Startups: you can fake it til you make it, but don’t ever lie

Every successful startup founder has to be first and foremost a great salesperson. It means to be able to sell a brand-new concept before it even exists. To get key stakeholders and users to buy in requires some creative promising — and some faking it till making it. However, there is a thin but clear line between that and blatantly lying.

One of the greatest startup salesmen was Steve Jobs. As the legend that he is, many have simply chosen to forget that he was probably the king of faking it. Jobs launched the Apple III with much aplomb, but the device hung so frequently that users were forced to pick it up and drop it to reboot. Despite all of Apple’s mistakes, the tour-de-force of a man almost single-handedly brought about the success of Apple — no one truly remembers the bad.

For startups, there are a few ways that you are required to fake it to make it.

The vision
Look at the vision of every successful startup, it is made intentionally grand — ala the big hairy audacious goal. According to James Collins and Jerry Porras in their 1994 book, Built to Last: Successful Habits of Visionary Companies, “The vision should be a crazy 10-to-30-year goal to progress towards an envisioned future”.

The vision needs to be impressive to attract investors, employees, and users to give the startups a chance. It is also often vague enough to give breathing room for key performance indicators that may not look very rosy at the beginning. As the future is not for us to see, startups need to look like they are aiming for the moon. The truth is that only some will make the landing, while most die trying. Those who don’t think big will likely be unnoticed.

Projections
Fundraising for startups is a catch 22. You need funding to get results and, at the same time, you need results to get the money. So what is a new startup on the block to do? The answer is projections.

Projecting your future earnings is a proclamation of a business potential and painting a rosy picture is a common practice. It is an indication of the founder’s belief in the business, as long as the profit and loss is realistic. When an app, service or product first hits the market there is no clear indication on how well it will do. Even with all the surveys on potential customers and R&D from lean startup methodology, you really would know only if your business will work when the results are in. Likewise, investors will understand a pragmatic projection of user growth.

Hiring
Startups often struggle with getting experienced talent to take a plunge into uncharted waters. 29-year-old Jobs lured John Sculley, Head of Pepsico, to Apple with the now legendary pitch: “Do you want to sell sugared water for the rest of your life? Or do you want to come with me and change the world?” At that time, Apple was a four-year old company started out of a garage – there was no way to know how big it would become. But of course, Sculley took the bait and joined up.

In fact many senior executives are leaving their corporate jobs for startup ones. Besides being tired from the mundane rat race, there is a combination of money, equity, role and prestige that goes into the sales process. Finally it all comes down to selling the vision.

All that but no lying
There is no excuse for outright lies and the truth will almost always come to light. A good example is of Scott Thompson, the Yahoo ex-CEO, getting to where he was by faking his resume. Common lies include faking a valuation, claiming other startups’ success as your own, and fudging one’s usage metrics with bots.

Massaging the truth is different from making it up. Many startups can be accused of taking longer to make returns than promised during fund-raising or talking up product capabilities that aren’t yet ready. Yet, as there is no crystal ball to peer into, delays are to be expected.

Startups always use an arsenal of half-truths, vague indications, and overt confidence to get through the difficult times. However, there should never any known lies. Sometimes, the ends justify the means, and it’s usually validated through success.

---

This article by John Fearon originally appeared on Tech in Asia, a Burn Media publishing partner.