Entrepreneurs lie. How much is ok?
In startup land, you need to spread the bullshit if you want to grow the crop. How do you know when you’ve gone too far?
I’ve been following the Theranos story a little too closely this week. In case you missed it, a Silicon Valley entrepreneur named Elizabeth Holmes raised $1.4B dollars of supposedly smart money with a made-up story about a product that could test blood in a fraction of the time and money required today. It couldn’t. When the house of cards collapsed, the money was gone, and she was in handcuffs. Her trial is now underway, and the air of Startup Nation is thick with drama and schadenfreude.
Like you, maybe, I make a living bringing new things into the world — ideas, products, businesses. Doing that requires a very particular set of skills… among them the ability to synthesize, simplify, and communicate effectively. But it also requires a force of will only enabled by unreasoned conviction you’re right, even when you might not be. It’s a certain kind of belief that drives good entrepreneurs right up to the line of deception, and sometimes past it into fraud.
I’ve walked up to that line myself. When we were trying to get m-Qube off the ground in 2002, we needed the support of the wireless carriers to win. Our vision was for a mobile marketing platform, a way for brands to leverage the still nascent technology of SMS messaging to communicate with customers. The problem was it was 2002, and text messaging wasn’t really a thing yet in the US.
We knew the carriers wanted us to be right, though, and set out to convince them of what they wanted to believe… that they could enlist brands’ help in turning SMS into a phenomenon here, just as it had become in Europe.
In September 2002 we cobbled together a pilot program for the category we were trying to create, to demonstrate the power of the “mobile coupon.” We enlisted the help of the local Cingular Wireless team, and set off in search of a retail partner willing to participate. When all the retailers said no, we found a local mall operator willing to support the trial, and we were off.
If I’m honest, the campaign was a nightmare. No one knew what text messaging was, let alone how to use it. We screwed up the call to action and the offers, and basically spent 3 weeks in a food court teaching people how to send and receive text messages on push-button Nokia phones.
However humble the reality, though, the carriers LOVED the concept. So did the media, who reported the story, and put us on the map. A few months later we had our first carrier deal. Four years later — having pivoted twice — we sold that company to Verisign. Today my name appears on the patent for mobile couponing, despite the fact the program I led to demonstrate its potential was an abject failure.
The truth is the vast majority of startups successful at introducing something new to the world have a story just like this one.
It’s a story of willing something into the world by brute force, whether or not it was really there to begin with.
There is no creation without will… in art, business, or politics. And there is no will without belief, first and foremost among people willing to act on it.
Is this deception? Does it cross an ethical boundary, even if the intent is benign? We never set out to deceive the carriers or anyone else with what we did at that mall in 2002. You could argue the difference is in the disclosure, that Ms. Holmes not only didn’t reveal her machine didn’t work, but claimed it did, and hid the evidence to the contrary. But we never told the carriers the vast majority of people didn’t know SMS existed, let alone how to use it. We just told them some did — which was true — even if they needed “a little help” to get there. Then we let the carriers fill in the blanks with their own fears and desires. And they did.
Rather than just condemn Holmes and move on, we should all take the opportunity to reflect on the difference between packaging and fraud, to think about the lines we’re willing to cross.
People in my line of work know creating momentum often requires creating the perception of momentum first. Doing so is all well and good, right up to the point where it’s not.
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