Entrepreneurs who exhibit narcissistic behavior are higher in a position to persuade investors to provide them money when their grandiosity comes across as confidence fairly than defensiveness or arrogance.
This is what we have learned from watching 12 seasons of the popular reality show “Shark Tank” to higher understand how an entrepreneur’s psychological profile affects his or her ability to secure financing.
My research focuses on how entrepreneurs reply to challenges, including how personality affects their work. My colleagues and I based our study on the concept that they exist two different “flavors” of narcissism: narcissistic admiration and narcissistic competition.
Narcissistic admiration means the desire for others to such as you and think well of you, while its more controversial counterpart, narcissistic competitiveness, refers to putting others right down to feel higher about yourself.
Our research, published in Organizational Science Last 12 months, we analyzed 789 positions featured on “Shark Tank.” For each pitch in our sample, skilled psychologists used: validated psychometric scale to realize the admiration and competitive behavior of the founder-CEO. We then measured investors’ immediate reactions by analyzing the emotional tone of their reactions – how positive or negative their language was – and linked this sentiment to financing performance.
We then measured each CEO’s narcissism using our coding approach, with continuous scores ranging from lower to higher levels of narcissistic admiration and competition. Our analyzes exploit this variability, particularly at higher levels, but the sample itself was not constructed based on narcissism.
We concluded that founders who showed narcissistic admiration were more more likely to get funding.
In a pitch, for example, it’s a charming founder who spins a compelling story about the company (“Let me impress you”) and the future (“I can take us there”).
Meanwhile, narcissistically competitive founders were less more likely to reach an agreement, even if their marketing strategy was solid. Their defensive style may come across as arrogance or hostility. In the deals we reviewed, it was the founder who bristled with questions (“Don’t challenge me”) or talked right down to the investor.
In other words: not all “self-confidence” works the same on the pitch.
Why it matters
Narcissism is there common among leaders in management positionsand it is often treated either as a secret virtue or a dangerous vice. Our findings suggest that a more useful query is: which version emerges when pressure is present?
“Shark Tank” offers sparse window in internal mechanisms of investing at an early stage. Entrepreneurs take short notes from seasoned investors who evaluate market trends and financial projections that will only be educated guesses. Products are sometimes still in the prototype phase.
Investors, often known as “sharks,” must rely on quick, interpersonal signals about the founder, and the presentation itself reflects the interaction to which they are responding at any given moment. Then comes the observable result: a trade or no trade and the amount invested.
For entrepreneurs, self-confidence and a daring vision could be an asset, but only when combined with openness and self-control. Investors seem to reply well to founders who can sell a great idea without turning difficult questions into a game.
And it isn’t just about reality TV. Venture capital meetings, accelerator demo days, and even company board presentations are often based on short, high-stakes interactions where the leader’s impressions quickly develop into impressions of the enterprise.
What’s next?
In the future, we wish to see if the same dynamics hold in less public settings, akin to private enterprise capital meetings where the camera is not on.
We also want to know whether competitive behavior is ever rewarded (for example, in highly adversarial negotiations) and whether different investors interpret the same behavior in another way.