Op-ed: Entrepreneurs, beware the reality distortion field

I, like a lot of CEOs in the tech community, recently saw The Inventor, Alex Gibney’s documentary about the rise and fall of Elizabeth Holmes, whose company Theranos went from a US$9-billion valuation to a net worth of zero dollars after allegations surfaced that she helped defraud investors through years of false claims and misleading data.

The film raised a lot of questions in my head: How could someone be so self-aggrandizing? How could they be so blindly deceitful to investors? And how could a boss let so many employees down?

The truth is, all CEOs and entrepreneurs use a mixture of smoke and mirrors, confidence and charisma to make the impossible seem possible to get the job done. There’s even a name for it: the “reality distortion field.”

First coined about Steve Jobs’ notorious managerial practices, it alludes to his ​– and like-minded leaders such as Holmes’ and Elon Musk’s ​– ability to convince employees and investors alike that seemingly unrealistic feats are surmountable through ingenuity, determination and hard work. But there’s a clear distinction between being a visionary and being a fraud.

Every successful business needs to test limitations to accomplish their goals. But over time I’ve learned that what separates great leaders from the merely good ones (or, in the case of Holmes, potentially criminal ones) is their ability to step outside the reality distortion field continually and reassess whether their goal is becoming a reality or having the impact they imagined.

It’s a lesson I learned early on as an entrepreneur and almost the hard way.

Reality bites

I had a bit of a breakdown one night in the summer of 2008.

Two years earlier, I had founded Tungle, an online scheduling startup that could synchronize and schedule meetings across various calendaring applications. A year later, we raised $1.5 million in seed funding and were gaining traction.

Despite making good progress (we had a small team of 12 employees), we were running out of cash (and fast). Slowly, self-doubt started to creep in, along with the fear that I was letting everyone down, and there was no going back.

The idea for Tungle was just that ​– an idea. Somehow I had convinced hundreds of people ​– from investors to team members to users ​– that it was a good one. And now, with a dwindling bank account and the full weight of a company’s future on my shoulders, it seemed like a bad one.

People had trusted me with their hard-earned money; uprooted their families, or quit their current jobs, to be a part of the project; and migrated businesses over from existing platforms because they saw something in us ​– and my vision.

Now, it looked like it was all for nothing. I had distorted people’s perception of reality with my idea, and it (and I) had failed us.

Self-doubt as strength

Luckily, we were able to raise a series-A round just before the 2008 financial crisis, and all our hard work paid off when RIM finally acquired us in 2011. But many startups and entrepreneurs don’t fare as well and end up succumbing to the reality distortion field.

I wish I could pretend that it was my confidence and sheer willpower that pulled us through. But honestly, I had a lot of doubts.

When I was younger, I saw it as a sign of weakness. But as I’ve matured as an entrepreneur, I now see the value in self-doubt. It allows you to step outside the reality distortion field, and yourself, to get a clearer picture of what it is you’re aiming for, and if it’s worth doing. I surround myself with employees and peers who keep me mindful, humble and curious because of that.

Doing so allows me to see the signs that I’m falling into the trap of my own reality distortion field and alter the course if necessary (like we did at my current startup Foko Retail, which pivoted in the early stages from an enterprise-focused, Instagram-like photo-sharing app to a social and collaborative store management platform that’s now used by retailers and brands worldwide).

Of course, not everyone has a team that helps them check their ego at the door.

So next time you fear you’ve stumbled into the reality distortion field, ask yourself this:

Are your board members asking a lot of questions about the point, purpose and target market of your platform? If so, chances are you’re not asking enough questions yourself and some improvements need to be made.

Are you dismissing any questions about your product point-blank? Then chances are you’ve drunk too much of your own Kool-Aid. (That doesn’t mean they’re right. But if you can’t reason your way out of any line of questioning, that’s another tell you’re stuck in your reality distortion field and might need to return to the drawing board.)

Breaking through the reality distortion field

“You have to have conviction in yourself to make something happen,” Holmes says at one point in The Inventor. “But ultimately that’s up to you.”

The phrase “fake it till you make it” is a popular aphorism in the tech community and beyond. But there’s a fine line between a storyteller and a snake oil salesman, and confidence and charisma can only get you so far if deceiving ​– either yourself or someone else ​– is the end goal.

To truly succeed, it’s important to step outside yourself.

Marc Gingras is a Canadian entrepreneur, angel investor and CEO of Gatineau-based Foko Retail.