growth equity financings. A modicum of liquidity for key management team members or founders can act as lubricant for a growth equity investment, particularly where the management team founded and has successfully bootstrapped a successful business.

Posted in Growth Equity, Raising Capital, Risk, Venture Capital Tagged with: ,

Finding harmony between advice and self-interest

advice and self-interestI just wrapped one of those calls where I had the opportunity to give advice to an entrepreneur that runs counter to my short-term interests. In this case, it is a story of a first-time entrepreneur who has built a $7 million revenue business and is wrestling with the decision whether to take growth capital or sell the business. He owns the vast majority of the company and he has a fair offer from a strategic buyer that emerged during the course of his exploring financing alternatives.

After meeting yesterday (our third meeting or so), I committed to outlining how a growth equity investor would structure an investment transaction for his business.

Posted in Growth Equity, Lessons Learned Tagged with: ,
Derek Pilling

About Derek

I'm a Managing Director with Meritage Funds, a growth equity investment firm based in Denver, CO. I've been working with growth stage businesses my entire career. When I'm not working, I ski, spin, coach youth sports and spend time with my beautiful wife and three kids.

I blog because the process helps me crystalize how I frame the world. I want to hear what you think. Please comment.

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Colorado - Entrepreneurial by Nature