How (not) to Win as a Founder: Holding Bad Expectations

Holding bad expectations hurts you... a lot more than what happens to you from the outside

I enjoyed watching highlights from the Paris Olympics this summer and following along with some of the big stories (and memes). One that didn’t get talked about enough was Valarie Allman, who won her second Olympic gold medal for discus.

But last year at Worlds, she won Silver. An amazing accomplishment itself, to be sure, yet she seemed pained in the post-event interview (pictured above) standing next to her American teammate, Laulauga Tausaga-Collins, who took Gold. Why?

Expectations are a funny thing. We tend to set a mental baseline for how things should go—then feel joy when we exceed it, or disappointment when we fall short. Valarie clearly expected to win Gold at the World Championships, and her expression said it all—Silver just wasn’t what she had in mind.

Startup life isn’t much different. We constantly rebuild our expectations about what’s going to happen next. And just like Allman, when we don’t meet those expectations, the disappointment can be intense—even painful. Add in investors, each with their own expectations, and it becomes a whole different ball game.

At 27 years old, I had a resume that touted some sort of “success” as a big tech company employee, but I craved the adventure of building my own company. Part of my motivation was personal growth through the experience, but another part craved the vain stuff: money, accolades, etc. I jumped in the deep end: goodbye paycheck, hello working on an MVP and pitching hundreds of investors for funding. I didn’t realize it then, but I was about to experience more professional pain in the ensuing years than I imagined. It took me a while to realize where that pain comes from. For most of us, emotional pain doesn’t primarily come from what happens to you. It comes from our own reaction to violated expectations.

Now, I’d like to log a caveat right now that I’m not referring to Traumatic events with a big T. Survivors of violence or abuse who are holding emotional pain are not to blame for what happened to them, and deserve care that leads to healing and recovery.

But a startup founder suffering heartbreak over their failed investor pitch or lackluster business results? Let’s focus here on why that can be so painful.

I’ve identified four types of false expectations that led to the most pain on my own startup journey:

1. Fantasy

2. Clinging to yesterday’s outlook

3. Miscalculation

4. Broken promises

You may notice that three of these four categories of bad expectations are entirely individual. In retrospect, it’s easy to pick apart my past expectations and decisions and point to principles I should have followed more closely. In the moment, these can be crushing.

Let’s walk through each type of false expectation with a story, and what I would do differently if I had the chance.

Fantastical expectations

In year one as a first-time founder, we were searching for Product Market Fit (“PMF”). I had a big vision about what shape our product would take, and in my mind, it was really clear what customers wanted. I had interviewed dozens of commercial real estate professionals including property developers, investors, brokers, and lenders. Why I decided to build in this industry is a story for another time. Suffice it to say that in my head, I sprinted ahead with a killer vision: a simple online marketplace to post real estate deals in need of financing, match with capital sources, and receive competitive funding offers.

Sounds easy, right?

I teamed up with a software engineer to build an MVP. When we launched in beta, we sought feedback from customers through emails, phone calls, and surveys. I was convinced we were SO CLOSE to product-market fit. In my head, my product plan was perfect, and we just needed to tweak minor stuff like adding “communication and privacy settings.” I started sending updates to our few angel investors early on, so I can peek back at my thinking at that time. Here’s a quick excerpt from one of those updates where I talk about how great my beta is going:

With some live users on the platform (using it for free, I should mention) telling us what they wanted, how could we not be on the cusp of Product Market Fit? After all, these are my ideas, and my ideas are awesome, right?

Well, notice my wording in that update. “We’re confirming much of what we expected”. I was falling into the classic trap of confirmation bias. The firm expectations in my mind leaked into my survey design, my conversations, and my product management. I already believed what I wanted to believe and filtered incoming information accordingly. I was in fantasy land.

The fantasy expectations leaked out beyond our product management, too. They melted into my financial projections, and when many of these free beta users didn’t generate revenue in the months to come, or churned (stopped using the product), it knocked the wind out of me. I had been writing our plan from my fantasy vision, not from real world validation.

It hurt to be disabused of some of my own fantastical expectations of what was needed for PMF, and even worse when we were rejected by investor after investor when we tried to raise more capital. This was not a Silver Medal situation, this was missing the qualifying cut.

But fantastical expectations are just one of the four traps that can lead to pain. Let’s look at another: holding onto yesterday’s outlook.

Clinging to yesterday’s outlook

My co-founder and I did not give up on our venture from that point. We experienced a ton of ups and downs which I may unpack later, but let’s fast forward a few years to a very different false expectation we can unpack.

In year six as a first-time founder, I felt were firing on all cylinders. The previous year we had tripled our revenue, and we were on pace to double revenue again that year. I was filling out an application for the Inc. 5000 list and thinking nothing of an expensive marketing proposal from a real estate industry publication sourced by a newly hired Marketing Director. The outlook was rosy!

Less than a year later, the real estate capital markets took a turn, interest rates rose, and our conversion rate started to dip for the first time since solving for PMF. Our revenue was impacted for a few months in a row, and I was certain it was a blip.

Why?

Well, our loan pipeline was still growing. Here’s another investor update snippet from this time period:

I acknowledged that our overall market was slowing down and also that our pipeline was changing, but still held to the expectation that we’d see a recovery based on our “healthy pipeline”. The pieces on the board had changed, but my strategy hadn’t. And we were in for a whole world of pain.

The critical mistake I made? Clinging to yesterday’s outlook. I thought our conversion rates would stay the same despite the market shifting, much like an athlete expecting to repeat past results without adjusting their training. But the game had changed—our deal mix was different, and I didn’t adapt fast enough.

The pain we experienced from this mistake, built on faulty expectations, was immense. My co-founder and I ended up facing down a possible bankruptcy less than a year later as our lower conversion rate sank our cash flow. Thankfully, we had built a tech platform that multiple other players in our industry wanted, and we ended up selling to one of them, salvaging the situation from a total loss of invested capital.

The principle I should have applied here is a simple one: hope for the best, but plan for the worst. Don’t cling to yesterday’s expectations.

Miscalculation

The same situation above had a second error baked into my expectations: miscalculation.

While in this case I had entered a faulty conversion rate expectation in my financial projections spreadsheet, bad calculations can come from other sources. I’m not referring to an actual formula error or math issue. It usually comes down to bad assumptions. Our assumptions come from our mental models about the world and how it works.

I recently had a conversation with an early stage founder that was playing with the idea of a novel two-sided marketplace model. He was wondering if he can bootstrap it. He believed his constraint was budget to pay engineers to build his product. I disagreed, pointing out that the real problem is that the two sides of his marketplace serve very different user personas, to the degree that branding with one side is unlikely to resonate with marketing to the other side. I gave him feedback that his idea is likely possible, but has a lot less to do with tech execution than go-to-market strategy (including branding and marketing). This idea’s execution would either require a heroic marketing effort, or require him to build and maintain two brands, which makes it a lot harder to bootstrap and increases the risk of failure. In this case, it’s a miscalculation to think that the hard/expensive part is building the product, rather than the go-to-market mechanisms, and that faulty thinking can lead to bad decisions.

Like poker players, founders face situations with incomplete information and the need to make quick and accurate decisions based on probability all the time. Great poker players can read the room, but you certainly need to at least understand the probability that you have a winning hand, and that’s calculation.

When my startup’s conversion rate tanked and interest rates spiked, I was way off in calculating our revenue projections. That mistake left us with way less cash than expected, and things spiraled fast. In hindsight, if I’d had a clearer grasp of the numbers, I would have made tough calls a lot earlier. But I didn’t—and it hurt.

Broken promises

I almost didn’t include this one. But if you’re a first-time founder, I think it’s important that you hear this.

People do weird and unfair things.

Very few people see themselves in a negative light, even if it can be demonstrated to them that they said one thing, and then did another (known as a “lie”). Maybe you think, like I have in the past, that yes, people may lie, but you can protect yourself by understanding someone’s incentives and negotiating in a way that is in your shared best interest. I really wish it was that simple.

The truth is, people do weird things for all sorts of reasons, including a host of irrational reasons, and most of them are beyond your control.

Now, this is the first and only pervasive False Expectation in this particular piece that originates with another person, rather than within yourself. However, you’ll find this pain is still on you! Let me explain with a story, starting with another investor email update:

We ended up taking investment from the group mentioned in this update, and structuring stock warrants related to the performance of the partnership, which we had modeled out together before taking the investment.

The all-time revenue generated from this partnership? Zero dollars.

I’m not going to give you readers here enough information to judge who is right and wrong in this case, as there are tons of reasons why a partnership may succeed or fail, and syncing up two sets of expectations from separate groups is even harder than keeping your own expectations under control. Judging the situation is not the point today.

The point is, I was frustrated, bitter, and honestly—pretty angry. Our “partner” had let us down, and it stung. As a startup founder, you’ll face moments where you truly believe someone has your back, only to be blindsided when they let you down. It might be an investor that rips up a term sheet after months of diligence work, a team member that steals your IP, or anything else that builds up your expectations and then dashes them.

The principle to apply here isn’t “just work with better people”. That’s a great theory, and it is important to be really clear about your company’s values so you can build up a strong culture full of great people. You should build your ability to read people, be careful who invests, and control your expectations about other people’s behavior (spoiler: people act irrationally all the time). But sooner or later, when dealing with humans, you’ll face violated expectations from a broken promise. So, the real question is how you handle it when it inevitably happens.

The principle that freed me from being salty with this investor was forgiveness. You don’t have to change your judgment of the situation and pretend it’s ok when it’s not. You don’t even have to “reconcile” - I wouldn’t plan to work with the people responsible for this situation again. You simply have to let it go of it emotionally on your end and decide to move on without trying to punish who offended you. You can judge well and forgive fully at the same time. That’s how you let go of the pain.

I have more practical business advice to share with my younger self on the topic of partnerships (and dealing with difficult investors), but it would take a back seat to getting really serious about forgiveness and allowing myself to move on emotionally. Ultimately, that’s what a startup needs out of its founder: a mentally and emotionally healthy leader.

Transforming pain into growth

Pain itself isn’t the enemy—it’s a signal that something’s wrong. And in most cases, it’s a chance to grow. More often than not, that pain points to our own unmet or faulty expectations. Valarie Allman didn’t give up when she won Silver at the Worlds last year. She faced the pain, adjusted her mindset, and took her gold medal back at the Olympics this year. 

In the same way, we as founders have to confront our pain, learn from it, and keep moving forward. It’s not about clinging to expectations; it’s about adjusting and staying in the game.

Maybe, like me, you’re dealing with something far more disappointing than a silver medal. Maybe you just watched your company crash and burn (or you’re scared it will), or you’re nursing the pain of a bad deal or a missed opportunity. Whatever it is, I’d urge you to think about these two things:

1. Forgiveness - for both others and yourself.

2. Check your expectations! Be transparent with someone who is further along and wiser who can spare you that pain.

Ask yourself: What unrealistic expectations are holding you back? What can you let go of to move forward? Pain isn’t something to avoid—it’s something to learn from.