The current TV shows chronicling these rise-and-fall stories of disgraced entrepreneurs are The Dropout (Elizabeth Holmes of Theranos), WeCrashed (Adam Neumann of WeWork) and Super Pumped (Travis Kalanick of Uber), all of which give viewers an inside look at what can happen when a company founder stops at nothing to scale their vision, creating a path of destruction that ultimately wipes them out, too. And though the specifics of the immoral, illegal, or just wildly ill-conceived actions of these three entrepreneurs are unique, they do tend to stem from a few personality traits common in toxic company founders.
- Michael Frese, PhD, Michael Frese, PhD, is a work and organizational psychologist. He is currently a Professor for Management & Entrepreneurship at Asia School of Management (in collaboration with MIT Sloan Management). His research spans a wide range of basic and applied topics...
- Tasha Eurich, PhD, organizational psychologist, executive coach, researcher, and author of Bankable Leadership and Insight
For starters, anyone who calls themselves a "disrupter"—in light of innovating within a well-established industry like, say, health-care testing or real estate—is likely to be, well, disruptive, for better or worse. Specifically, big-time company founders tend to be risk-taking and overconfident, exhibiting the kind of overt courage and resilience that’s long been attributed to entrepreneurs of all sorts. But, for the particularly toxic company founders of new television fame, it was when the size and scope of their powers began to grow exponentially that a far darker side of these personality traits came to light.
“An entrepreneur has to be a bulldozer to get things going, but that can absolutely be taken too far.” —Michael Frese, PhD, psychologist
In other words? These founders simply didn’t—or couldn’t—ever curb their ambition (even in the face of obstacles to their visions), and the cutthroat tech-startup environment only served to fuel their delusions of grandeur. “In the beginning of starting a company, it’s normal not to be concerned with the nitty-gritty of appropriate behavior,” says work and organizational psychologist Michael Frese, PhD, whose research centers on entrepreneurship. “You have to be a bulldozer to get things going, but that can absolutely be taken too far.” That is, when an overly ambitious founder starts bulldozing right over important people and practices, things can quickly veer toward toxicity.
So, how do you spot such behavior in practice? Below are the common personality traits of those toxic company founders who just can’t quit.
Here are 5 personality traits toxic company founders may share, according to psychologists
When the high-key enthusiasm of a charismatic entrepreneur reaches an extreme, you have hypomania, or a period of revved-up excitement that’s basically a less severe version of a manic episode common in leaders. “This kind of energy can really motivate people around a founder by convincing them that the person has this complete belief in what they’re doing,” says organizational psychologist Tasha Eurich, PhD, author of Insight. “It’s the hypomania that serves to really get people on board and fuel these founders’ big ideas.” And, of course, with more backing comes the implied permission for them to go even further with their ambitions (and toxic with their behaviors).
To picture hypomanic behavior in practice, just consider Holmes’s excitement around doing something that no one had ever accomplished before, which reeled in investors despite the fact that she had no functioning technology in place to accomplish her goal. Or Neumann’s famous 12-minute tour of WeWork’s headquarters that was somehow so motivating, it resulted in SoftBank’s initial $4 billion investment.
With exaggerated beliefs of their own importance and achievements, grandiose people assume that they’re destined for greatness. And the same is often true of toxic founders who become emboldened by the many hoops and hurdles they've successfully jumped through and the reception of fantastical monikers, like “unicorn.” “Entrepreneurs are certainly prone to exaggerating the positivity and power of their own inventions,” says Dr. Frese. “Even if there are problems that they’re aware of, they’re likely to brush them off.”
“As a leader’s power increases, so does their degree of overestimation of their own skills, abilities, and contributions.” —Tasha Eurich, PhD, psychologist
When such grandiose leanings are met with praise and support from investors and employees, things tend to turn toxic, says Dr. Eurich: “As a leader’s power increases, so does their degree of overestimation of their own skills, abilities, and contributions.”
Toxic company founders aren’t just in the innocuous business of starting something new to add value to the world; they often assume that they were somehow “elected or selected by God, by destiny, or some higher power, or even just by banks to do something decisive, special, or important,” says Dr. Frese. That narcissistic-leaning belief can act as an enormous motivator for the founder whenever they face setbacks, which can function as a good thing, he adds. But in other cases, it can easily lead to greed or entitlement (both of which are also toxic in nature).
Because narcissistic founders tend to be attracted to power and success, they can also end up in executive roles that serve to reinforce their narcissism, according to Dr. Eurich. “They become surrounded by people telling them how great they are, both employees and board members, who have been shown to reward overconfidence,” she says. “In fact, overconfident CEOs tend to be paid more than their peers, and as their compensation packages grow, so do their levels of overconfidence, allowing narcissistic tendencies to go unchecked.”
For a functional (aka non-toxic) company founder, any actions that might physically or emotionally hurt someone else would be total stop signs: Sure, they’re ambitious, but they’re not going to verifiably exploit someone to get ahead. That's not the case with the toxic company founder who tends to exhibit some version of machiavellianism, or a willingness to manipulate anyone around them as chess pawns in their own game of success, says Dr. Frese.
Dr. Eurich cites Holmes—who is known for having seen people only for how they could serve her goals, and dismissing them as soon as they didn’t—as an example of what machiavellian behavior can look like. “Founders like this create the impression that their employees are valuable until they stop producing the results that they need to verify their own identity and specialness,” she says.
Though this trait can encompass a range of behaviors related to thwarting societal norms and expectations, at its core is a strong antisocial component: The psychopath is out for themselves and themselves only, and “doesn’t co-emote with other people’s suffering,” says Dr. Frese. Often, that makes a founder totally brazen in the face of risk or danger, and even animated by it, which can work to their advantage, he adds. But, of course, that same psychopathy could quickly spawn immoral or illegal behavior in a founder unafraid or seemingly unaware of any consequences.
For example, Kalanick's "winning at all costs" mentality could be indicative of psychopathy, says Dr. Eurich. Unfortunately, those “costs” were very real and unforgivable, including multiple cases of sexual harassment and abuse and class-action lawsuits for unfair labor practices. And yet, he charged ahead for years, demonstrating the classic psychopathic tendency of lacking any real moral compass.
Oh hi! You look like someone who loves free workouts, discounts for cutting-edge wellness brands, and exclusive Well+Good content. Sign up for Well+, our online community of wellness insiders, and unlock your rewards instantly.
Loading More Posts...