Guy Kawasaki posts a great list of lies that entrepreneurs tell to investors on his blog. He also explains why telling these lies, which are presumably intended by the teller to improve his or her chances of getting funding, actually scare off potential backers. Among my favorites:
- "No one is doing what we're doing." As he points out, the obvious reaction to that statement is to think that the entrepreneur is either too lazy to do a Google search or else you must believe the market has suddenly stopped abhorring a vacuum.
- "Key employees will join the company as soon as we are funded." So that means that the people you have hired to date are not key, or not key enough? And how does an investor know that the key people you are promising will ever materialize, let alone that they'll make as big a contribution as you hope for?
- "Patents make our product defensible." Guy says that the smart entrepreneur says the word patent only once in a pitch, just to show that yes, he or she has considered intellectual property and filed a claim. If you say it many more times than once, Guy says he begins to worry that you have overestimated the protective power of patents in this day and age.