Recently, I came across a post from a venerated angel investor, who I hold in high regard. He had written about gaming traction, stating that entrepreneurs sell to their friends and family to show a good product-market fit to investors in the initial stages.
This got me thinking about the importance of values and ethics in a start-up environment. While gaming the system may be a fairly common practice, it definitely does not make it okay. Here’s why.
You never want to start a relationship with your investors, based on a lie. Even if it is not an outright lie, it is still deception to game the system. You may be able to work around it in the initial stages and gain the approval of your investors. But what happens post funding? Your friends and family can’t keep your numbers up, forever. There has to be a genuine need in the market and an actual customer base that purchases your product. Remember, the numbers never lie.
A little lie or a big lie or even a minor deception is always found out. If you lie once, you will need more lies to cover up the original lie. Once the truth comes out about your lack of product-market fit, no investor will be willing to work with someone they do not trust. And who can blame them? Investing in a start-up involves money and no one likes to lose out. Come to think about it, no one likes to admit that they invested in the wrong company as well. So, keep it simple. Lay all your cards on the table and whatever the reality is, if you have a plan to build a customer base or a vision for the future needs of the market, let your passion sell your idea.
There is no shortcut to success. It requires hard work and perseverance. Giving up your ethics and integrity for what seems like a faster route to success is foolish and only harms you in the end. Every successful start-up once started at the bottom. Nobody appears at the top, out of nowhere. There is no jet-pack that lets you skip the intermediate levels. It takes grit and determination to climb your way to that mountain top.
Success that is a by-product of cheating never gets you anywhere. It is short-lived and bitter. No matter what you say to convince yourself that you deserve it, deep down, you know that it is based on deception. Even if you game traction just at the beginning but work really hard after to make your company succeed, you still know that you started out by giving up your integrity. It may be success but it will be bitter. If you are truly passionate about your ideas, then you should also have faith that you will find a way without giving up your values.
When you tell the truth, however harsh, people trust you. Customers and investors, alike, know that no matter what you can be trusted. This goes a long way in ensuring that people are willing to work with you. Even if you go through tough times, they know that you will never lie to them and their trust is not misplaced. They can count you to never take shortcuts and to never compromise on integrity. Even if your ideas seem otherworldly or too different, they know they can trust you.
Personally, the concept that I am vested in for the last 3 years with heart, body and soul not to mention all my life savings, needs vision and understanding to back. It is a long-term plan and our angel investors need to see the same path as us. It is a growth strategy against what every venture capitalist would suggest, i.e. to stay focussed, but we’re playing our own game. For now, it’s a rather compelling one and we intend to stick to this path till Kingdom come!
Rajh is a serial entrepreneur with ventures in knowledge process outsourcing, hospitality, retail, IT and e-commerce. He has over 25 years of corporate experience and expertise in key roles of leadership, strategy, planning & management. Rajh is especially skilled at developing new profit centers within scheduled timelines and costs while ensuring operational efficiencies through long-term strategic planning. His core expertise includes delivering customized and cost-effective solutions to meet the operational and financial goals of the organization and its stakeholders. Rajh holds an MBA in Marketing from the University of Mumbai.