Monday, October 18, 2021

Honesty and Optimism in the New York Times

I recently spoke with the New York Times about an issue that's both very much in the news and on my mind: building a company honestly.

The temptation to "fake it 'til you make it" in business is real. For some, it's overpowering. The pressures to succeed are immense and come from both within and without. It should go without saying--though apparently not since so many people are now having to say it--that it's our solemn duty as entrepreneurs and investors to resist the temptation to make things look better than they actually are for the sake of buying more time and raising more cash.

As I told the Times, "You have to come clean about what you’re doing and why. Otherwise, your customers might come to rely on something you said or a promise that you can’t deliver that would harm them. And that’s not only morally wrong, it’s bad business to build that reputation."

It's easy to blame entrepreneurs for giving in to the lure of wealth by way of dishonesty. But we also need to look at the systems that induce this behavior. They're really not very different from the incentives that public companies face. To pick just one fairly recent example, Under Armour inflated their numbers one quarter by borrowing from the next quarter. Then the next quarter they had to borrow a little more from the quarter after that. One white lie led to another and eventually it became a massive scandal. What often starts small with a decision that seems like a one-off can snowball faster than anyone might think possible into ruin. We need to fix the systems companies are operating within in order to make it not just easier but routine to start off with integrity and then stay on that path long-term.

If you'd like to read the whole interview, you can find it here.