It is, sadly, common for CEOs to label their VCs as “the bad guys”, particularly during stressful cash times, and when communicating the reality of expense reduction to the executive team. This is a relatively normal excuse that operators use as fear grips them, and it always feels better to blame their poor performance on some external factor. This allows the temporary relief from self of poor performance and inner-judgment. But it is not accurate, and it certainly doesn't help change the operational execution of the team. Blaming others for circumstances is weak. It will not help to solve the situation and personally improve.
As a talented coaching client of mine, John had incredible potential and was able to resist and grow amid unbelievable competition. But things began to decline because his marriage was loveless, and he lacked any semblance of support or life at home. Once the pandemic hit, John’s situation became more dire. The sales pipeline, once promising, never became a reality. Already unprofitable, the abrupt lack of fresh sales created tension amongst all of the senior executives as each leader prepared to address their departments effectively. Even with the reality of having to cut 50% of his workforce, amid other workplace stresses, John preferred to be at work, as it was “more relaxing and peaceful” there than at home. What a tragic intersection of work and home pressures! Of course, during these times, John could easily point to the lack of fresh capital investment to their majority investment partner/owners, and reference the team's lack of success to having not enough resources. One wise general partner of a VC firm wisely stated to me, “the investor’s decisions will always be unpopular with somebody.”
This key insight, that the VCs are on your side, is naturally hard to do if the board member has too many 'favorite' portfolio CEOs, but that motive and interest in helping remains. The reason that the CEO may not 'feel the love' is usually more to do with the CEO's own self-perception and insecurities than it is the lack of performance and support from the investor(s). Think about it. It's hard to appreciate others for their help when you are down on yourself for not producing the goals on time, and for having to depend, yet again, on anther round of fund-raising to create the opportunity to succeed as planned. As a CEO coach, and sometimes working withe the entire executive suite parallel with the CEO, the recommended course of action is to not just blame the investors for the poor cash situation, but to breathe, slow down and truly be honest with themselves as to how the company got there. To understand the issues that the CEO and team created, and that the economy, competition and other forces shaped the outcomes of the business. It is not the VC's fault. Most often, the self-loathing comes up and makes the VC the 'bad guys.' It would be more healthy to own the results, assess the damage, come up with a strong course of action, and to learn to be better the next time.
So why does this happen? Why does the blaming others take place?
Research shares that we are often good at positive emotions of winning, of a happy outcome, and can shout, cheer, hug and celebrate quite readily. Psychologists believe that people blame others for poor outcomes because negative emotions (loss, shame, guilt, sadness, hurt, anger) are more difficult to process and express, and the mind is more likely to deflect the feeling and project it outwards. It is a skill that we do not have developed or invested in learning. For example, even at home, when the teenagers come home after curfew, I would yell at them for being disobedient and uncaring rather than calmly welcoming them back home, expressing that I was happy to see that they were safe and that they had a good time, and that my fear that they were harmed, in a bad situation, or in need of help was what caused my worry and concern for them. Or, at work, I could easily express frustration at the Sales VP for missing their quarterly number, but really, I just hadn't developed my abilities to recognize where I was emotionally, and with much more sanity, express to the VP my concern for the multiple projects that needed cash deeply from new sales, and that the pain of asking for more investment funds was weighing down heavily on my shoulders. I just wasn't as emotionally mature in my negative space as I am in my positive space. This is usually the case for many people. Including the CEO who blames the board.
They have not spent the time to develop the competent of pausing to understand their feelings, assessing the accuracy of the situation, and then intentionally responding (not reacting) to the occasion with power and accuracy.
So the one key insight from VCs is this - take time to understand the situation and not blame them, or others, automatically.
My executive coaching experience has shown that if I, personally, can improve and get out of that mindset of blame, you can too. It takes deliberate work and practice over time like any other skill. My one key insight is that everyone can become more consciously competent in the way they assess negative situations, and it can be learned.
“All the adversity I've had in my life, all my troubles and obstacles, have strengthened me. You may not realize it when it happens, but a kick in the teeth may be the best thing in the world for you.” — Walt Disney