Having insight into the dark side is essential in business, but we must learn to look there but not live there. In recent years, I have found a place in myself that allows this question to accompany me in all my business dealings: is that a lie?

Many of us, the fortunate ones, approach life and business with optimism and good faith. We take people at their word; we assume they are telling the truth, even if we see a bit of spin on the story, or exuberance in the telling. This optimism and good faith are part of the constitution of many entrepreneurs, and gives them their resilience to keep on through the trials of building new ventures, again and again.

And this same optimism and good faith can be an obstacle to their success, until they hone the ability to cast an eye of deep skepticism on essentially everything they hear from potential partners, investors, and strategic allies. This is particularly troublesome to the most honorable entrepreneurs, the ones who, by their very nature, keep their commitments.

The trick here, to look on the dark side but not live in it, is a kind of segmentation of your thinking – you can both let yourself fly high on the exuberance of a gleaming story of success (with a partner or an investor), and then come down to earth, without bitterness or negativity, and look at the opportunity, the partner and the investor with a colder eye, that says: “What if it isn’t so?” What if the technology hasn’t really been tested? What if the benchmarks in the investment deal are set against my keeping control of the company and there is a hidden motive here? What if this buyer wants only to close my company because it competes with one of his own companies, and he will never build it, as he says? What if this charming, positive and successful person across from me is a flim-flam man? What if I’m being conned?

In my work with entrepreneurs, I refer to this as my being Darth Vader – showing the dark side of every opportunity while we are assessing it. My work has shown me so many deals and their consequences that I often find humor in this perspective, because I have seen such a wide range of characters. The humor that is now embedded in being Darth Vader can startle my clients, but also lightens the gloom.

How do you master this segmentation of thinking? You sit still for awhile, alone, outside of the negotiations. You allow all the feelings to run through you, and recognize each one for what it is – euphoria, hope, skepticism, distrust, doubt (and self-doubt if that shows up), and the early stages of paranoia.

• Look at the optimistic projections you’ve been shown, and indulge in a few dreams of what that kind of success might mean for you. Then set this context aside.
• Conduct rigorous due diligence on the person, the product, and the capital, by yourself and with your advisors. Use your network. Did she really get that MBA? When she said she was instrumental in that other company’s success, did you find anyone who knew her and would verify this? Did you test the product and verify the results of the beta test of the technology? Did you see the investors’ check the potential partner claimed he had received?
• Examine the negotiations you are involved in, step by step, to see if there is any behavior inconsistent with a true story. What promises or illusions were mentioned but never followed up on? How long does it take to get a response to your communications? What does the behavior you witness in negotiation tell you about a long-term working partnership? (Someone once said, “If courtship is this difficult, what will marriage look like?”).
• Consider seriously the pessimistic view of the opportunity and your risk profile. How much are you planning to offer and commit of your time and expertise for what return? How much control do you have at what point? If everything falls apart, what are you left with and what have you signed away that cannot be retrieved? Then set this context aside.
• Study your “gut instinct.” You won’t be able to ignore it if you don’t. Your gut instinct is often correct but just as often irrational. So take a look and allow yourself to feel it. Then set this context aside.

Finally, take some time in a neutral context to see what weighs in more heavily – the doubts or the confidence that this is the right choice. With the information from your due diligence and your risk profile, the balance should tip significantly more one way than the other.

These tactics help us expose all the ways we can approach a decision, including the exuberant hopefulness of a new opportunity, and its dark side. By separating each approach, we can avoid our own irrational feelings sneaking up on us and helping us to rationalize a bad choice.

This discipline grows easier the more often we apply it, and saves us from approaching opportunities with either too naive or too defensive a context.