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Believe you're destined for it
Founders who carry that belief tend to see themselves as meant for more. It shows up in how they argue, how they pitch, and how little they flinch at pushing back on people with money and leverage.
One founder was handed a $6 million term sheet with a standard four-year vesting schedule. He objected that he would die before the company was worth less than $10 billion. Debating vesting at that stage is absurd on its face, and the remark carries the sentiment.
Confidence like this tends to come with assertiveness, strong opinions, and an unnatural enthusiasm and optimism. These founders care more about getting the listener to believe what they're saying than about saying the socially acceptable thing.
Why does vesting exist at all?
Vesting ties a founder's shares to time, so the stake is earned gradually instead of handed over on day one. A cofounder who leaves after a few months then cannot walk away with a full share of the company. Investors ask for it to protect the business if a founder departs. Four years with a one-year cliff has become the standard schedule in venture-backed startups.
How does overconfidence help founders?
Optimism lets people attempt long-shot ventures that a cautious estimate of the odds would talk them out of. In a 1988 survey published in the Journal of Business Venturing, Arnold Cooper, Carolyn Woo, and William Dunkelberg asked entrepreneurs to rate their own chances of success. Eighty-one percent put their odds at seven in ten or better, and a third put them at ten in ten. The survey covered 2,994 entrepreneurs.
How binding is a term sheet?
A term sheet summarizes the main terms of an investment before the final legal documents are drafted. It covers items such as valuation, board seats, vesting, and liquidation preferences. Most of it is nonbinding, and the parts that usually do bind are confidentiality and exclusivity, which stops a founder from shopping the deal elsewhere for a set period. Many terms get negotiated before the money moves.
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