Mapping Cultural Barriers

Mike

Mike founded a quickly growing, direct-to-consumer startup in the midstage of expansion, valued at just under $7 million. Mike retained ~32% equity while the Board of Directors, which consisted largely of investors from the early rounds, had over 57%.

Mike wanted to shift from the rapid growth stage of burning cash to seize market share, focusing on more gradual growth funded by revenue while the Board overwhelmingly wanted him to keep growing the company rapidly. When he was not sure which avenue to take, Mike had a sense of growing anxiety, even dread, over asking more investors for money.

Mike eventually started going to therapy and taking psychiatric medication. However, Mike refused to reveal his mental health condition to the Board, insisting that they would not support him and might even question his competence to lead the company. Mike shared with a team member a number of instances when he saw other startup founders hide their mental-health challenges due to fears about problematic reactions by Board members.

The Board continued to pressure him and pretty soon, Mike was close to burnout. After some time, Mike finally revealed his condition with the Board and was met with a great deal of support. Several people said they pressured Mike because of their own anxiety, specifically fearful of larger competitors.

Eventually, burnt out Mike lost his passion for the company and hated getting up for work. He later turned in his resignation letter and offered to sell his equity at a discounted price. Many of the employees felt loyal to Mike’s leadership and vision and were discontented with Mike’s resignation, blaming the Board. In turn, many of them left in the subsequent weeks and the company was sold to another startup trying to enter the space for $2.5 million, much less than the initial valuation at $7 million.

Read the full story here: https://www.entrepreneur.com/article/349877

In this case, we see how the stigma of talking about mental health led to the failure of a company. Though the Board was very supportive by the time he did open up to them, it was too late to start the conversation as Mike was already badly burnt out.