When I started my first company in 1994, my only business plan was to make the $600 minimum monthly payment on my credit card for startup expenses. A brilliant and reasoned plan, I know.

When, in the first month, I brought in $25,000 I thought I hit the lottery (aside from the splitting headache from lack of sleep). Things only improved from there (except for the lack of sleep part). Very quickly I had 20 employees. Still, I had never stopped to figure out what I was doing, or more importantly what I wanted out of it.

It is easy to say that you want to build a successful company. It’s harder to say exactly why. In retrospect, much of what I did in those first two years was to build my own ego. I hate to admit it, but it’s true.

It was not until I had my first significant failure that I took pause to collect my thoughts. In 1996 I founded The Virtual Market, one of the first dynamically generated e-commerce sites on the Internet. It won all sorts of technology awards, and was really fancy. And it lost me over $500,000 cash. It almost took down my other company, although we pulled through and paid off the creditors.

It was then that I realized I was looking inward, not outward. I was thinking of myself and how I could increase my own importance. Inevitably, I failed to understand the market and made decisions that did not create value for the company. Because of my early success, I thought I knew everything.

Why is this so important? Because so many entrepreneurs are building ego instead of building value. If that is what you want, go for it. I just won’t be joining in. I’m into building value.

Of course, building ego and building value can be closely intertwined. Money is often the measuring stick of self-evaluation. Therefore, it’s really easy to be fooled about what you’re really up to.

How can you tell when an entrepreneur is building ego? It shows up in his need for control, his irrational valuation expectations, his failure to focus on market needs, and in many other ways. If the word “legacy” is appealing to you, then you might want to stop and think twice about what you’re focusing on.

When I consider doing business with people, one of the first things I try to assess is whether the executive team is building value or building ego.

I prefer working with people who are building value. They are more rational. They tend to be more fun to spend time with. And it’s much easier to work with them to build even greater value together.

Ego builders, on the other hand, are hard to work with. I feel like I’m having to manage them to get them focused on value creation. It’s not much fun, and it’s very hard to create a mutually beneficial relationship with them.

Like I said, there is nothing intrinsically wrong with building ego. It’s just that I’m into building value, and that is the sort of people I prefer to have around.