One of my rules for getting involved in a program is that the product has to be real. It has to have a market and it has to meet the market need.
There are gray areas in this arena and it is up to each individual to make up their mind how far they can suspend their disbelief before they have to admit the truth to themselves.
The conundrum that a team has to face is that at the start of a project that is truly innovative, there may be nothing more than projections and predictions with little real life substance to back up the claim – because the technology creating the fundamental advantage is immature.
It follows that the more ground breaking a project is the more work you should do to establish integrity for your forward looking projections in schedule, technical and financial models.
It is common that project teams confuse integrity with group think. Removing challenges to the hypothesis by silencing dissenting voices is not the same as providing additional evidence that the hypothesis in question is strengthened. But it can feel the same if you can suspend just a little bit of disbelief.
It is also critical that absolute belief in the project is communicated in all interactions with potential investors.
At the point in time where a project should be challenging assumptions and questioning the existing positions there is an overwhelming pressure to reinforce the basic concept and do whatever you can to make it look as attractive as possible.
Early stage investment is often based on a narrative based on unsupported positions because of this problem.
And this is where the problem starts.
If your initial investment is based on a collection of assumptions and positions that later turn out to be incorrect, what do you tell your investors? Can you change the product, the business case and the narrative to something new that has the same or better return on investment as the original proposition and sell it to your existing and new investors?
It is very rare that an initial over-optimistic business proposition can be replaced with one based in reality that is as good or better than the original proposition.
So what starts out as optimistic exuberance and a dream that you are doing your best to chase ends up either in compromising the vision or sustaining the unobtainable vision by lying.
There is a fine line between a forward looking statement and a lie. You might imagine there is a gray area. There isn’t. Once you know that your forward looking statement is not true you are telling a lie.
A lie can get you rich or get you in court, or both. Somewhere in the rush to grab that sweet, sweet venture capital a whole bunch of people working through their internal risk benefit forgot that lying is wrong.