The Emperor Is Still Naked: Why Founders Must Choose Value Over Vanity

Build value.

That should be the aim of every leader, every founder, every organization. It’s the first principle of business—and yet somehow, still the most misunderstood.

Despite the claims of business schools and the promises of self-help gurus, the concept of “value creation” remains elusive. Jargon clouds it. Playbooks oversimplify it. Everyone seems to have a shortcut. None deliver.

Steven Kerr’s classic “On the Folly of Rewarding A, While Hoping for B” exposes this contradiction: we say we want one outcome but reward another. Founders want to build value—but the system hands out medals for valuation.

Why?

Because we follow the herd. Because vanity metrics feel safer than the slow, patient work of substance. Because in startup culture, chasing the next round is easier than building the next layer of customer value.

When I first heard the story of The Emperor’s New Clothes, I was baffled. How could someone believe they were clothed when they clearly weren’t? How could others play along? Then I entered the startup world.

Too many founders walk proudly in pursuit of greatness, cheered on by a system more interested in momentum than meaning.

At Golden Section, we call this misalignment what it is: valuation chasing—and we built a methodology to counter it. The Balanced Path advocates five pillars for building a sustainable, founder-aligned business. The fifth is this: Value Creation over Valuation Chasing.

Here’s the hard truth: founders are not short on vision. They’re short on focus. They’re not short on grit. They’re starved of execution. And the reward system is broken.

Why The System Is the Way It Is

The system isn’t nefarious. It’s just outdated.

In the early 2000s, it cost nearly $10 million to build a viable SaaS company. Venture capital was the right-sized tool for that level of risk. But two decades later, the landscape changed. The cost of traction dropped. Infrastructure became a service. Bootstrapped founders started breaking through.

But the capital kept flowing like it hadn’t noticed.

Institutions doubled down on VC allocations. VC funds ballooned. Incentives shifted: assets under management became the scoreboard, not return on capital. Round sizes inflated, valuations skyrocketed, and startups were coaxed to spend faster than ever.

The original purpose of venture capital—backing bold, uncertain bets—gave way to something else. Recklessness dressed as reasonableness. More money into safer, smaller bets. Vertical SaaS companies became the targets, but the capital structure often outpaced the company’s needs.

And founders were seduced by the promise of valuation. They traded their customer-centric edge for total addressable market pitch decks. Diluted their focus. Burned through capital. Six out of ten ended up with nothing at exit; we call that the "stat" (queue Jaws music)...

Before they ended up with nothing at exit, nearly all those diluted capital burning companies became misery factories. We coined that term at Golden Section to refer to a business where every constituent loses. In a closed system, that shouldnt be possible.

A Different Tribe

And yet… there’s a quiet tribe that chose differently.

Bootstrappers. Capital-efficient builders. Founders who watched their better-funded peers flame out while they steadily grew. Ask any of them—they can name the vertical SaaS companies that soared high and burned hot.

They aren’t anti-growth. They’re anti-illusion.

If you want proof, look to the PE firms that now quietly dominate the vertical SaaS landscape—or dig into the filings of Constellation Software. Patient, disciplined growth. Efficient capital use... real, enduring value.

The Balanced Path: Build Differently

The Balanced Path calls founders to build differently.

It doesn’t worship the size of the round. It treats capital as regrettable fuel—useful, but not something to brag about. It emphasizes revenue, margin, customer expansion, and retention. It encourages founders to pause before chasing artificial milestones.

And perhaps most importantly—it gives founders their agency back.

We’ve calcified 20 years of abnormal conditions into some perceived law of physics. I still hear people say what a “Series A ought to be.” But no one says what a local dry cleaning startup “ought” to raise.

Software isn’t a special class. It’s just another business model—one that has outsized potential, yes—but also one that can just as easily veer off track.

We’ve built a culture that celebrates funding like it’s revenue and round size like it’s product-market fit.

But we forget:

The emperor is still naked.

It’s time we called it out.