How to Avoid Hubris When Growing Your Start-Up The early warning signs - and what founders can do about them

The dream of many founders is to grow fast, make headlines, and become the next unicorn. But in the rush to scale, some start-ups fall into a dangerous trap: believing they're untouchable. When founders - and their teams - start thinking they can do no wrong, they risk creating a culture of hubris. This can sink the business before it reaches its potential.

A hubristic culture means that employees become convinced that they should do whatever it takes to achieve the start-up's grand ambitions. This mindset makes employees believe that the end goal of start-up success justifies using any means. This can involve threatening the company's critics, spying on regulators, or releasing products quickly before verifying that they are not harmful for customers. These actions might help the start-up briefly in the short-term. However, they create major trouble for the company and for society in the long-run.

We've all seen the headlines: start-ups that soared on hype only to crash amid scandal. A hubristic culture may feel like high-energy hustle on the surface, but beneath it often lies recklessness, denial of criticism, and a disregard for key stakeholders.

The Cost of Hubris
There are many cautionary tales of how a culture of hubris can grow unchecked in high-pressure start-up environments. Together with my colleague, Dr Elena Dalpiaz, I studied how the problem of hubristic culture arises and how to solve it in a fintech start-up. The company had to completely reform its operations and culture to address its problematic hubris. This was important because it was leading the company to pursue growth at all costs and harm customers. This was undermining its future. The writing was on the wall. Founders can avoid this fate for their start-up by looking out for warning signs and taking decisive action.

How to spot a hubristic culture
Hubris doesn't announce itself with flashing lights. But there are early warning signs every founder should watch out for:

• Pursuing growth at all costs
  If your team starts chasing growth with no regard for customers, regulators, or the public, you are veering into dangerous territory. This often shows up as neglected customer service, negative media attention, or regulatory scrutiny. This will catch up with you, even if you may be able to sustain fast growth for a while longer.
• Defaulting to dismissing criticism
  Does your founder team routinely wave off concerns - whether from employees, customers, or the press? Ignoring feedback or even attacking critics can be a red flag. Some leaders rationalize this by claiming outsiders "don't get" the company's vision or are biased to favour incumbents. Ask yourself if your company has become an echo chamber that is not longer able to take stakeholder feedback on board?
• Generating the wrong kind of excitement
  If your team gets excited about breaking rules and about getting criticised by the outside world, your company has fallen prey to "antagonistic excitement". Employees are motivated for the wrong reasons and dangerously ignore the needs of stakeholders. For example, watch out when employees get excited about getting criticised for launching products that are untested or for ignoring regulatory requirements. In one startup we studied, an employee admitted, "We were getting attacked (by protestors) … You live off that adrenaline."

How to prevent hubris
The good news is that hubristic cultures aren't inevitable in entrepreneurial companies. Here are three steps founders can take to safeguard their ventures:

• Focus on sustainable growth
  Chasing growth at all costs stores up long-term trouble. It's important to focus on growth that is sustainable for customers, rather than on growth that harms them. The fintech we studied made a conscious shift from chasing short-term wins at all costs to helping customers navigate financial challenges responsibly. As a result, the default rate on its consumer loans halved over three years. Growth is healthiest when it aligns with long-term value for customers and society.
• Build a transparent culture
  It's dangerous when companies become echo chambers that automatically dismiss any external criticism, rather than learning from it. Open dialogue matters to understand what the company is doing and how stakeholders are reacting to it. It's important that employees are encouraged to bring problems to leaders so that they can be resolved quickly. The alternative is that these problems are hidden until they spiral out of control. Consider introducing regular town halls to acknowledge mistakes and discuss how to fix them and learn from them. The fintech company that we studied adopted this approach. This transparency paid off: The fintech stopped getting regulatory fines, in a stark reversal from its fine-riddled early years.
  - Channel excitement in the right way
  It's great for teams to feel passionate about the mission. But founders need to steer that excitement toward creating a positive impact for what the venture is building, rather than focusing employees on excitement about breaking rules or creating controversy for its own sake. For example, are you generating excitement by telling employees to "fight the establishment"? Consider refocusing that excitement on delivering on the company's purpose and what it makes it unique. At the fintech we studied, such a shift bore fruit: After the change, 70% of employees stated on Glassdoor that they would recommend the company to a friend. The fintech had successfully transitioned from a hubristic culture with its accompanying toxic behavior to a purpose-driven approach that sets the company up for long-term success.

The bottom line
A culture of hubris can derail even the most promising ventures. It's important that companies recognise and address hubris before it's too late. By watching out for the warning signs and fixing issues early, founders can build ventures that will go the distance, rather than crash and burn prematurely.