How Getting Your Identity from Your Startup Can Hurt It

No matter what your job is – whether you’re a teacher, a construction worker, or a founder of a billion dollar company – our jobs make up a portion of our identity.

When you’re a founder, your “job” will likely make up a disproportionate amount of that identity. It’s not rare for founders to spend 80+ hours a week building their startup in the early days, and it doesn’t stop there. Our startups don’t just demand our time, they demand a majority of our mindshare. As a result, our startups can begin to consume more and more of our identity over time.

I experienced this to an alarming degree over the course of three years. I was obsessed with building Compass into a successful company, and a vast majority of my identity became wrapped up in Compass. Months would go by where I’d forget about dating or playing basketball. Weeks would go by where I’d forget to talk to a friend or a family member.

While some startup folklore may portray this level of obsession and self-sacrifice as a positive thing, I can confidently say that taking this too far won't only result in personal sacrifices – it can also hurt your startup more than it will help it.

In my experience, my overleveraged identity helped us in the early “proof-of-concept stage” of building Compass. However, once it became time to figure out how to grow Compass sustainably, it hurt us. 

I can now clearly see that as a founder, cultivating a balanced, diversified identity outside of your startup is not just good for your own personal wellness, it’s also good for business.  Viewing your role as a founder as one small piece of your “identity pie” will make you a better decision maker and help you set a better strategy for your company.

 

 

When I came up with the idea for Compass (a freelance web design marketplace), I had already decided that I was going to start a company to realize my aspirational identity as an entrepreneur. 

Compass quickly became my obsession, and with my entire identity wrapped up in my it, my Compass accomplishments became my sole source of self-worth.

In the early stages of starting up, I didn’t notice this as a problem. In our first 18 months, we experience a lot of the early stage accomplishments that you may achieve if you’re all-in, like getting our first 10 customers, attracting co-founders, getting our next 50 customers, raising an angel round, hiring our first employee, and consecutive months of growth.

During this “proof-of-concept” phase of starting up, I didn’t realize how dependent I was on these accomplishments to feel good about myself. If anything, I attributed these early successes to the very fact that I was betting my entire identity on my startup. I thought, “I’m accomplishing these milestones because I’m obsessed.” It positively reinforced a dangerous idea: that betting my identity on my startup was not only healthy, but that it would result in more accomplishments.

When in the “proof of concept” stage of our startup, accomplishments happened regularly. New customers, angel investors, and press write-ups were like dopamine. The proof-of-concept phase provided me with a lot of immediate gratification.

However, the next phase (figuring out how to unlock sustainable growth), requires a lot more comfort with ambiguity, patience, humility, and long-term thinking. It does not necessarily provide immediate gratification, but rather delayed gratification if things work out.

Looking back, unlocking sustainable growth would have required 3-6 months of building technology while simultaneously trying to overcome certain marketing hurdles. It required delayed gratification and patience.

But I needed the immediate gratification that came from growing sales, which I became accustomed to during the proof-of-concept stage. Without a diversified identity that could give me self-worth from other sources, I wasn’t able to consider a reality where I would forgo that sole source of my self-worth.

As a result, we continued to do what we’d done in the proof of concept phase. We continued to grow sales, and software development remained a second priority. While we were technically "growing," we weren’t building any capacity to sustain that growth. This was short-term thinking, not long-term thinking.

Eventually, this mindset resulted in everything coming crashing down. We’d hired employees since we were growing, under the assumption that we’d continue to reduce cost of acquisition and the cost of servicing customers. We came to the realization that by focusing on month-over-month growth instead of long-term sustainable growth, we weren’t able to reduce those costs. We had to lay off half of our team and change our direction.

Continuing to grow the Compass proof of concept without figuring out how we’d achieve sustainable growth fit was one of our most fatal mistakes. I attribute that mistake to two things: (1) our inexperience, and (2) my overleveraged identity.

If I’d had a more diverse identity, and thus less dependence on Compass’ immediate growth for my self-worth, I would have been more capable of making objective decisions based on the long-term goals of the company, rather than based on my short-term emotional needs as an obsessed founder.

While other founders may not experience things in the same way that I did (every startup is different), it’s clear to me that over-leveraging your identity with your startup makes you a less intentional founder. For me, this resulted in clinging onto a growth, but for other founders it may manifest in different negative ways.

 

 

Now, as I think about what’s next for me in my career, one of the most important things for me to do is cultivate a diversified identity before I jump into something else and eventually start another company down the road.

I identify more with being a brother, a son, a friend, a basketball fan, a former founder who helps first-time founders, and more.

It may sound counterintuitive, but cultivating a balanced, diversified identity is one of the best things you can do before taking the leap and starting your own company. 

 

Mike Wilner