Unless you've been living under a rock lately, you've most likely heard about the ongoing saga of Theranos. For those who aren't familiar, Theranos is a medical startup that claims to have developed a highly disruptive and revolutionary new means of conducting blood tests.
These claims, however, have been called into question due to aninvestigative article in The Wall Street Journal last October by John Carreyrou. Normally, a story about a startup potentially exaggerating their abilities would not be newsworthy. However, Theranos is not your typical startup.
Theranos and its 31-year old founder, Elizabeth Holmes, have been awarded nearly every accolade imaginable. The company has raised over $400 million at a staggering $9-billion-dollar valuation and received commendations from TIME Magazine and the White House.
Most entrepreneurs dream of that type of hype. Unfortunately, hype is a double-edged sword. People are quick to raise you up and equally quick to knock you down. Hype can quickly and subtly affect an individual's perception of reality, often creating a strong temptation to believe what's being said more than what's being done. A balance can be struck, however, between hearing the hype and resisting it's allure.
We all face the temptation to exaggerate
The temptation to present one's business in a different, potentially better light can be strong. After all, creating something from nothing can be a Herculean effort and most entrepreneurs will do whatever it takes to help that process along, even if it means stretching the truth from time to time.
Early on at BodeTree, I used to joke about how often we encountered "truthiness" in the marketplace. "Truthiness" referred to making statements that were accurate in spirit, if not in fact. Often, we'd hear people squirm when describing the number of customers they have, or what their technology could do. I struggled with the temptation to overstate technical ability during the first few years.
Our development team was moving so quickly that sometimes it was easy to describe features that were in process as being already available. The trouble was that whenever I ended up over-committing on the product development front, I ended up creating unnecessary stress and anxiety as we rushed to live up to what was promised.
At the end of the day, any near-term benefits I gained from presenting my product as something it wasn't ended up being outmatched by the stress that always accompanies "truthiness."
You can't run from the truth.
No matter how good your intentions may be or how innocent your claim seems, at the time, the truth always comes out. I learned this firsthand when we launched an early partnership at BodeTree.
At the time, our distributions strategy was primarily focused on a single institutional partner. Their team insisted that they had a network of clients and was ripe for third parties like ours to leverage.
We poured ourselves into trying to serve this market but never found the type of success we desired. We agonized for months over our product, marketing, and strategy, desperate to figure out where we went wrong.
It was only after talking to other partners that we realized that the number of customers the partner served was much smaller than we believed.
It wasn't that our partner's assertions were completely wrong or that they were ill-intentioned. It was just that they presented a version of reality that was based more on hope than facts. Once the truth came out, we were able to revise our strategy accordingly and move forward.
Our relationship with the partner remained intact, but the level of trust was never quite same.
Authenticity may not be sexy, but it always wins out.
The most important virtue I can encourage in my team is authenticity. I'm always amazed at how understanding and forgiving people can be when you simply tell the truth and work hard to do what is right. It isn't always easy, but in the long run authenticity wins out over deception every time.
At BodeTree, we simply tell our story to prospective clients, partners, and investors. We focus on the positive, but never shy away from being forthright and earnest about our challenges and limitations. This authenticity builds trust, and trust builds lasting partnerships.
That's why I encourage my team and all of the entrepreneurs I advise to strive for honesty and authenticity in everything they do. The temptation to exaggerate or bend the truth can be strong, but it never pays off.
In this world, a person's word and reputation are all they truly have. Once that reputation has been compromised, it can never be fully restored.