HBR IdeaCast When Entrepreneurs Distort the Truth
Aug 10, 2021
Kyle Jensen, Associate Dean at the Yale School of Management, sheds light on the intriguing world of entrepreneurial deception. He discusses how founders often feel pressured to exaggerate their ventures, risking authenticity for the sake of success. Jensen shares fascinating examples of notorious misrepresentations, including the Theranos scandal, and emphasizes the importance of fostering a culture of honesty in startups. He offers advice on balancing confidence with transparency, arguing that a truthful approach can ultimately benefit entrepreneurs and their investors.
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Entrepreneurs Always On
- Entrepreneurs are always "on," constantly promoting their ventures and projecting unwavering confidence.
- This constant pressure can lead to exaggeration and even deception.
High Stakes and Asymmetry
- The high-stakes nature of entrepreneurship, with outcomes ranging from failure to immense wealth, contributes to dishonesty.
- Information asymmetry, where entrepreneurs know more about their venture than investors, makes misrepresentation easier.
Jensen's Experience
- Kyle Jensen admits to stretching the truth as an entrepreneur, allowing investors to hold false beliefs about competitors or market conditions.
- He felt pressured to present the best possible picture of his venture, leaving due diligence to investors.
