Breaking Bad News: A Founder’s Guide
Are you an early stage founder trying to figure out what’s next in your startup’s journey? Check out more insights from the Next47 team in our Seed to Series A Playbook.
Every startup goes through ups and downs. One day, you’re on top of the world. You’ve made a new sales hire who’s really making a difference, or you’ve landed a fresh infusion of cash, or your product is beginning to gain traction. But on the very next day, you can find yourself in the dumps. A key hire leaves to join a competitor, or a contract with a major customer falls through, or a funding round doesn’t come together the way you expected.
Most founders know how to convey the good news to their team and investors—that’s easy. But when it comes to delivering bad news, that’s where things can become much more of a challenge. In this article, we’ll discuss how to deliver bad news to your team, board, and investors.
Finding the Balance
Founders can often be put in a very difficult position when it comes to communicating bad news to their team and investors. On one hand, you want to maintain the excitement and confidence of your team members and investors, so you might find yourself sugarcoating the bad news or delaying it. Or you might go 180 degrees the other direction—fretting over every little bump in the road and offloading your personal stress onto your team. Either way, you run the risk of losing the trust and confidence that you’ve worked so hard to build. Communicating bad news well requires delivering the message clearly and in a way that instills confidence, maintains trust, and gets you the help you need.
Get Past the Emotions
When you have bad news to deliver, you might be the one who feels it most acutely in the organization—as a founder, you’re under enormous pressure and in turn, you feel enormous responsibility to all involved. If you fail, if your business fails, you’ve let everyone down—most of all yourself. So, if necessary, take a minute to discuss the problem with someone you trust, whether it’s a co-founder, your significant other, your parents, a therapist, or whoever it might be. If you need to take a moment to cry it out, that’s fine. Get your head straight, get through the emotions, and then come back with an attitude that accepts the reality of what happened, but ensures things will be different going forward.
Stand up as a Leader
Some founders make the mistake of blaming others for bad news and not owning it themselves. While that may technically be the case, and the events leading up to the problem may have been beyond your control, your team members and investors see you as the one who owns the situation. This means you need to stand up and be a leader, no matter what your personal emotions are. If, for example, your company missed its numbers, say, “This happened under my watch, and I take responsibility. It’s not the effort and results we were hoping for, but we’ll find a solution and do better next time.” While you can’t control how others will react to the news, you can control yourself and be the true leader you are.
Be Truthful and Honest
Being truthful and honest about bad news is the best way to maintain both your own personal integrity and the confidence of your team and board. Don’t panic, don’t go into denial, and don’t sugarcoat the reality of the situation. You’re going to need them to help you find an answer to the problem, and you cannot afford to lose their trust. If you don’t have the answers, then the role of the immediate leadership team is to work together on the problem and try to find an answer. Keep your trust battery charged up.
Assume that your stakeholders are well connected—they may hear the bad news from someone else not long after you hear about it yourself. So, process the bad news and then move fast to get the news to those who need it quickly. Acknowledge that you own the situation, that you’re dealing with it, and that you will provide updates along the way. Understand that it’s infinitely better for people to hear bad news from you instead of from another source, even if you don’t have the answer. Then you can work together on a solution.
Even though we all want to do well when communicating bad news, we sometimes make mistakes. If you have to deliver bad news, take some time to process it and deal with your own emotions first. Then, be a leader—take responsibility, craft a clear message, and communicate it to everyone involved. Always be truthful and honest, and don’t wait to share the bad news. The sooner you communicate it and get your team’s help, the sooner you can address the problems that led to it and move forward.