Businesses, investors and consumers alike are gregarious. They want to go where everyone else is going. They want to buy success, from successful companies.
This leads to a perversion that affects the startup world as well as the rest of the business world: the need to appear more successful than you are, in order to get business, investment, customers.
This is not entirely artificial. Building a successful business is also about being able to project the right image to appeal to customer, and an appearance of success is part of that. Fake it till you make it, as they say. People don't want to buy from or invest in a dying company, so you've got to look like you're doing great, even if you're an invoice away from technical bankruptcy.
But there's a reverse side to that, which I believe is harmful to some startups: this projection of fake success extends to meetings with other startups and potential mentors at networking events, and because of that, founders who could really use a good dose of advice from a more experienced entrepreneur end up flying blind and making all the same mistakes again.
Startup networking events
When I turned up to my first startup networking event, I didn't know what to expect, so naturally, I turned on the "we're doing great" façade (which, I quickly observed, everyone else did too). Isn't it amazing how, in a high-risk industry where most companies are expected to fizzle out in the next few months or years, everyone is doing great, growing fast, acquiring more users, etc? How often do you meet a new founder and hear "Yeah, well, I've been at this for 9 months and our revenues are still way too small, so I think I'll be throwing in the towel and trying something else soon, because this isn't working."
Another aspect of this problem is that once you start putting up the appearance of success, it becomes very tempting to do so consistently, with everyone. Anyone could refer you to some business, after all, so you have to be on your toes all the time. Otherwise, you might miss out on some great opportunity that would have come your way if only people thought you were doing well. At least, that's how it often feels.
To make matters worse, if you introduce yourself by presenting what's wrong with your business, people will peg you as a negative type, and that's not the kind of founder people think of as being headed for success. No, you have to be an outgoing, friendly, open extrovert with a strong dose of self-confidence and a very slight touch of arrogance.
I'm very lucky that I can genuinely say that at this point, the two businesses that I am involved in are doing very well. But this wasn't always the case.
In the times when my companies were not successful, did I get any amazing opportunities by claiming to be successful to my startup peers? I don't think so. Founders have a pretty finely tuned bullshit detector. I doubt anyone was all that fooled. What about investors? With them, faking success is even less useful. VCs will not invest without doing a fair amount of due diligence. Claims that you're doing great when you're going bust will never lead to investment, unless you're a consummate con man.
What opportunities did I really miss, then?
How about opportunities for advice? Entrepreneurs are a helpful lot, but if you don't present your problems clearly, your peers won't be able to help you. Even non-entrepreneurs seem more likely to offer advice and connections if they think you're struggling and they could make a difference. Perhaps the only set of people to whom you might want to project the "appearance of success" are clients, during a pitch. Even that is unclear, though. It really depends on your industry. In some industries, a fledgling startup is more likely to get a foot in the door than a mature, successful company, and expectations will be lower, and therefore easier to beat.
- Appearing more successful than you really are will destroy more opportunities than it will create.
- Instead, be honest with fellow entrepreneurs. Don't be negative about it, but don't claim to be doing great when you're not.
- VCs will not invest based on an appearance of success, so bullshitting them won't work either.
- Appearances of success may work with some types of customers in some industries, but think about it for a few minutes instead of simply defaulting to the startup gung-ho attitude.
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