“All businesses are loosely functioning disasters.” – Brent Beshore
If you’ve ever built, scaled, or even just survived running a business, this quote probably lands like a warm hug and a punch in the gut at the same time. It’s honest. It’s unvarnished. And it’s weirdly comforting.
You’re not alone.
In fact, I’d argue that the real tragedy is when founders or leadership teams pretend otherwise. Especially during tech due diligence.
The DD Illusion: Shine Over Substance
When we step into a due diligence process, especially in tech, we often find ourselves confronted with a polished version of the truth. It’s natural. The pitch deck is sleek. The documentation is manicured. Everyone’s LinkedIn is perfectly optimised for investor confidence.
But here’s the problem: we don’t want the polished version. We want the truth. The beautiful, broken, brilliant truth.
What do you already know is broken?
What’s quietly on fire in the background while everyone smiles for the investor day Zoom call?
What do your engineers talk about on Slack but don’t dare put in a board pack?
These “known knowns” are pure gold in due diligence. They’re manageable. Workable. Prioritisable. But what we also want to do is sniff out the unknown unknowns — the lurking tensions, the cultural misfits, the code debt that’s been duct-taped together by that one brilliant but burnt-out developer.
When It Falls Apart: Post-Investment Implosions
I’ve seen it too many times.
An exciting deal. Great product. Thrilling market. Talented team. Serious tech.
And then… six months later, it’s chaos. Burnout. Founder exit. Political infighting. The culture collapses. Everyone blames everyone else.
Why?
Because:
- The pace of change post-deal was unsustainable.
- Founders got sidelined or overruled by “grown-up” hires who looked good on paper.
- Original team culture was misunderstood or ignored.
- Money poured petrol on pre-existing tensions.
The pressure goes up, the cracks widen, and before long, the “loose disaster” becomes a full-blown one.
What’s the Solution? Less Theatre. More Truth.
Here are a few post-deal strategies that work:
- Coach the execs, not because they’re broken, but because they’re human. Pressure changes people.
- Slow the hell down. Give the team 90 days of breathing room before enforcing change.
- Treat culture like code – it needs documentation, testing, refactoring.
But the strategy I think we must adopt more is this:
Psychological Due Diligence — For Both Sides
We do a lot of post-deal assessments of the Senior Leadership Team (SLT). It helps investors understand what kind of engine they’ve bought. But what if we assessed investors, too?
Let’s flip the lens:
- What’s the investor’s default decision-making style?
- Do they value alignment or velocity?
- Are they coaching types or scoreboard types?
- How do they handle disagreement?
Imagine starting a post-deal integration not with a gantt chart, but with a facilitated session where founders and investors lay out their working styles, conflict triggers, and genius zones.
Not to fix differences — but to know them. To build on strengths instead of silently tolerating quirks until they explode.
We Don’t Need Perfection — Just Realism
Due diligence isn’t about uncovering perfection. It’s about understanding what’s real, and deciding whether the risk is worth the ride. So let’s stop playing theatre.
Let’s meet each other where we are — brilliant, chaotic, imperfect — and build something honest from there.
I’d love to say you can avoid Functioning Disasters, but look at firms like Lehman Brothers, which took 150 years to build and days to collapse. So it’s vital to enjoy the journey.
