The 1 Fatal Delusion That Kills Startups

There's a certain level of delusion that's necessary to be a founder. You have to be delusional enough to look at a market dominated by giants with 200x your budget and still believe you can outcompete them. That kind of irrational, beautiful confidence is the fuel that keeps a startup alive.

But then, there's a point where that confidence crosses a line. It becomes a full-blown fantasy, a level of self-deception that prevents you from seeing the flaws in your own approach, let alone pivoting at the right time.

I can’t tell you the number of founders I talk to who keep telling me they’re "about to" do something momentous. They’re "about to" close a funding round, "about to" sign an incredible new client. They say it with such conviction you almost believe them. But when I follow up a few weeks later, they haven't signed a thing. And they never will. It was all a performance, a way to justify the struggle without confronting the uncomfortable truth that they're not where they want to be.

This isn’t just an ego problem; it’s a strategic failure driven by a toxic, invisible rule: the belief that "looking successful" is the same as "being successful." In the relentless performance art that is entrepreneurship, many founders become so obsessed with the illusion of growth that they lose sight of the messy, painful reality.

This delusion is a direct result of a founder's failure to understand their industry's invisible rulebook. They’re trying to win a game without knowing how it's scored. And they’re missing two critical unwritten codes:

• The Credibility Rule: Credibility isn't built on what you say you're about to do. It’s built on what you have already done. The delusional founder doesn't realize credibility isn't about degrees or resumes, it’s about understanding the specific language that signals authority in your space. It's about demonstrating your understanding of the unwritten code and offering an insight that feels counterintuitive to your audience. By the time they "pitch," they've already failed the secret credibility test by trying to win on logic in a game being scored on cultural fit.
  

• The Investment Rule: A deal isn't "imminent" just because a buyer said your product was "interesting." The reality is, every purchase is driven by a hidden set of Investment Triggers that a founder has to uncover. These can include implicit pressures like expectations from leadership or industry trends. A leader may feel pressure to demonstrate digital transformation, for example, even if parts of their workflow are working well. The delusional founder doesn't do the hard, uncomfortable work of uncovering these real motivations, and instead takes polite niceties as a signed contract.

This is why mastering these two rules is the only path to a genuinely realistic picture of where a deal or opportunity will end up. The better you understand the true drivers of credibility and investment, the better you’ll get at assessing a situation without your own ego getting in the way. This realism allows you to project a level of confidence in your assessment that not only instills faith in the investor, prospect, or future hire, but also gives you a fighting chance of following through when that deal does come through. In a world where AI and AI-powered performance art are everywhere, your word still carries weight. In fact, it carries even more than before as the world becomes increasingly skeptical of what they read online.

So, stop pretending. Stop with the "imminent" deals and the "almost-closed" rounds. Start doing the unsexy work: asking the uncomfortable questions, digging into the real pressures on your prospects, and building a foundation of credibility one small win at a time. Because at the end of the day, a business built on solid ground will always outlast one built on smoke and mirrors.

A Provocative Question for You:

Did you take the time to reflect on why your assessment of a situation was so off? What did you do to avoid putting yourself in that position again?

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