When do you know if your venture is going to work out?

When I start a company, my essential baseline behavior is terror. I worry about product market fit, financing, team, revenue, marketing, going broke, it will never really work, what was I thinking, this was sheer arrogant stupidity – get me out of this mess.

At some point, if you are lucky, there is clarity. Either give the money back and work on your pickleball, or you know you actually have a fighting chance. When is that moment, when do you get that epiphany, that message that it is all going to work out? What is the signal?  Revenue, partnerships, Meta calls. There is a moment. I have experienced them from time to time. My sincere hope is that every startup founder gets one. Immodestly I am going to share mine.

I have a tiny AI company. Software, platform, product, some revenue, still terrified, but not yet suicidal. Our pitch is one of privacy, security, your own data, no training by the LLMs, etc. We claim to bring AI enterprise RAG (Retrieval Augmented Generation) to the world of small and medium business.

Remember, that is our Kool-Aid. That doesn’t mean anyone else agrees with us. We could be whistling in the wind, believing our own myopia.  

So, I am attending a blah blah political event, having nothing to do with AI. I get into the hotel elevator. An older gentleman steps in. I notice the credential hanging from his neck. He is attending a venture, finance, crypto, AI event in another part of the hotel.

I like to chat people up. I turn to him and learn that he is a professor of computer science at a prestigious East Coast university. This is the classic elevator pitch moment. I have time for only one question. 

“What is the biggest problem in AI?” His answer, “Trust and privacy.”  

Then the door opened, and he got off on floor six. There it was. I am not telling you that I have stopped worrying, but when you get an answer that validates your premise, whether you are making tacos or lasers, it is a moment that gives comfort to the adventure you have begun. It does not, however, meet payroll next week.  

I remain a pessimist. I am reasonably certain that we can still go broke, but it felt good for one moment to get external validation. It suggests that at least we are on the right road.  After all, if you are running down a road, and you look back and you see no one. Two possibilities. You are really far ahead – or you are on the wrong road.

My only concern was that when he got off the elevator, there were two men in white coats holding a very large jacket with very long sleeves and some ties dangling from the ends.

Now to a different matter of equal psychiatric importance. Praise. Most of us want it, but when we get it, we are uncomfortable and reject it as false. Must be a mistake. It is the “You talkin’ to me” syndrome.   

More often than not, our receptivity to compliments is a reflection of our conflicted view of our own self-worth, or lack thereof.

I consulted my shrink and he offered these thoughts:

• Receiving praise from others elicits discomfort when it conflicts with one’s existing belief system.
• An employee with low self-esteem can misinterpret praise and feel pressured to live up to heightened expectations 
• Praise can create cognitive dissonance and increase feelings of imposter syndrome.

I bet that last one resonates with a lot of founders.

Without analyzing too much, the challenge for the founder/CEO/leader/manager is to find a way to compliment the employee in a way that he/she can hear it. The goal is not to be Freud and try to change their behavior, but rather to consider how to change your behavior to deliver praise in an effective manner.

Our little AI company recently hit a big milestone, courtesy of my brilliant co-founder. But when I give him the praise he deserves, he dodges, deflects and denies.  

So I have modified my behavior. Now with each success, I tell him he is a total failure. He agrees with me, smiles and digs in even deeper with renewed fervor.

As Woody Allen says, “I need the eggs.”

Rule No. 807:  You were great – sorry

Senturia is a serial entrepreneur who invests in startups. Please email ideas to neil@askturing.ai.