October 20th, 2021 | By: Wil Schroter
The difference between lying and optimism is often told in the outcome.
As Founders, we spend an inordinate amount of time telling stories about how the future of our startups MIGHT turn out. Often, those stories balance the line between being optimistic gestures of hope and a sordid tale of deceit.
When we tell our customers we'll be able to deliver a product we don't have the personnel to deliver (yet), are we lying? When we stand anxiously in front of investors boasting that we'll become a billion-dollar unicorn, are we misleading them? And when we recruit someone to leave their high-paying job to work for an idea we've barely proven, are we betraying their trust?
This is the moral dilemma we face as Founders every day while we convince the world our bold predictions may come true while at the same time trying to prop up the veritable shit show that our startup really is.
We'd love to believe that our unbounded startup optimism isn't just optimism, it's a positive hope toward a better tomorrow. At first glance, that sounds like a noble way to think of our lives and intentions. And for the most part, Founders do indeed have noble intentions with our optimism.
But let's call our startup optimism what it truly is — wishful thinking for the purpose of aggregating the resources we need to make that thinking a reality. What we're really doing is distracting ourselves with the future long enough to overlook the present.
When we tell an investor that our startup might be the next "Facebook for Pokemon," what we're really doing is distracting them from the present (parting with their capital) in order to shake our focus long enough to hopefully turn that dream into a reality. Optimism, by default, is the most important resource we have because it holds the illusion of the future long enough to ignore the present (which again, usually sucks!)
The reason our optimism isn't straight-up lying is because in order to lie, we have to know and withhold the truth. This is a slippery slope that every Founder has to manage.
Let's say we are out of cash and we tell our entire staff that they should continue working even though we know we can't make the next payroll — that's lying. We knew the money wasn't there, and we deliberately didn't tell them about it. Conversely, if we had expected a fresh round of capital to land, only to learn at the last moment it fell through, that was just busted optimism. It wasn't lying because we didn't know for certain the money wasn't there. (Fun fact — they won't care either way if they don't get paid!)
There's also a factor of whether both parties know the inherent risk of a statement. When we tell investors our company could be worth a billion dollars, they don't actually 100% believe us. They know that there is potential, but they don't go home, sit down at dinner with their family and say "Welp, family, we now own 10% of a billion dollars! Pack your stuff we're buying a new house!" We know that going into those discussions, both parties are smart enough to evaluate their own risks — we're just painting one potential outcome.
What keeps honest Founders on the right side of the equation is how we present our hopes and optimism. We baseline our predictions based on what we know (presenting the facts as we see them) and then color them with the optimistic hopes that we have on top of that.
In doing so, we tell our staff "We've got 3 months of runway left at present, but our goal (hope) is to raise another round of capital before that runs out." We're not lying because we present the fact, but we're also using our optimism to rally our resources toward a common goal.
None of us are Nostradamus. We're not expected to accurately predict the future. What we're expected to do is present our version of the future, as we intend it, with the full disclosure of what we do know while doing it. Honesty and optimism don't have to be a competing moral quandary — it can be the foundation for every aspect of how we present our startups if we use them together in harmony!
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Wil Schroter is the Founder + CEO @ Startups.com, a startup platform that includes Bizplan, Clarity, Fundable, Launchrock, and Zirtual. He started his first company at age 19 which grew to over $700 million in billings within 5 years (despite his involvement). After that he launched 8 more companies, the last 3 venture backed, to refine his learning of what not to do. He's a seasoned expert at starting companies and a total amateur at everything else.