Sharing unpleasant truths to protect others

As a trusted advisor to entrepreneurs, investors, and executives across the globe, I am often asked my opinion about conducting business with certain individuals and/or companies. It mostly involves great people and companies and it’s one of the most enjoyable aspects of my job — helping good people achieve their business goals and realize success. Sometimes however it puts me in challenging situations when my opinion or feedback will be strongly negative. So, how do you navigate this situations and share your truth without overstepping boundaries and/or taking on unnecessary risk, especially in today’s litigious and politically correct environment?

I’ll share two examples that demonstrate different approaches in disclosing negative information or feedback about potential business partners.

A young entrepreneur reached out to me seeking advice on a potential angel investor who had just proposed an investment term sheet. I was very aware of the investor’s reputation of taking advantage of young entrepreneurs, and borderline fraudulent activities, so I knew I had to intervene. As Nassim Nicholas Taleb says, “If you see fraud and don’t say “fraud”, you are a fraud.”

Sharing the specifics of a past deceptive and abusive deal I directly witnessed, or flat out telling the entrepreneur about the investor’s general sordid history, would have been inappropriate, especially considering his litigious nature. Instead, I simply offered the entrepreneur uncompensated help, and I spent a few hours with her and her team responding to the term sheet. I identified and discussed the “gotcha’s” with the team, we removed the most egregious terms completely, and softened some of the potentially devastating impact of others. Of course, the investor did not like the changes, and sensing there was someone looking out for the entrepreneur, and no chance he could take advantage of an inexperienced founder, he backed off. Focusing and intervening in the process allowed me to protect the young entrepreneur without having to explicitly divulge information about the investor that could be perceived as gossip/badmouthing or put me on record disparaging him. This approach to disclosure is about communicating the truth indirectly through action rather than direct conversation.

However, not all situations can be handled by acting directly; often clients or colleagues explicitly ask for my opinion and expect me to be true to my reputation as a “straight shooter.” In those cases, it’s important to provide honest feedback, but doing it without crossing a professional line or breaking confidentiality (and any other legal obligations). For example, a Private Equity partner called to ask my opinion about two executives I had previously worked with; the execs were pitching a transaction to his firm and he wanted some insight into their character and capability. Unfortunately, I had direct exposure to both, each in different situations, and considered both of them to be unethical, untrustworthy, and generally corrupt. Instead of providing the sordid details of my experience working with them, I chose instead to say, “My mama taught me if I have nothing nice to say, to say nothing at all.” The partner immediately recognized the signal. He asked, “…that bad?”, and when I repeated myself, he thanked me for my input and hung up the phone. Sometimes, saying nothing or very little, says everything.

The challenge with both of these approaches, and a few others I have developed over the years, is the subtlety. As the communicator, sometimes it can be hard to tell if your indirect communication is being received as you intend. What’s more, as the receiver, it can sometimes be challenging to hear the latent message. In my next article, I will share an example of a time that I, myself, missed the message at great cost, and explore some of the ways you can avoid doing the same.

The advice shared in this article is a preview to the counsel I provide to entrepreneurs, founders, Corporate Executives, and Private Equity and Venture Capital clients based on three decades of work in these areas.

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Founder and Managing Partner of Ideasphere Partners - Consulting. Co-Founder and CEO of World Watch Plus -AI-drive SaaS Risk platform sold to D&B

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Chuck Papageorgiou

Founder and Managing Partner of Ideasphere Partners - Consulting. Co-Founder and CEO of World Watch Plus -AI-drive SaaS Risk platform sold to D&B