Entrepreneurs are optimistic by nature. They have to be to survive the ups and downs that come along with starting and running a company. This optimism often leads to a rosier view of the future than what plays out.
Entrepreneurs also have to manage employees. If most employees knew about the reality of your cash position, or the real reason an employee resigned, or all the negative feedback you’ve heard from potential investors, they may not stick around. This leads to sugar-coated untruths that help paint a slightly better picture for the company’s situation.
Below is a selection of these little white lies I’ve heard repeatedly from entrepreneurs over the years. Heck, I’ll admit I’m guilty of saying some of these myself.
1. This is our last pivot
Pivots are inevitable with early-stage companies as they search for product/market fit. What is unknowable is when you’ve made your last pivot. My first company went through three significant pivots in the course of eight years. After each one you always think it is the last. God please let it be our last pivot!
2. This is our last round of funding
Haha. I hear this from entrepreneurs maybe 75% of the time after they close their latest round. No one wants to raise more money and you always hope you’ll reach profitability before the money runs out, but alas, the venture capital hamster wheel keeps turning.
3. We’ll be profitable next year
This is a variation on the “we won’t need to raise any more money” lie. Trying to accurately predict expenses and revenue for anything more than a quarter out is a task that’s too difficult for many entrepreneurs.
4. We are changing our pricing for the last time
Ahh, pricing. The bane of many startups’ existence. Let’s price low so we remove barriers to using us. Let’s price high so we are the premium offering in the market. Let’s price middle-of-the-road so we can get some value while offering more features. Product pricing (especially for SaaS) is more art than science and very difficult to get right. As Marc Andreessen puts it, most startups price too low.
5. It’s with mixed emotions that I’m announcing that John is leaving
Now we get into some of the lies that are told to employees. While we may have mixed emotions about an employee, generally the mix is anger for leaving without warning and dread because now you have to try and backfill the position.
6. We believe in complete transparency
It’s trendy to say you are running the company in a transparent manner. Everything is out in the open!
It’s an easy platitude to say too. But in reality, this is how most CEOs feel about her employees' ability to handle the full details of what’s going on behind closed doors:
7. I’m open to everyone’s feedback on how we can improve
Again, this is a simple platitude, but how many leaders really mean it? Right after you hear a CEO say this, the next thing going through his mind is “Please don’t give me any feedback. Please don’t give me any feedback.”
8. We do not plan to ever sell the company
While there are a few exceptions to this (e.g., Craigslist), in general most startups are going to sell their company at some point. It’s fashionable to say you’ll never “sell-out,” but when some big company waves a lot of money, it’s human nature to strongly consider it.
9. We are moving to a new office that will position us for the future
No one moves because it is fun. In fact, moving is highly disruptive and can cause all sorts of issues with changing employee commute times. CEOs like to sugar coat any forced move to “position us for the future” which simply means our previous lease ran out and this new place was the least expensive, best option we could find.
10. Our budget is aggressive but achievable
Programmers get a bad wrap for not being good at estimating how long it takes to get something done, but in my experience, most leaders are pretty bad at predicting how much money they’ll need throughout the year too. It’s understandable. As Jason Fried likes to say, they are really just guesses.
11. We only hire the best of the best
People don’t say this anymore, right? According to Google, it is still common. This is a self-aggrandizing truism that really means nothing. No one ever says “We only hire a notch down from the best.” or “We like to hire second rate people!”
12. I only take investment from value-add investors
It’s rare that startups in the Southeast (where I’m based) can be picky over the type of investors they raise money from. I find it particularly amusing with the first-time entrepreneur that claims she’s only talking to investors that will be a “value-add”. Good luck with that!
13. The last couple of months have been very strong
No matter how bad it’s going at a startup, it seems like the last couple of months are going well. No one wants to say that the last couple of months are trending down, we are losing customers, and employees are leaving. It takes a strong leader to be truthful about the current state of affairs when things are not going well. I get it. The common fear is if you tell people how it’s really going, maybe that will only make it worse.
14. We are conservative with our cash
Have you ever heard a CEO say, “We spend our cash without restraint.” Nope. Most proclaim how they like to “conserve” cash. They want to be good “stewards” of the capital. I guess that extra night in Vegas at the $300 hotel to save an extra $100 on the return flight is being a good steward?
15. Our product is way ahead of the competition
Of course. Have you ever heard a startup say their competition was much better than them? If so, they probably weren’t in business much longer. Everyone tends to think their product is superior to the competition, even if it isn’t.