Lying startups outed (and I see tiny things)

In today's IT Blogwatch, we look at the lies entrepreneurs use. Not to mention a big "hello" to Daniel J. Geduld, who is blogging from his digital microscope...

Having eviscerated and antagonized the venture capital community last week, Guy Kawasaki decided to turn his sights on startup entrepreneurs.  Guy narrowed down his list to the ten top lies; here are our faves...

1. 'Our projections are conservative.' An entrepreneur's projections are never conservative. If they were, they would be $0 ...  Generally, an entrepreneur has no idea what sales will be ...As a rule of thumb, when I see a projection, I add one year to delivery time and [divide by ten]
2. 'Gartner says our market will be $50 billion in 2010.' ... Venture capitalists don't believe this type of forecast because it's the fifth one of this magnitude that they've heard that day
3. 'Boeing is going to sign our purchase order next week' ... The funny thing is that next week, the purchase order still isn't signed. Nor the week after. The decision maker gets laid off, the CEO gets fired, there's a natural disaster, whatever ...
8. 'Oracle is too big/dumb/slow to be a threat' ... Larry Ellison has his own jet. He can keep the San Jose Airport open for his late night landings. His boat is so big that it can barely get under the Golden Gate Bridge. Meanwhile, entrepreneurs are flying on Southwest out of Oakland and stealing the free peanuts ... Entrepreneurs who utter this lie look at best naive."

...which stirred up the multitudes into commenting. Wes S: "The main thing to remember about VCs is this: Do the right thing, at the right time, and you don't NEED THEM. Gates never begged anybody for cash. If you find yourself doing it, ask yourself if there's not some area in which your contributions would be so overwhelming, you could bypass begging completely. Once you find it, that's where you should be spending your time." Ming666: "You will know a good VC when you come away from the meeting having actually learned something new. that is rare. if you can get a termsheet from that VC then consider it. if it happens more than once then take it." Laura Bennett: "I agree that we entrepreneurs tell lies but having made many presentations to potential investors, I often find they don't really want to hear the truth ... I recently presented a 2 year break-even period ... and the comment I got back was that two years was too long! ... My goodness, aren't we being a bit too literal here? I bet Amazon projected a short break-even period when they were raising money and everyone was still impressed when they made it after 7 years."

» Jason, 37signals added comments to Guy's list: "Projections, like fortune telling, are a waste of time ... Gartner isn't giving you any of that $50 billion ... Talk from passion, not from slides ... My advice: Never bet your business on one customer. Ever. Never give preferential treatment either ... Yes, [Oracle etc. are] slower, but they may be slow enough to watch what you're doing, learn from your mistakes, and then clobber you down the road." Then he got some interesting comments himself. Mark: "It’s crazy. If you really want see / hear people spout off these type lies, go to a franchise show or home-based business show sometime, they are all over this" Jason Kunesh: "When I was in a band, we would pass out a ton of tickets for people to see our show and say the same lame thing: If we can get 1% of the people we give these tickets to to show up... But they never do. Why? It’s not the great value or the free show ticket, it’s the great experience shared by a friend or colleague that lifts your product, be it art, music, or technology. Aiming for 1% of a market is like pissing in the wind."

» YoungGoGetter: "Haven’t had the need for fundraising, yet, other than selling lemonade a decade or so ago hoping to overtake the Minute Maid empire. So some of these lies/truths would seem unapplicable to an entrepreneur such as myself as well as all of the other self-funded young go getters on this blog. But, I still think they are important points that are valid on a smaller level." 

» Josh Poulson added some suggestions:  "I've not had a plan torn apart by a VC, yet, but I've watched others tear apart presentations. I'm not sure I could offer any advice over and above the list of don'ts above. Perhaps I should mention a list of dos ...  make projections with solid supporting evidence ... acknowledge what the experts are saying ...  indicate what customers you have lined up, that you understand their unmet needs and that they are going to benefit by your proposed solution ... Instead of insulting the big players in your market, indicate how it would hurt for them to make the same choices you've made."

» Dave Morin:  "It is great to see Guy shaking up the blogosphere with interesting ideas. But, I'd like to point back to his post on the art of intrapreneurship. Which, I think is as important for new entrepreneurs to think about as "normal" entrepreneurship ...  Sometimes sealing the internal support, budgets, resources, and just plain passion is as hard as chasing the dream with an all-new team and a set of VCs. And, don't forget, you will have to do this all through an established and throughly rigid culture."

» Nick Hac: "so if you think it's hard to get a 'yes' out of venture capitalist, you should try to get a conclusive 'no.' This is because there's no upside to communicating a negative decision. Entrepreneurs will simply hate us sooner ... Alas, entrepreneurs are also simple people: If they don't hear a conclusive 'no,' they assume the answer is yes. This is an example of the kind of breakdown of communication between venture capitalists and entrepreneurs that causes much pain and frustration for entrepreneurs."

Buffer overflow:

• Jon Udell: Scarcity versus abundance of talent
• Ed Foster: Poll: Looking for the Best Laptop Vendor
• Cemper: Economic Death Penalty - Spammer Must Pay $11.2 Billion
• thatITguy: Lock Down IE through Creative Login Script
• Techdirt: Everything Old Is New Again With Dot Com Price Targets
• Techdirt: Apple's Big Decisoin: Time to Open Up?
• Tim Bryce: The Need for Critical Thinking
• Mitch Shapiro:  Can Two Visions of the Internet Co-Exist? I think so.
• Andrew Clifford: The barriers to effective systems management
• Philip Letts: Vodafone and Sony launch new music service
• Jason McCabe: The stupidest thing I've read in a long time...
• Old New Thing: Beware the MSJ subscription scam
• David Berlind: Eclipse is the defacto IDE for Java 
  
• Paris Mayor: Free Internet For All
• Martin MC Brown: How to get info on Apple's annoucements
• Martin McKeay: Viable options
• Mailbag: Waiting for Microsoft's patch
• Robert L. Mitchell: Carriers' pay-for-play Internet strategy
• Shark Tank: New year, same old users

And finally... It's the little things that make Daniel happy... [hat tip: BoingBoing]

Richi Jennings is an independent technology and marketing consultant, specializing in email, blogging, Linux, and computer security. A 20 year, cross-functional IT veteran, he is also an analyst at Ferris Research. Contact Richi at blogwatch@richi.co.uk. Also contributing to today's post: Judi Dey, our very own Antipodean.