Should Entrepreneurs Lie?

"I generally assume that it's okay to lie if it doesn't lead the other person into a decision that will bring them harm..."

Humility is knowing you're not smart enough to know when other people are better off being lied to. Once you start justifying your lies as being helpful to the victims, you've crossed from malice to delusion.

Further, you've just admitted on a public forum read by many with deep connections in the startup world (and others bright enough to crack whatever anonymity you think you have), that you're okay with lying to investors. This doesn't bode well for your career as a master fraud.

With skills like these, the Dark Side doesn't have much to offer you. Please consider switching teams.

I never claimed to be a master liar, and it should be obvious that I'm not one. I don't like doing it, as I find it distasteful, and I don't, but I recognize that certain kinds of material and social success will require deception for 99+% of people.

Most people live in a world of fiction and react horribly to having that fiction refuted, which the truth often does. If you're willing to piss them off and have them hate or reject you (which I often am, because it's endlessly amusing to me) tell the truth to them. If you want smooth relationships with them, offer up a story.

One of those fictions is "Society"; many people have a deep desire to believe that they're among an exclusive elite-- and those who are powerful have the means to persist in this semi-delusion-- and that this elite encompasses all people who are of any value-- this part is obviously ridiculous. If you ape their values and manners (spin a story; uphold the fiction) these people may let you into their club and you may benefit from their resources; if you upset their story with the truth (that most people of talent are not like them and have different values and backgrounds) they will either reject you or (if you pierce their shield of self-deception) become very angry. The former is more likely, but neither benefits you.

Hyping, shading and puffing are normal in entrepreneurial circles and, properly limited, are probably expected to some degree. People discount the statements accordingly.

Misrepresenting material facts or omitting to disclose something major (like the loss of your major customer the day before a funding) constitutes securities fraud and can get you in a heap of trouble, notwithstanding how it may have worked out in a particular case such as that cited in this piece.

There are also limits to hyping if it amounts to misrepresenting material facts. I was once approached by an entrepreneur whom I turned down as a client and who later got busted for securities fraud for having done a demo claiming that certain of his company's whiz-bang technology was in fact doing something stupendous when it was in reality just a rigged demonstration designed to simulate what he claimed his technology could already achieve. Having raised $7 million based on such demonstrations, mostly from gullible investors, he went to jail for his "over-hyping" of his product.

When it comes to issues such as lying, there are moral issues and there are legal ones. If you are an entrepreneur who wants to avoid serious problems, the rule should always be: never lie in a way that amounts to fraud or misrepresentation (legally speaking), no matter what the supposed benefit. It is not worth it.

Concerning moral issues, the issue for me is one of integrity. Just as we all can stretch something when it helps us, and just as we all do so to some degree, so we can stretch it to the point where it amounts to a pure fabrication. Mild stretching might be considered a gray area. Fabrication is a character issue that can reflect badly on the entrepreneur. Of course, this depends on context as well. If it is clear you are speculating (such as about growth rates), that is one thing. If you are knowingly misrepresenting facts, the natural thought that occurs to people you are dealing with is, "If he will do that once, how can I trust him not to do it again." You might think it is innocent in your mind, but crooks make a living off such misrepresentations. And there is no percentage in aligning yourself with that which is unseemly. I have repeatedly seen the consequences of such activity in courts of law, and they are not pretty in cases when things do blow up.

"Inherently unfair and often dark" was an exaggeration on my part.

The universe is benevolent by default because it has absolutely no supernatural character,

Wouldn't this make it utterly neutral?

What I meant to say, and didn't articulate very well, is that human societies have egregious failures that often undermine progress. Most people are good, but most of the people who get power and status (at least in the short-term, first-order senses of these words) are the despicable, evil ones.

no.