David Sacks: Founder psychology is at the heart of most rail-jumping behavior. A founder CEO pushes things too far, not just on one dimension but typically on a whole host of them.
When you read the accounts of spectacular blitzfails, the founders who’ve come off the rails are always described in similar ways. They’re described as “running through walls,” “crazy,” “aggressive” and “visionary.”
When things are up and to the right, people use those adjectives in a positive way. It’s not until the startup goes off the rails that “crazy” goes from meaning something good to meaning something bad.
The world rewards aggressiveness far more than what a ‘sane person’ thinks
Founders do need to have these qualities—being a visionary, aggressive and even “crazy”—because they have to be far more aggressive than the average person. There’s no question about that.
The world does not follow a normal distribution. We like to think there’s a perfect Goldilocks amount of aggressiveness that a person should have—the mean amount. But the world rewards aggressiveness far more than what a “sane person” would think.
When the startup is ‘up and to the right,’ the founder gets positive reinforcement that their crazy, aggressive, visionary traits are working. This becomes a positive feedback loop urging them to go faster and faster, further and further, until they go off the rails and have a ‘jump the shark’ moment.
The culture becomes self-reinforcing to the point where it derails
Companies that go off the rails often dismiss the warning signs. No matter how outlandish the behavior, as long as the company is growing, it must mean that the founder has discovered some hitherto unknown secrets of company building.
The company’s growth is taken as proof that this new culture is some brilliant new way of doing things. What’s actually happening is that a time bomb is building—because the culture is becoming self-reinforcing to the point where it’s headed for a derailment.