Every successful startup founder has to be a great salesperson, first and foremost. You must be able to sell a brand new concept before it even exists. To get key stakeholders and users to buy-in requires creative promising: hence, fake it till you make it. However, there is a thin (but clear) distinction from blatantly lying.
One of the greatest startup salesman was Steve Jobs. As the legend that he is, many have 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 – and no one truly remembers the bad.
For startups, there are a few ways that you are required to fake it to make it.
Look at the vision of every successful startup; it is made intentionally grand – a la 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 in order to give the startup 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… while the truth is that only a few will make the landing, while all others die trying. Those who don’t think big will likely be unnoticed.
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 common practice. It is an indication of the founder’s belief in the business, as long as the P&L 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 will only know if your business will work when the results are in. Likewise, investors will understand a pragmatic projection of user growth.
Startups often struggle with getting experienced talents to take a plunge in uncharted waters. 29-year-old Jobs lured John Scully, 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 the time, Apple was a 4-year-old company that started out in a garage; there was no way to know how big it will become. But of course, Scully took the bait and joined up.
In fact, many senior executives are leaving their corporate jobs for startups. Besides being tired from the mundane rat race, there is a combination of money, equity, role and prestige that goes into the sales process. 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 Scott Thompson, ex-CEO of Yahoo!, who got 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 fundraising, 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 series of half-truths, vague indications and overt confidence to get through the difficult times. However, there should never be any known lies. Sometimes, the ends justify the means, and it usually validated through success.