Should Entrepreneurs Lie?

I was talking with one investor late last year. Things were going pretty well in one direction with my company and I decided that it would be a good time to fund additional growth. Just before I closed the deal, however, some key relationships that I had been counting on fell through. Ever the optimist, it didn't cause me personally to doubt what I was doing and didn't think it was a big deal in the long term.

One thing that I think is true of technical people is that we are comfortable disclosing difficult things. We tend to view them as just bugs to work out and expect that everyone involved will have enough belief in the end goal to find workarounds to any challenges. So, perhaps naively, I told the investor what was going on and how I planned to proceed.

He (being a certain type of investor) took this as an opportunity to try to completely change the terms of the deal we had agreed upon. So, I ended the talks without taking any money.

I wondered for a few months afterwards if I had made the right decision in being so honest and came to the realization that some investors do expect you to only paint a rosy picture.

At the end of the day though, I realized that I don't to work with that kind of investor and, as things turned out, it was a very good thing to not take money from him. Since then, some unbelievably good things have happened and couldn't have taken place if I was tied to some investor in Japan who didn't believe in me.

So, the lesson for me was, be honest and be yourself. The people who believe in you as an entrepreneur will be there through the ups and downs. And the truth is a great way to weed out those of little faith.

Lots of complex answers here.

Legal analysis aside, it's risk -vs- reward decision.

Best outcome - you Lie for strategic reasons, nobody ever finds out, and your company is a success, everyone makes lots of money, everyone is happy, and even if they find out you lied, they may not care if you've demonstrated nothing but good behavior since. Maybe.

Lie, and then fail, and get found out - that may follow you around forever doing untold damage to your credibility for the rest of your life. Trust is an easy thing to lose and a hard thing to gain.

No. EOF [End-of-File, meaning "period!"]

Playing the game, hyping or as some called it marketing is part of being an entrepreneur. You always have to encounter that the information given to you is often fashioned in that way. As long as the facts are not misrepresented or blank wrong information which can get you in some serious trouble it is part of business.


I personally stay away as far as possible on stretching the truth because of a simple fact. When you start it you have to remember, what you said to whom, how much you said and so forth. At some point it starts to catch up on you and people start to remember it. Despite all the thinking it just gets messy and integrity in business in the long run is key. Therefore I stick with facts and truth which keeps it simple. That might sometimes mean that I do not get the deals I wish, but I have a good sleep and no headache and for sure I will survive.

Another test is: Would the victim be annoyed if they found you had lied? I doubt a VC would get annoyed at inflated sales forecasts (they know it's part of the game), but they would be annoyed if you lied about the feasibility of your project.