May 26, 2022

as founderYou will meet many hills and valleys which will increase your business. As much as you strive to provide positive information to your stakeholders, it is also important to be clear when product results and financial performance fall short of expectations.

As an angel investor funding promising start-ups, I sometimes – and fortunately this is rare – encounter dishonest practices. The point at which the “fake” turns into a lie for investors, clients, and oneself is the point at which ego and reality collide – and in some cases, the ego wins.

The highly publicized case involved Elizabeth Holmes, the founder of Theranos, who was convicted of defrauding investors of a diagnostic device company she founded. Less well known is Adam Roga.I CEO of cyber fraud prevention company NS8, which allegedly raised $123 million from investors using financial statements, with millions of dollars in revenue and assets missing.

These and other equally horrific cases are a warning to entrepreneurs and investors: transparency is not an option; This is a necessity.

The founder of the company I invested in kept two sets of books secret: one with accurate historical financial data and another with numbers that were more than 10 times the real numbers. Product sales and performance lagged behind. Their solution was to present extended financial data to investors.

The founder of the company I invested in kept two sets of books secret: one with accurate historical financial data and another with numbers that were more than 10 times the real numbers.

But investors are always wary and feel that something is wrong. After examining the data, we quickly discovered another set of books. This founder was unable to secure additional investment in his company and got into legal trouble.

It’s okay to report positive news, but it’s equally important to present problems. Problems can turn into big problems if you don’t communicate with them. Never let the pressure of investors looking for good news push you to exaggerate or hide the truth.

optimism and reality

The philosophy of “fake it until you succeed” has never been about playing with the truth. It suggests that you must adopt the mindset that you will be successful even if you don’t believe you will be successful.

It is quite normal to have an optimistic view of the future of product development and finances. But it is important to present reality, not the reality that you A wish When reporting on the current state of product development, real customers and financials were accurate.

ego going wild

One trait that allows founders to take huge risks in order to work and stick to their vision, which is overconfidence and arrogance, is a trait that can cause some of them to lose their sense of right and wrong. When their moral compass drifts, they cheat to move on.

In extreme cases, founders have become addicted to cheating because of their egos. He sees himself as the CEO of the next unicorn. They uncover a stream of lies that support the reality they have created. These people are stuck in an imaginary place steeped in pride. As we saw with the rise and explosion of Theranos, the scam got out of control, in fact the founder was lying.

Blue Chip Temptation

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