Physical Address
304 North Cardinal St.
Dorchester Center, MA 02124
Sailing a startup and starting one is usually likened to sailing in unknown seas, encountering unanticipated storms en route. What most entrepreneurs are not expecting is that sometimes the toughest barriers do not lie with external market pressures, money limits, or technical challenges. Rather, they emerge from within — through individuals whose unrealistic expectations, obstinate views, and distorted perceptions can undo your efforts if not contained. Delusional people can be employees, investors, partners, or even early customers, and managing them requires a very deliberate and thoughtful approach. In my own journey, I’ve encountered a few such individuals, and trust me — handling these situations with strategy, rather than emotion, can make all the difference between startup success and failure.
Throughout this guide, I’ll take you through the tactics that I personally have used and perfected over years. These aren’t textbook tricks — they’re practical strategies that I used to keep my firm’s vision intact and its sanity in place even in the midst of the most challenging personalities.
Understanding Delusional People
What Makes Someone Delusional?
The first step toward dealing with delusional people is to really comprehend what goes into making people that way. Delusion is not necessarily a matter of mental instability; it’s usually an understated phenomenon of unchecked optimism, arrogance, fear, or fundamental insecurity. A delusional entrepreneur may believe in the illusion that every new startup is the next Google in a year’s time. A delusional employee may think that simply working hard without developing skills or having market fit is a guarantee of success. Most of the time, these people are not evil — they’re just out of touch, clinging to something that meets their emotional requirements but not the realities of the situation.
Understand that delusion people are products of psychological and emotional conditions, not plain stupidity or lack of information, and this is your first step in managing the source of problem. By dealing with the situation with compassion instead of initial anger, you become a stronger, wiser leader who can deal with complexity graciously.
How It Affects Your Startup: Source of Problem
If not nipped in the bud, delusional thinking can infect the very fabric of your startup’s operations and culture. It generates unrealistic expectations which squander resources, distort strategic planning, and demoralize rational team members who perceive things better. For instance, a co-founder beset by delusional thinking may insist on launching products without market verification, causing expensive flops. A dreamy-eyed investor may pressurize you to expand aggressively without laying a sustainable foundation first, putting the entire venture at risk.
When delusional people weigh in on decision-making, you put your business at risk of crashing into a maelstrom of trouble that wouldn’t have materialized had you stuck with reality-based reasoning. That is why identifying and managing delusional behavior isn’t an aside task — it’s a primary leadership competency that you need to get right if your startup has any hope of survival and success.
1 Brutal Truth: Pin Down the True Cause of the Issue
One of the most difficult, yet most critical steps in dealing with delusional people is pinpointing the true cause of the issue through communicate. It is easy to call someone delusional who does not see eye-to-eye with you, but good leadership calls for deeper discovery. Ask yourself: Is the issue due to an overzealous employee whose zeal is affecting their judgment? Is it an investor with little actual knowledge of your sector, imposing unrealistic expectations based on spurious comparisons? Or maybe it’s a customer who wants a degree of customization that would put your nascent business out of business if you were to comply?.
Identifying the precise origin of the delusion, AKA the source of problem, allows you to develop a specific response. A delusional employee may require mentoring and limits. A misdirected investor may require hard numbers and re-education on your realities of the marketplace. A customer may require a diplomatic referral to realistic alternatives. Each requires a different approach. If you incorrectly diagnose the origin, you may be treating symptoms while the true issue develops — something no startup can afford in its formative early days.
By taking the effort to see clearly where unrealistic beliefs or expectations have their source, you enable yourself to reply back properly, saving not only the future of your company but even your own intellectual and emotional investment. You must have to communicate with them.
2. Establish Clear Limits and Expectations
When working with delusional people, vagueness is your worst enemy. Delusional thinking flourishes in settings where expectations are unclear, objectives are loosely defined, and accountability is spotty. To avoid this, you need to establish a system of crystal-clear boundaries and expectations — and consistently enforce them. This doesn’t involve being cruel or dictatorial; it involves creating a professional setting where everyone understands the rules of engagement.
For instance, if you have an employee who is always overpromising and underdelivering because they really think anything is possible, you have to sit down with them and set measurable, realistic goals. Write out what success means in concrete terms: deadlines, deliverables, quality standards, and what happens if they fail to meet them. Similarly, with investors or partners, make clear from the beginning what growth paths, financing milestones, and operational metrics are achievable — and commit them to paper whenever feasible.
Boundary setting isn’t primarily about safeguarding yourself. It’s about safeguarding your business’s purpose and the sanity of your whole team. Without bounds, one or more delusional people can create confusion, resentment, and wasted effort. Consider boundaries the scaffolding that supports your startup as it grows; they add structure without stifling creativity and ambition. The more clear you are, the less there is room for misinterpretation — and the easier it is to course-correct when someone’s delusions begin to go off track.
3. Don’t Argue, Show Data
Another of the greatest errors founders make when handling delusional people is attempting to “win” arguments with pure logic, as I have mentioned earlier, you need to communicate with them. The bitter reality is that delusional thought processes are seldom logical — they are emotional. As such, just informing a person that they are wrong or arguing with them based on logic often gets one nowhere; it could even further reinforce them in their delusions.
Rather than squandering energy on circular arguments, let statistics do the talking. Provide tough, unchallengeable facts: market studies, customer surveys, financial projections, competitor studies, and actual case histories. When you are able to provide concrete evidence to substantiate your view, it becomes more difficult for delusion to hold ground. For example, if you have an investor who is adamant that you double revenue in three months without any additional marketing spend, politely demonstrate to them evidence of your customer acquisition costs, conversion rates, and realistic sales forecasts.
From my own experience, information has tended to be the “cold shower” that brings people back to earth from fantasy. It diverts the debate away from opinions and towards facts. And even if the delusional people will not believe you, by presenting your stance supported by facts and figures, you insulate yourself and your organization. You leave a path of evidence proving you acted prudently and made decisions on evidence — not hopes.
4. Pick Your Battles Carefully
Not every delusional remark or proposal requires a full-blown intervention. In a startup culture, particularly when passions are running high and stakes feel existential, it’s tempting to fall into the trap of needing to correct every false premise or unrealistic remark you hear. But it will leave you drained in short order, and worse, it will derail you from what you need to focus on.
You must grow the acumen to discriminate between delusions that are harmless and ones that are perilous. An employee who thinks your startup will someday be worth a billion dollars may be unrealistic — but if it motivates them without influencing daily operations, it might actually be useful. A co-founder who demands you spend $50,000 on a sleek office space you can’t afford, however, is a delusion that could destroy your company.
Ask yourself: Does this delusion put our resources, timeline, team morale, or brand reputation at risk? If so, you need to step in hard, we do seek support. Otherwise, you’re probably better off letting it go or gradually steering the person back to reality. In startups, energy is your most valuable resource. Invest it in the battles that, if lost, would really cost you.
Learning to choose your battles is not a weakness — it’s a badge of strategic leadership. The objective isn’t to win every battle. The objective is to win the war: creating a successful, sustainable business in spite of the chaos that early-stage entrepreneurship so often engenders.
5. Create a Culture of Reality-Checking
In order to actually safeguard your startup from the pitfalls of delusional thinking, you can’t simply respond to it — you must actively create a culture in which reality is continually and freely checked. This doesn’t imply creating an atmosphere of pessimism or cynicism for its own sake; it implies instilling honesty, critical thinking, and openness in all levels of the organization.
Begin by rewarding those who bring up legitimate issues or provide realistic projections, even if it is painful to hear. In most startups, workers are reluctant to speak up when they feel something is wrong because they don’t want to be perceived as being “not believing in the vision.” You must eliminate that fear. Make it explicit that challenging assumptions, stress-testing proposals, and checking strategies against the evidence of reality are not betrayals — they are acts of profound commitment to the success of the company.
Instill rituals that mainstream reality-checking: routine post-mortems following launches, bi-annual deep-dive critiques on product-market fit, and anonymous feedback avenues where workers can raise red flags without fear of reprisals. Reward individuals who identify flaws early, rather than those who champion daring ideas. The more you integrate reality-checking into your day-to-day activities, the less easy it is for delusional ideas to get a foothold and propagate unseen.
In the long run, developing this type of culture does not only safeguard your startup from collapse. It creates resilience, enhances decision-making, and builds trust in the team. Employees feel safer, wiser, and more committed when they understand the company places truth above ego.
6. Be Prepared to Walk Away
This is likely the most difficult lesson of all, but it’s completely necessary: occasionally, no matter how much patience you exercise, how much information you provide, or how many limits you place, you will be faced with delusional people who will not change. They may be investors holding out for unrealistic expectations of return, co-founders fixated on fantastical visions that ignore market reality, or employees who insist on pursuing failing concepts in spite of overwhelming proof.
When it comes to that, you have to be able to walk away — for your company’s sake, your team’s sake, and your own sanity. Hanging on to relationships with individuals who are not reality-based is akin to building a house on quicksand. Eventually, everything crumbles, no matter how diligent you are.
Walking away does not always equate to burning bridges or severing relationships in irritation. It can be executed professionally, respectfully, and convincingly. You may, for example, decline further funding from an irrational VC with a polite yet firm reason that your visions are incompatible. You may also walk away from a co-founder through a managed buyout agreement, citing strategic differences at the root.
The key is to know when a relationship has turned into more of a liability than an asset — and to act boldly. In the high-stakes startup world, defending your momentum and sanity sometimes means making the hard decision to cut loose, you must seek support. It hurts, but in the end, it’s also freeing.
7. Hold Your Own Grip on Reality
Finally, in your efforts to manage the delusions of others, never lose sight of your own mental state. One of the subtle dangers of working closely with delusional people is that over time, their warped view of reality can start to influence yours. When you’re bombarded day after day with inflated claims, impossible expectations, and make-believe thinking, it’s astonishingly easy to get swept up in the same distorted universe — particularly if you’re running on empty, feeling disconnected, or desperate to succeed.
You need to create habits in your life that keep you grounded. Surround yourself with advisors and mentors who will give it to you straight, even when it’s painful. Take time regularly to step back from the day-to-day grind and look at your company’s path with fresh, critical eyes. Ask for honest customer feedback, drill deep into your numbers, and compare your progress to outside benchmarks, not just your internal goals.
Just as crucial, look after your emotional and mental health. Burnout, lack of sleep, and long-term stress leave you more susceptible to delusional thinking since they negatively affect your judgment. Prioritize rest, contemplation, and a healthy separation between your startup and your identity.
Also, Read these Related Articles:
- 10 Powerful Strategies to Build Your Ideal Customer Profile and Land Clients Fast
- 7 Unstoppable Types of Customers You Must Retain for Business Success
- How to Sell Online Course Without a Website: 7 Brilliant Ways
It is in a world where optimism and aspiration are valued — particularly within the startup community — that keeping a firm hand on reality is a radical, brave move. It’s what distinguishes the founders who blow up in flames from the ones who ride out the turbulence and ultimately flourish. Ultimately, your capacity to see the world as it truly is — and to act accordingly — will be one of your strongest competitive differentiators.
I hope you liked this article. if yes do let me know down in the comments, see you in the next one.
