By definition and in practice, ego is not an inherently bad thing. We all have an ego. It’s what drives our confidence, gives us optimism, and fuels ambition. It allows us to accept challenges, overcome doubt and fear. Without ego we would never accomplish anything of note. When ego is kept in perspective and used to complement our skill-sets, our knowledge, and our goals, it can be a powerful, positive force. 

The problems arise when you let your egos dominate your actions, when your sense of importance starts having no basis in reality. That’s when confidence turns to arrogance, self-assurance becomes self-centeredness, optimism digresses into conceit. When egos over-inflate and get in the way, it’s difficult if not impossible to make good decisions that will positively impact your business.  

In some cases egos overinflate after achieving some success. Look at what I did. Aren’t I great? It gets pumped up by the person’s mistaken belief, by the illusion, that they alone were responsible for the achievement. Ego also convinces them any future project or efforts will automatically be just as, if not more, successful. Sometimes it works out that way although not very often. But in my experience too often entrepreneurs’ egos are unrealistically burnished by VCs. They are blind to their mistakes because they’re being brainwashed by VCs telling them how brilliant they are before they even open for business—a self-serving strategy. Competition between VCs is intense, so the goal is to snatch up a promising team and business plan before the VC next door. Making the budding entrepreneur feel good about themselves is just part of the game. 

 Behavioral economics tells us that humans are short-sighted by nature. We are wired to seek evidence confirming what we already believe and to ignore evidence that contradicts it. We are usually overconfident, underestimating how much we don’t know. That leads to tunnel vision, bad decisions, and myopic judgments that can lead your start-up to fail.The irony is that failure and the ego-driven mistakes that helped undermine your business also tend to widen your range of experience and shrink your ego. Few things are as humbling as your business crashing and burning. We seek confirmatory evidence, or external affirmation, of our own decisions because it allows us to avoid the mental exertion of change.

 The ego is always for the status quo because in the status quo you are alive; there’s no risk to your life and carefully maintained identity. So you can improve your odds of success by not becoming a slave to your ego. It’s a little bit like fire; when controlled it gives us warmth, safety from predators, and food. When it’s uncontrolled, it incinerates us. As with all things, balance is critical, so an important tool for any entrepreneur is ego-management, which is based on humility, curiosity, and a thirst for truth. Humility.

----
The above is an exclusive excerpt from TalkMarkets contributor Ziad K. Abdelnour's new book:
Start-Up Saboteurs: How Incompetence, Ego, and Small Thinking Prevent True Wealth Creation.