Why Do So Many Founders Cross Ethical Lines? A Guide for Investors

Introduction: The Brutal Truth About Change If you’re leading a company, here’s one brutal truth you can’t dodge: resistance to change isn’t just inevitable—it’s a gift. Most leaders don’t see it that way. They treat it like an obstacle to bulldoze, something to out-argue, out-maneuver, or silence. But resistance, if you know how to read it, is a living, breathing diagnostic tool. Every objection, every sideways comment in a hallway, every moment of awkward silence in a meeting—it’s all data. It tells you where the trust gaps are, where the communication breakdowns have happened, and where your people’s unspoken fears live. If you ignore that data, you’re flying blind. The hard numbers back this up: more than 70% of organizational change initiatives fail, not because the strategy was flawed, but because leaders underestimated what it would take to guide people through the emotional turbulence of transformation. If you want your next big initiative to succeed, the shift starts here: stop seeing resistance as the enemy, and start listening to what it’s telling you. When you do, you’ll discover that resistance isn’t a wall to break down—it’s a map showing you exactly where to go next. 1. Rethink Resistance: It’s Data, Not Defiance Let’s flip the lens. When people resist, they’re rarely doing it for sport. They’re sending up flares. They’re telling you something’s unclear, untested, or untrusted. For example, I worked with a CEO rolling out a sweeping technology overhaul. His first instinct when his managers hesitated was frustration—until we sat down and dissected the resistance. It turned out the managers weren’t doubting the technology; they were worried about the gap between the training timeline and the rollout date. They didn’t fear change—they feared being set up to fail.  When you stop labeling resistance as “non-compliance” and start treating it like intelligence gathering, you find it points to the very levers you can pull to move the change forward.

Most startup founders are brilliant at innovation, disruption, and blazing new trails. They're visionaries, incredibly driven, and fiercely independent. Unfortunately, those same powerful traits often sabotage their ability to foster genuine collaboration—a critical ingredient in startup success. I've spent decades coaching founders, and one of the biggest blind spots I've observed is the gap between what founders naturally do well and what's required to create truly collaborative cultures. Understanding these tendencies—and knowing how to counter them—can mean the difference between startup stagnation and breakout growth. High Independence, Low Collaboration Founders thrive on independence. They love breaking rules, ignoring boundaries, and pushing limits. But independence can quickly morph into isolation. The very idea of slowing down to seek consensus or accommodate team input feels restrictive, even suffocating. Implications: This independent streak inadvertently sidelines team members, suppresses input, and reduces engagement. Talented people quickly learn their ideas don't matter, and teams become passive or defensive. Actions to Counter: Practice deliberately inclusive decision-making. Clearly define which decisions you'll make alone and where you'll solicit team input. Regularly check in to see if team members feel heard and involved. Dominance Isn’t Always Dominant Many founders naturally take a commanding stance. Their assertiveness, directness, and forcefulness can spark initial progress but, over time, it creates resistance. When team members feel steamrolled or fearful of speaking up, creativity vanishes. Implications: A dominant style shuts down communication, makes feedback difficult, and kills the very collaboration needed for sustained innovation. Actions to Counter: Make intentional space for quieter team members to speak. Foster psychological safety by modeling vulnerability and humility Balance assertiveness with curiosity—actively seek feedback rather than waiting for it. The Curse of Poor Delegation Delegation isn't just handing off tasks—it's handing off trust. But founders notoriously struggle with this, often believing only they can execute properly. Every task not delegated reinforces the message that the team isn’t capable. Implications: Poor delegation creates bottlenecks, slows execution, and demoralizes talented employees who feel undervalued and micromanaged. Actions to Counter: Start small by delegating lower-risk tasks clearly and thoroughly. Regularly check your impulses to micromanage; remind yourself why you hired capable people. Invest in mentoring and coaching rather than controlling. Communication Breakdown Founders are famously impatient. They think fast, act fast, and often communicate quickly or incompletely. What seems obvious to them might be totally unclear to their team. Implications: Poor communication creates ambiguity, confusion, and frustration, grinding collaboration to a halt. Teams waste energy guessing expectations rather than innovating. Actions to Counter: Slow down to clearly articulate the "why" behind your decisions. Confirm understanding by asking team members to reflect back their interpretations. Regularly solicit feedback on your communication style and clarity. Arrogance: The Silent Collaboration Killer Confidence is crucial. But confidence unchecked can veer into arrogance, leading founders to dismiss feedback, overlook critical insights, and alienate key contributors. Implications: Arrogance destroys trust, stifles dialogue, and creates a toxic environment where collaboration is impossible. Actions to Counter: Intentionally invite critique and respond openly and constructively. Regularly acknowledge your mistakes publicly to model humility. Actively seek alternative viewpoints before finalizing decisions. Conflict Avoidance (or Aggression) Many founders fall into two extreme camps: conflict avoiders or conflict initiators. Both extremes are deadly to collaboration. Avoiding conflict leaves critical issues unresolved. Aggressive conflict handling creates resentment and fear. Implications: Poorly managed conflict erodes team cohesion, undermines trust, and can spiral into prolonged dysfunction. Actions to Counter: Establish clear, structured conflict resolution processes. Practice direct yet respectful conflict conversations. Use neutral facilitation for emotionally charged discussions. Systems Thinking vs. Reactive Planning Startups prize agility and adaptability. But too much short-term thinking neglects the processes and structures that sustain collaboration. Without clear systems, teams fall into chaos. Implications: Reactive planning leads to burnout, inefficiency, and frustration as team members constantly fight fires rather than building strategically. Actions to Counter: Balance short-term agility with consistent investment in systems and clear processes. Regularly revisit and improve structures as your company scales. Empower process-oriented thinkers in your organization to build effective systems. Workaholism and Burnout Culture Founders set the pace. But when founders turn workaholic, they unknowingly create an environment of exhaustion, anxiety, and diminished psychological safety. Exhausted teams are seldom collaborative. Implications: Productivity drops, innovation dries up, and talented employees start to leave. Actions to Counter: Actively model sustainable work-life balance. Publicly recognize and reward collaborative, balanced behaviors. Regularly monitor signs of burnout and intervene early. Ambiguity Isn’t Always Your Friend Founders typically tolerate ambiguity better than most. But your team needs clarity and direction. Too much ambiguity creates stress and undermines collaborative execution. Implications: Team paralysis, lack of initiative, and increased frustration. Actions to Counter: Clearly define roles, responsibilities, and expectations. Regularly ask your team what clarity they need to be effective. Balance your tolerance for ambiguity with your team’s genuine need for guidance. The Collaboration Paradox Founders face a paradox. The same traits that fuel their success—independence, assertiveness, rapid execution—also sabotage the collaborative environments crucial for scaling. Acknowledging this paradox is the first step. The second is intentionally adopting behaviors that might feel unnatural at first: fostering inclusive communication, delegating with trust, managing conflict constructively, investing in systems thinking, and balancing your independent streak with genuine empathy.  The good news? These skills are learnable. Great founders don’t have to become entirely different people; they simply need to expand their toolkit. Start today by picking just one area and committing to small, consistent improvements. Your team and your startup—will thank you.