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Fake It ‘Til You Make It In Startup World, Until Somebody Gets Hurt

An interesting phenomenon in the startup world, and one that very few acknowledge, is the practice of “faking it until you make it (click for an unofficial definition).” This concept comes in varying levels— from modest “fake it” behavior, to outright blatant “fake it” swagger, and everything in between. What’s even more interesting is that “fake it ‘til you make it” seems to be contagious.

In the corporate world, by contrast, people are scared to fake anything — if they are questioned, criticized, or asked to do something out of their comfort zone, most tend to run away, ignore the issue, or look for someone else to pass off the job — because with far more resources and time, this is possible. This is certainly not case in the startup world, where you just don’t have the same luxuries.

This leads to the question, how fake is too fake, and when does it cross the line?

  • IT’S OKAY TO: Fake self-confidence to persevere through a tough time (something every entrepreneur goes through). Being an entrepreneur is tough. It’s a roller coaster of emotions and so much harder than working for a large company with a stable paycheck. Put a smile on and wait until you really feel it.
  • IT’S OKAY TO: Sell a future idea if you have a feasible plan. Many entrepreneurs go through a period where they are asking for money solely based on the idea of a future product or service. The only caveat: If you are selling a dream, you should have research and data to back up your claims to future success. Ever heard of Marc Lore, founder of this online Costco e-commerce site, may be the poster child for raising big pre-product bucks based on data, research, and experience.
  • IT’S NOT OKAY TO: Fake expertise or skills to give advice. Being an outsider, we often enter meetings where others have done very little to no research on our background (which is another interesting startup phenomena) and are pitched on ideas or “advised” on a topic in which we are intimately familiar.  We recently had a breakfast with an entrepreneur advisor that gave us a cringe-worthy diatribe on the advice she gives startups on the benefits of using professional employer organizations, including the ability to avoid paying overtime under the Fair Labor Standards Act (this is not true, thankfully).  Faking expertise will, at best, lead to a potential embarrassment by taking a customer’s money for a service they are not getting, or worse, quickly lead a startup into a lawsuit.
  • IT’S NOT OKAY TO: Sell a fake “product” to raise money for fancy offices and big salaries. Once again, “faking it ‘til you make it” is cool on your own terms, but don’t bring other people’s time, money or livelihood into the equation. We have witnessed at least one tech company raise millions of dollars based on a fake product without any feasible way to execute. They had amazing marketing, insightful content, and a shell demo, and spent the capital they raised on fancy offices, travel and executive salaries. It’s unfortunate to waste money, but what’s almost worse is seeing unsuspecting employees leave stable jobs for this type of startup, getting laid off within a matter of months. Don’t believe this happens? Check out Clinkle, the company that duped well known investors, Forbes, and The WSJ, but that the average person has never heard of and probably never will.

At the end of the day, faking confidence and positivity on occasion to keep yourself and your company going is understandable. But unfortunately, there are plenty of entrepreneurs who’ve jumped on the startup bandwagon and are faking it at the expense of anything and anyone until they make it. While a large VC firm may be able to spot this kind of company, it is the potential employees, families, friends, and smaller investors that can be really hurt by this behavior.

Ultimately this all begs the questions: Is the startup boom becoming so contagious that it attracts the wrong type of individual who is willing to do anything to raise capital?  Will this “fake it ‘til you make it” mentality be a catalyst for further tightening of investor wallets? How long can fakers survive in the startup world? Only time will tell.

Nikki TicknorComment