At the heart of any startup is a great idea and a vision. The inherent tension between having a vision and no product, then selling this vision before the product is even in alpha, is part of the nature of startups. The founders have the vision and strategy, they promote and evangelize, develop the product, and raise the funds. In many cases, the exercise of fund raising in Silicon Valley and the technology industry in general, is an exercise in hyperbole, not accuracy.
When you tangle in the feeling that many people have about sales - that salespeople are ‘snake oil charmers,’ that ‘anyone who can fog up a mirror can sell,’ that ‘salespeople are b.s.-ers,’ there is potential for unethical behavior and communication.
What do I mean? It’s a game where investors expect a certain amount of, yes I’ll say it, B.S. or inflation of the facts. Entrepreneurs know that investors need to see big goals and numbers in the business plan, otherwise why would they invest? Founders know that without these figures that show how an investor will grow the investment exponentially, they will not get funded.
External evangelizing, stoking the flames of the visionary’s fire, is also used internally to get new hires, keep existing team members excited, and keep the Board at bay.
I’ve experienced more than one CEO start to increase figures and numbers during pitches over time. For example, what starts as a figure that is say, 10, becomes 20, then 30, then 50 and before you know it, 100. What’s more, one starts to believe the new statement or figure as it gets repeated and embedded in one’s mind.
Then, this same hyperbole gets applied in the sales cycle with potential customers. What’s the problem with this?
The biggest problem with communicating overstated product features, growth metrics, or unrealistic delivery dates, is that it sets an expectation with the prospective client. Then when the prospect signs up, becomes a customer, and finds that the product is not ready, nor will it be for months, sometimes years, and that you’ve taken their money, they are naturally upset. Sometimes the customer finds out that they will be living with a minimal viable product that is much more reduced than they were promised, the sales and the account management teams end up having to manage this tense relationship.
I remember one instance where the CEO added a zero to the number of customers a partner had. After the call, I reminded her that the partner had 1500 customers, not 15,000. She disagreed and pushed back. Her mind had convinced herself that it was 15,000. After verifying with the partner, she admitted she made a mistake, however, it was just one example of ‘remembering’ an inflated number.
What is our ethical obligation to our customers as salespeople?
Step one in any sales cycle is building rapport. Why do we need to build rapport? Because trust is the foundation of any relationship and especially in sales. People buy from salespeople they trust. Without this, there is no sale.
Presenting information that is hyperbolic or exaggerates the abilities of a product, solution or company leads to questioning the validity of that information, rather than building trust. Hyperbole leads to distrust which is counterproductive to your end goal – the sale. The sale requires trust as a foundation.
So, entrepreneurs must resist the temptation to let exaggeration take over. Salespeople need to push back when the CEO exaggerates and tells little white lies. We need to remind the team that customers want, expect and value our honesty. Be real, give accurate information, as it will, in the long run, engender trust.
I believe that there is power in truth, even in sales. We will have more success if we are upfront, honest, and forthright with our potential customers about what our product does today, as opposed to selling futures. People buy from people they trust. Prospects can see through the smoke screen of hyperbole.
You must remain honest with yourself and your customers. At the end of the day, you have your reputation and integrity on the line.
As always, I welcome your thoughts, stories, and comments.
So just for fun, I put the first paragraph of my post above into ChatGPT to see what would happen. Here it is:
My input:
At the heart of any startup is a great idea and a vision. The inherent tension between having a vision and no product, then selling this vision before the product is even in alpha, is part of the nature of startups. The founders have the vision, strategy, they promote and evangelize, develop the product, and raise the funds. In many cases, the exercise of fund raising in Silicon Valley and the technology industry in general, is an exercise in hyperbole, not accuracy.
ChatGPT's write up:
As an AI language model, I cannot have personal opinions, but I can provide insights and information based on data and research.
It is true that a startup's success often hinges on a great idea and a compelling vision, but it takes more than that to turn an idea into a successful business. Founders also need to develop a viable product or service, identify and target a specific market, and execute a solid business plan.
The tension between having a vision and no product can be challenging, but it can also be an opportunity to generate interest and excitement around the idea. By promoting and evangelizing the vision, founders can attract potential investors, partners, and customers who share their vision and want to be a part of bringing it to life.
However, it is important to note that hype and hyperbole are not sustainable business strategies. Investors and customers will eventually expect results, and if the product does not live up to the hype, the startup may struggle to retain their trust and support.
Fundraising is indeed a critical component of many startup journeys, and Silicon Valley has a reputation for being a hub of venture capital activity. While hyperbole and exaggeration may be prevalent in some fundraising pitches, it is important for founders to be transparent and honest about their company's potential, risks, and challenges. Misleading or deceiving investors is not only unethical but can also have legal consequences.
Ultimately, the success of a startup is determined by a combination of factors, including the quality of the idea, the execution of the business plan, the team's skills and expertise, and the ability to adapt and iterate based on feedback and market conditions.