While deeply fulfilling, establishing and growing a business poses grave dangers for your mental health as an entrepreneurial executive.
During the expansion stage, a founder will often face brutally long workweeks, pressure from different sources to manage the startup while raising funding, and the stress of having to make many decisions — all at the same time. It isn’t surprising that many entrepreneur executives find themselves developing mental health challenges if they don’t prevent them.
Unfortunately, mental health challenges still face serious stigma in entrepreneurial circles and are often not discussed and addressed. Sometimes, these issues are discussed implicitly under the framework of founder burnout or work-life balance. The key is to identify when you are on the verge of burnout and address it immediately.
Case Study: Mental Health Challenges for Entrepreneurial Executives
Mike founded a fast-growing direct-to-consumer startup in the mid-stage of expansion, and valued at just under $7 million when he hired me as a coach. He had already gone through a couple of rounds of fundraising. His Board of Directors consisted mainly of investors from those early rounds; Mike retained about 32% of the equity, and those on the Board had over 57%.
He brought me in because he wanted to figure out what to do next. Mike wanted to shift from the rapid growth stage of burning cash to seizing market share, focusing instead on more gradual growth funded by revenue rather than investment capital to become profitable. His board of directors overwhelmingly wanted him to rapidly keep growing the company.
While either position might have merit, the underlying challenge that Mike experienced was a sense of growing anxiety — even dread — about asking more investors for money. An introvert, he always felt fear in doing this and struggled over asking the early investors who now sat on his board. While there’s extensive advice for entrepreneurs over asking people for money and addressing fears of rejection, such advice generally doesn’t address the clinical anxiety and depression that might develop from repeatedly overcoming your intuitions.
Signs of Mental Health Challenges That Shouldn’t Be Ignored
The stressful period that Mike was going through wasn’t something that should be taken lightly. Often, the kind of pressure he was experiencing posed a severe threat to the mental health and potential for executives and employees’ burnout. It’s not only extensive and multiple studies that bear out this claim, but my own on-the-ground experience as a coach to business leaders.
Mike eventually started going to therapy and taking psychiatric medications. However, while I strongly urged him to reveal his mental health condition to the board, he refused to do so. He expressed high confidence that the board wouldn’t support him. Mike shared with me several instances when he saw other startup founders in different situations hide their mental health challenges from fear of an adverse reaction by board members.
He even told me he thought they might question his competence to continue to lead the company if he revealed his weakness. As someone struggling with anxiety myself, I empathized with his concerns but thought he was taking it too far. His fears fit with his broader pessimism bias, an excessive perception of potential threats common for those with anxiety or depression.
Pessimism bias is one of the many dangerous judgment errors that result from how our brains are wired, what scholars in cognitive neuroscience and behavioral economics call cognitive biases. Fortunately, recent research in these fields shows how you can use pragmatic strategies to address these mental blind-spots.
His pessimism did not serve him well. The board continued to pressure him. Despite his wise decision to seek professional help, his anxiety and stress undercut his fundraising capacity. Since we did not yet have a close relationship, Mike had trouble accepting the uncomfortable information that his gut reactions were failing him.
Turning Point: Timing Matters on Mental Health Challenges
Pretty soon, Mike was close to burnout. At that point – when he told me that he considered quitting – I finally convinced him to reveal his condition to the board by asking him what he had to lose by revealing his mental health condition.
Well, guess what? The board expressed a great deal of support. Several of the board members, who had pressured him, revealed that they had done so because of their own anxieties. Namely, they felt fearful of larger competitors who might try to catch up to the startup’s early mover advantage. As veteran investors, they saw such scenarios happen way too often, and that’s why they were pushing for rapid growth fueled by investor capital.
These board members suffered from pessimism themselves, and took it out on Mike, pushing him to breaking point. A couple of members even revealed their own mental health issues. The board agreed to step back from its fundraising goals, focusing instead on gradual growth.
Nevertheless, the story did not have a happy ending. Badly burned out, Mike couldn’t go on to achieve the gradual goals. He lost his passion for the company and started hating going to work. Eventually, he resigned.
The company launched an extensive search for Mike’s replacement. Unfortunately, this person did not work out very well, as he lacked Mike’s credibility — a characteristic crucial in direct-to-consumer offerings. It didn’t help that many startup employees felt discontented with Mike’s resignation, and blamed the board. Many of them left after Mike resigned, further crippling the startup.
In the end, without Mike’s drive and guidance, the company floundered. A larger company that wanted to enter the space bought the startup for less than $2.5 million, a fraction of its earlier valuation.
Mental Health Challenges in Hindsight
Part of the blame lies with me. Looking back, I believe I could have done a better job supporting Mike in sharing his mental health challenges with the board. The whole fiasco could have been prevented with a timelier revelation. An earlier strategic shift to gradual growth would have solved the need for some fundraising efforts, thereby letting Mike focus on his passion for satisfying customers and building the brand, instead of forcing him to deal with his most hated task of soliciting investor cash.
He would have had more mental resources and wouldn’t have burned out. The startup would have continued to do well.
I share this story, for which I acknowledge a degree of blame, in the hope that startup founders will take it to heart and influence key stakeholders to be more aware of, and attentive to, mental health issues. This story also serves as a cautionary tale for startup executives wary of disclosing their mental health struggles to significant investors and board members, for fear of their competence being questioned. Mike is one of many brilliant startup founder executives pushed past their breaking point by such stakeholders, and I hope you will never travel in Mike’s shoes. It should also serve as a warning to major investors and board members to support founders and to take care of mental health as a priority.
The Fight to Address Mental Health Challenges
In an increasingly disrupted and uncertain future, which will only breed more stress and anxiety, we cannot afford to lose such talented entrepreneurial executives by ignoring the dangers that mental health pose. Startup executives and employees need to encourage and model transparency around mental wellness and training to spot and support colleagues in times of trouble while fighting the stigma around mental illness.