Time Wounds All Heels – The Importance Of Honesty To Successful Serial Entrepreneurs

Standing on the courthouse steps, moments after receiving his permanent residency Green Card, John Lennon was asked if he harbored a grudge against the Nixon Administration for tapping his phone, putting him under surveillance and mounting a multi-year attempt to deport him. Without missing a beat, John smiled and said, “Time wounds all heels.”

Given the manner in which history has depicted Nixon and his Administration, truer words were never spoken.

Not only was the phrase apt in Lennon’s case, it is also highly applicable to today’s business world. In the pre-Internet age, it was easier to successfully execute a business model based on screwing everyone once. This has never been a particularly efficient business model, but it certainly was more plausible before the Internet allowed users to effortlessly share their insights and experiences on a global level.

Honesty Matters - Honest

Survey after survey confirms that honesty is one of the most common traits of successful business leaders. In his book, The Entrepreneur’s Manual, Richard White notes that a survey of venture capitalists reveals that honesty is the single most important characteristic for a successful serial entrepreneur to possess. In their book, The Leadership Challenge, James Kouzes and Barry Posner cite three surveys, each of which lists honesty as the most admired trait among successful leaders. This characteristic was valued over other important attributes including competency, visionary skills and charisma.

This makes sense. Successful serial entrepreneurs know that each relationship they develop is a potential goldmine. As noted in Your Personal Pitch, in order to be successful, entrepreneurs must enlist the help of numerous Donors – individuals who are in a position to give their adVenture a helping hand. Most employees, investors, customers and suppliers prefer to work with people and organizations which they trust. Thus, as noted in Corporate Creed, dishonesty is a major handicap for an entrepreneur, just as honesty and integrity are significant assets.

Sales to existing customers traditionally account for the majority of a startup’s revenue, ranging from forty to sixty percent of annual sales, depending on the dynamics of your specific industry. Given the cost of acquiring a customer, more than just good manners motivate an entrepreneur to play nice and ensure that their customers remain happy. In most instances, it is far less expensive to maintain an existing customer relationship than it is to establish a new one. One of the most economical methods for acquiring and maintaining customers is to treat them honestly and respectfully.

In order to be successful at multiple ventures and earn the title “successful serial entrepreneur,” you cannot leave a trail of broken relationships and angry stakeholders in your wake. Dishonesty can lead to near-term success, but it almost never results in a successful life-long career. Dishonesty is truly a handicap to success, as it becomes more and more difficult to succeed as more and more people realize that you do not live by your word. Eventually, you are relegated to working with other unethical businesspeople who share your “no honor among thieves” mentality. Your reputation for ethics and honesty will proceed you – the better your reputation, the wider the pool of potential stakeholders from which you can choose to work. Once your career is over and you have passed on, your reputation will become your legacy.

Three Things About You

Question: How much of his money did Andrew Carnegie leave when he died?

Answer: All of it. Even Mr. Carnegie, with all of his lavish possessions, did not have a U-Haul trailer following his hearse to the cemetery. In addition to his material wealth, Mr. Carnegie also left behind his legacy as a brutally tough businessperson who did not hesitate to bend the rules in his favor. Despite his highly public philanthropic activities, many of which continue to benefit society to this day, the manner in which he operated his businesses and competed with his rivals leaves a legacy of deceit and corruption. There is a reason Andrew and several of his contemporaries were labeled “Robber Barons.”

As discussed in Are You An Entrepreneur?, startups can become all-consuming. At times, this is unavoidable and not unexpected. In such an environment, it is tempting to compromise your principles in order to meet a short-term objective. Maintaining a proper perspective and balance between your personal and professional lives is one way to mitigate the risk of making unethical decisions in the heat of battle. Another way to avoid rationalizing unscrupulous behavior in the name of survival is to establish a strong Corporate Creed. Your company’s creed is the foundation upon which your corporate culture is built. It defines acceptable ethical boundaries and acts as a guidepost for you and your employees when the ethical lines begin to blur and short-term goals become all-consuming.

As Kawasaki notes at the end of his book, The Art of the Start, it is important to maintain a healthy perspective on the things in life that really matter, even as you throw your heart and soul into growing your business. To reflect on your priorities, Kawasaki suggests, “It is the end of your life. Write down the three things you want people to remember about you.”

Hopefully, your friends and acquaintances will remember more than how cool your car was, how big your startups became or what a sharp negotiator you were. If these are the sorts of things people recall about you, then you likely have your priorities in the wrong place. Ideally, your actions will lead to your desired legacy. However, as with any goal, it is imperative that you define your legacy in order to have any chance of attaining it.

As John Lennon realized, time has a way of settling all accounts. Unethical behavior might help you achieve a monthly, quarterly or even an annual goal. However, unscrupulous decisions will ultimately catch up with you in some form or fashion and jeopardize your adVenture’s chances of success – it is just a matter of time. In order to ensure that you are on the right side of history and to provide your startup with the honesty advantage, always do the right thing, no matter who is or is not watching.

John Greathouse has held a number of senior executive positions with successful startups during the past fifteen years, spearheading transactions, which generated more than $350 million of shareholder value, including an IPO and a multi-hundred-million-dollar acquisition.

John is currently a partner at Rincon Venture Partners, a venture capital firm investing in early stage web-based businesses, and is a Co-Founder of RevUpNet, a performance-based online marketing agency.

John is a CPA and holds an M.B.A. from the Wharton School. He is a member of the University of California at Santa Barbara's Faculty where he teaches several entrepreneurial courses.

Note: All of my advice in this blog is that of a layman. I am not a lawyer and I never played one on TV. You should always assess the veracity of any third-party advice that might have far-reaching implications (be it legal, accounting, personnel, tax or otherwise) with your trusted professional of choice.

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