Entrepreneurs have an evangelistic approach to their products and companies. Indeed, legendary founders stand out for their ability to inspire others, even if it means spreading the truth. Think of Steve Jobs, a salesman. Early Apple employees describe him as “able to convince anyone of almost anything.”
Founders have to stop the disbelief in their products and have to convince their users. And provide their users to see opportunities as they see is vital for the startup. But, unfortunately, that causes stress and distorts the truth.
After that, facts can begin to exaggerate, embellish, and gradually turn into half-truths with bluffs. Whereas deception leads to their inefficiency; It can prolong the life of failed startups but makes it difficult for VCs and employees to know where to invest their money, efforts and locks up resources. The fact that the founder or the lead investor next to him starts to lie creates a personal stress effect on the founders. In this case, enthusiasm can lead to exaggeration, and exaggeration can lead to lies one after another.
How can we get rid of staying away from realities from the startup culture while encouraging entrepreneurs?
Entrepreneurs continue their journey in uncertainty. Entrepreneurs often don’t know or think they know whether their products will work, who the customers will be, or how to reach them, but on the way, they realize that they don’t know. So they accept, work, and continue to learn. The entrepreneur is someone who, in the face of all this uncertainty, acts while others hesitate. Is this enough? An entrepreneur needs the help of others and therefore needs to be persuasive, persuading VCs for funding, teammates for product development, and customers to give a new product a chance, all while instilling confidence in the team as it moves forward. It causes vacillations. The mental state of the entrepreneur becomes very important here.These vacillations are the first reason some entrepreneurs stay away from the truth.
A small percentage of Entrepreneurs get their startups where they want to be. On the face of it, entrepreneurs dominate the ranks of the world’s richest people. A thousand things must go right to reap such huge rewards. In any meeting, a founder’s fate is on a knife-edge. It is tough mentally. Failure can not only cause a vast, unexpected downturn, but it can also mean disappointing friends, family, employees, and investors. That’s the second reason why it can be tempting to distort reality when expectations are so high.
For example, during the era of tech bubbles in the late 1990s and 2000s, startups that only dealt with small software tried to classify themselves as the future tech company because it would increase their value. The founders overestimated the expected income as they expected investors to discount their figures. In this scenario, in an article I read, one founder said, “I have to say we’re going to make $50 million a year because investors will cut the figure and hear $5 million a year; everybody knows that,” he said. Founders may also exaggerate their financial models to achieve the results they think VCs expect. Ten times return a multi-billion dollar market. Entrepreneurs who do not exaggerate, who think that exaggeration is wrong, may rightly fear putting themselves at a disadvantage. However, business and startup areas are no different from the rest of life and must be managed with the same ethics.
The Honest Entrepreneur
Most entrepreneurs want to reassure others and prove that they are worthy of that trust. According to psychological studies, lying and cheating are known to cause significant stress for the vast majority of people. Research has shown that stress-related to ongoing ethical dilemmas reduces job satisfaction and is a leading cause of burnout.
Investor ethics are equally important. An entrepreneur may build or join a few startups in his lifetime, but the most experienced investors join hundreds. In many markets, they witness many founders’ years of ordeal and accumulate wisdom that founders cannot imitate. A good investor has the ability to “pattern-match,” is sensitive to the moral dimensions of specific exams, and knows which courses of action are “right” and have the best results. The best investors pave the way for entrepreneurs and startups with their wisdom and experience, not just capital. Conversely, the wrong investors can be disastrous. Disasters come especially from investors who put growth above all else.
Entrepreneurs face extraordinary pressures to lie. Competing for a fixed pool of VC cash, often trying to secure returns for their friends and family, and chasing their dreams of greatness, they may feel disadvantaged if they pursue their ventures with a solid commitment to reality. Understanding the forces that encourage them to lie and the tactics that can help them stay virtuous can lessen the deception prevalent in this crucial part of the economy.
What should we do as a result? First, surround yourself with people who will help you became your best. A lot of psychology researches show that our social environment affects our morals. While the actions that those around us do or condone become acceptable to us over time, the actions they condemn become unacceptable. That’s why smart entrepreneurs surround themselves with co-founders, mentors, board members, and investors who will help them become their best selves.
Good Luck To All Of Us,