They were fantastic salespeople, but they ignored three things that separate winners from failures

Elizabeth Holmes, Adam Neumann, and Arif Naqvi had a thing in common: they were brash, persuasive, and borderline messianic entrepreneurs. They pitched their ideas so well that investors and customers trusted them blindly.

But their sales talent stabbed them in their backs.

Holmes was recently convicted of criminal fraud. Neumann’s WeWork lost $37 billion, costing him his job. Naqvi is facing 300 years in jail for financial crimes.

Unabashed self-esteem is like a rocket booster. It helps you get off the ground quickly. You sell your idea to an investor and receive your first million. But once you are in the air, you’ll need to keep flying. This is when you have to ask yourself: “Is my business plan really that great, or am I just being a fantastic idea-seller?”

To a visionary founder, this question is by far more painful than pitching a business idea to a few VCs and bankers. It challenges your ego and makes you listen to smart people who disagree with you. Yet, it separates winners from failures. See for yourself.

When Elizabeth Holmes was nine years old, she proclaimed: “I want to be a billionaire.”

Like a Houdini, she mesmerized people around her into believing whatever she told them. She never once stumbled or lost her train of thought during her pitches. Her blood-testing startup, Theranos, summoned a billion dollars of venture capital and secured major customers.

Yet her blood-testing devices never worked. Eventually, Theranos went bankrupt, tossing Elizabeth into a courtroom for fraud.

But there is more to the story of Elizabeth Holmes.

Several years ago, I fell into a nasty streak in my startup. Our first product sucked. However, a big part of me didn’t want to give up, calling anyone a disbeliever who begged me to pivot. It hurt like hell to hear smart people raising concerns about my success.

Luckily, I gave in. We redesigned our product, and our sales went up. Had I ignored the advice and listened to my ego, I’d be feeding a dead horse.

John Carreyrou writes in his bestseller The Bad Blood that Elizabeth Holmes never admitted to failure. She created a dysfunctional, dictatorial corporate culture that choked any criticism. Elizabeth regarded anyone who raised a concern as a cynic and naysayer, going ballistic every time she heard an objection. She fired experienced executives who criticized her and promoted sycophants instead.

Theranos’ product designer, Justin Maxwell, resigned with the following words to Holmes: “Please do read the books The No-Asshole Rule and Beyond Bullshit, and believe in the people who disagree with you.”

The navy seals commander Jocko Willink writes a leader must be confident, but she should never feel too good to fail. And it starts by allowing others to question you, your ideas, and your products.

Adam Neumann was so good he could sell sand to an Arab.

His brashness, persuasive power, and sales talent proved themselves in the first year of his startup WeWork. With just a pitch and zero paying customers, he convinced an investor that WeWork was worth $45 million — an unthinkable valuation for a real estate company with no assets.

In a few years, he boosted his company’s valuation to a staggering $47 billion. But WeWork was a gigantic bubble: the result of a herd of people who collectively overpay for something, bedazzled by its messianic founder.

In a way, I can relate to Neumann. In the first months after founding my company, I felt I outsmarted everyone else. My solid education, top-notch industry experience, and my big mouth made me feel entitled to success. My self-esteem was at an all-time high, helping me ace my pitches and raise millions for my startup.

My ego helped me sell my idea and collect venture capital — but it proved toxic for building a sustainable business. Painfully, I had to learn that ego was indeed the entrepreneur’s worst enemy.

Eliot Brown writes in his bestseller The Cult of We that Adam Neumann’s ego escaped gravity. Neumann claimed he was looking for ways to live forever and run for the “president of the world.” He wanted Walter Isaacson to write his biography. The final prospectus for WeWork’s IPO wasn’t about the company but all about him, mentioning his name 169 times.

Neumann surrounded himself with sycophants who never dared to object to him. Executives, bankers, and advisors showered Neumann with praise, boosting his ego to the stratosphere instead of warning him of WeWork’s growing problems.

Some investors called the company too poisonous to invest. The chairman of JPMorgan Chase, Jamie Dimon, said to Neumann: “You are your own worst enemy. You listened to nothing.”

The company lost $37 billion in market value, forcing Neumann to step down.

When I signed my first investor contract, I was in the clouds. I trusted I had engraved the success of my company in stone. But when I think back, selling an idea was the easy part. Building a profitable business was a million times more challenging.

Here’s the skinny: Prove to yourself that you have more to show than your grandiose pitches and your let’s-change-the-world-talk.

I learned that a sure way to turn yourself into a dictator is to preach one thing but do the opposite: “do as I say, not as I do.” Even small things make a difference. For example, you can’t arrive at the office late, but expect everyone else to appear early and remain motivated.

The entrepreneur Arif Naqvi promised to solve humanity’s biggest problems: hunger, sickness, and climate change.

The crowds of investors swelled with applause during his grandiose speeches. He was a masterful performer convincing the UN, Interpol, Bill Gates, Prince Charles, and John Kerry to join his efforts pumping billions into his impact fund.

Yet, behind the facade of Naqvi’s charismatic talks was a criminal dictator, writes the Wall Street Journal reporter Simon Clark in his bestseller The Key Man.

Arif Naqvi’s investment company was a place of contradiction.

Naqvi talked about his love for democracy, but his employees experienced his tyranny. He treasured transparency, but everyone around him was scared to death to express any disagreement with him. Saying one thing but doing another was Arif’s daily routine. His toxic culture spread inside the company like a virus — killing trust and increasing backstabbing among Arif’s ranks.

In Arif Naqvi, we see the same narcissistic attitude repeating as with Elizabeth Holmes and Adam Neumann. He combined charm and eloquence with an enormous sense of entitlement and ego. He rewarded employees who complied with his wishes with promotions and bonuses, and he flew into fits of rage with anyone who dared to question him.

The problem wasn’t that Arif Naqvi’s idea of impact investing didn’t work. Instead, Naqvi failed to live up to the standards he was preaching — leading to the collapse of one of the largest impact investing funds in history.

So the ultimate lesson from Naqvi’s story is to walk your talk as an entrepreneur. Be the example of what you want from others.

We entrepreneurs often overvalue our ability to sell our idea.

We cling to the amount of money we raised and to what valuation our company has (or will have in a year or two). I know it because I fell for it too. I kept feeding my ego for years.

Daniel Kahneman wrote that we unconsciously filter things that confirm our beliefs and make us look good in our own eyes. We prefer to feed our egos, making it painful to listen to criticism and objections. What’s worse, the “founder’s cult” in Silicon Valley feeds this narrative, boosting our egos even further.

Yet investing in your ego provides the lowest ROI in the long term. It prevents you from building a sustainable and profitable business.

Luckily, here are the three lessons we now learned from the stories above:

1. Listen to the smart people who disagree with you and encourage a culture of transparency in your team (book tip: Principles by Ray Dalio — it’s both inspiring and instructive).
2. Handcuff your ego because building a profitable business will be much more challenging than selling your idea to your first investor (book tip: Ego is Your Enemy by Ryan Holiday — it’s an eye-opener).
3. Be the role model for the actions and behavior you want to encourage. Walk the talk and lead by example. Be brave but vulnerable, disciplined but kind (book tip: Dare to Lead by Brené Brown — an invigorating guide to any leader).

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