Balter: The Importance of Being Humble

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We’re living in an era where many leaders are put on a pedestal.

CEOs are conveyed as all-powerful celebrities, and startup entrepreneurs are being given John Wayne-like hero treatment.

It’s no surprise then that many are showing signs of a fatal flaw: acting without humility.

I’d argue we’re entering an era where outsized egos are a warning sign of impending failure. Fail to keep yours in check and the only thing you’ll be leading is the search for a new job.

We’re seeing signals of this all around us.

For most of her career, Carol Bartz’s strong suit certainly wasn’t her humility, and Yahoo’s shareholders can attest to the result of that. Dominique Strauss-Kahn’s ego (and questionable morals) reportedly gave him a sense of invincibility, which cost DSK the French Presidency and any potential legacy. Hewlett-Packard had a fabulous CEO in Mark Hurd, until he resignedin what HP’s own general counsel called a, “profound lack of judgment that seriously undermined his credibility and damaged his effectiveness.”

While on a much different scale, startup CEOs and entrepreneurs are among the most ego-fueled leaders. In fact, I’d argue that today’s easy-to-get-funding and it’s-cool-to-be-a-CEO economy is actually fostering a sense of grandiosity that will eventually be the majority’s undoing. In NYC alone there are now dozens of incubators – from DreamIt to Tipping Point Partners and Betaworks and Startl – making it easy to leave your day job and become a startup CEO in seconds. Sites like Angel List are making it all too easy to become an investor or the invested. Even the awesome entrepreneur and investor, Naval Ravikant is being given the “you’re-amazing, just-add-water-to-grow-your-ego” treatment in this NY Times piece.

I recently returned from San Francisco where I saw at least a dozen startups, each with more than 20,000 square feet of space for fewer than 40 employees. “We’re going to grow fast,” their effusive leaders – fresh with cash – would boast.

But if the funded and funders don’t change something fast, the end is nigh.

And it’s not the money that’s the issue. It’s the hubris that comes with it.

I know of what I speak because I had my own great press, easy money and 22,000 square feet (to be exact) –and the ego that came with it nearly cost me my fourth startup, BzzAgent. Launched in 2001, by 2005 we were featured in a cover story in The New York Times Magazineand had A-list angel and venture investors. We were arguably the first company to monetize social media, with a network of volunteer consumers who shared their opinions with peers about products and services. We had real revenues and the best clients.

We. Were. Awesome.

But all of that led us to ignore the fundamental necessity of humility. One of the defining moments of the business came in late 2005 when a young buck showed up at our office and asked for a job. After a discussion, we politely declined with a “nice try, kid” and sent him on his way. He returned a few months later to thank us for chatting with him, and to let us know that he had taken a job at this thing called Facebook, which had 50,000 members (compared to our then 250,000) and no revenue model – and he’d be the 12th employee. I’ll never forget us laughing about the silly premise of Facebook after he left.

He eventually was a bigwig with Facebook’s East Coast sales and someone I had to call to “kiss the ring” if we wanted to get things done with Facebook (and his boss was a guy I used to hawk t-shirts to in the entertainment industry, no less). My ego made me underestimate them until they changed BzzAgent’s business forever.

This being just one story of our outsized egos, we had to learn our lessons the hard way.

By 2009, we had to cut nearly 50% of our staff and we spent the better part of a year reconsidering our business. I personally began the process of learning humility. I learned to listen more—to colleagues, friends, prospective employees, family. I was forced to trust my peers. I paid close attention to competitors and became thankful for every day we were fortunate enough to be running our business. We eventually turned things around, rebuilt and sold the company earlier this year for a sizeable return to a unit of TESCO PLC.

But only because we stopped acting like the press and funding made us more valuable than we actually were.

And that’s the lesson every single CEO, entrepreneur and leader needs to learn now. It’s never too early to start acting with the humility that can make you smarter—and save your business. This is one reason I helped develop The Humility Imperative project, a mashup of art and the collected stories of humble and ego-fueled leaders. If just one or two entrepreneurs learn this lesson before it’s too late, then we’ll consider this a success.

As for Carol Bartz, head of Yahoo until last week, some see her last email to Yahoo employees—“I’ve just been fired” — as an overly emotional and career-killing admission, but I see something different. I see someone who found humility and didn’t spin the facts into a mutual parting of ways. She was fired and she said as much, which is about as humble as you can get.

Dave Balter is the founder and chief executive of the Boston-based social marketing company BzzAgent, owned by dunnhumby ltd., where he is part of the global executive team. He is also a founder and executive chair of skill-testing platform Smarterer, and an investor or advisor to a dozen start-ups.