Danny Crichton writes at TechCrunch that startups in Silicon Valley run on an alchemy of ignorance and amnesia and that lying is a requisite and daily part of being a founder, the grease that keeps the startup flywheel running. Most startups fail. The vast, vast majority of startup employees will never exercise their options, let alone become millionaires while doing it. But founders have little choice as they sell their company to everyone, whether investors, employees, potential employees, or clients. "Founders have to tell the lie – that everything is fine, that a feature is going to launch even though the engineer for that feature hasn't been hired yet, that payroll will run even though the VC dollars are still nowhere on the horizon," writes Crichton. "For one of the most hyper-rational populations in the world, Silicon Valley runs off a myth about startup success, of the lowly founder conquering the world."
Crichton says that Silicon Valley needs a new transparent approach toward information, but also need to understand that startups are inherently risky – and accept the lies that come with them. Founders can't expect to hide the term sheets and their liquidation preferences from employees who ask and informed employees have a right to know what they are getting into. "We still need that Big Lie to function. We still need to dream about the possibility of success in order to realize it," concludes Crichton. "With greater transparency comes a responsibility on the part of everyone in the startup ecosystem to understand and empathize with the plight of founders trying to build their companies."
(Score: 1, Funny) by Anonymous Coward on Sunday August 02 2015, @06:40AM
The Workers feared our lying abilities, so we were beaten, hunted and killed. Finally we arrived here in Silicon Valley. And here, safe in our isolation, we made our startup.
(Score: 2, Insightful) by Anonymous Coward on Sunday August 02 2015, @06:46AM
Spend money you don't have to pay people to make worthless crap that absolutely no one needs so you can scam idiots into buying it from you? Well, shit. What could possibly go wrong???
(Score: 5, Funny) by davester666 on Sunday August 02 2015, @08:02AM
Yeah. I thought we had all those guys rounded up and put in Wall Street. Who let the dogs out?
(Score: 4, Interesting) by mrsam on Sunday August 02 2015, @11:32AM
There's actually some truth to this snark.
I'm saying this after spending 15 years working in IT on Wall Street. A 60-hour work week is implicitly expected from you, if you work in IT on Wall Street, in order to get your coveted end-of-year bonus, which makes a significant portion of your total compensation package.
Except that if the company doesn't do well that year, of course through no fault of your own. There goes your bonus, after a year of working dawn to dusk.
And, of course, since you're salaried, you're getting paid for working 40 hours, and the rest you work for free.
I figured out this racket fairly early on, and switched to working as an hourly-paid contract consultant. Suddenly, once you get paid by the hour, you end up working your regular 40 days a week. Imagine that.
Over time Wall Street companies began to attempt to screw contract consultants just like their employees, by trying to do change their contract terms to a "professional day". Haa, haa, haa. This homey didn't want to play that game. Sadly, most consultants did fold like a cheap camera, because they're deathly afraid of losing their gigs; so this is now also pretty common. But I still refused to work for free, and I really pissed off several pimps who thought that they could lie to me, after I was perfectly honest, and straight to them up front. They still believed that all they had to do was get me an offer, and I couldn't possibly refuse it, once it's dangled in front of me. I told each one of them that I expect to work and be paid for an eight hour day, and paid the same rate for each hour after, before they even tried to get me an interview. Still they were in a complete shock after I immediately turned down an offer for the rate I was asking, but for a "professional day" paying ten times my rate.
I don't work on Wall Street, any more. I wouldn't have any automatic objections to returning to the scene, but only on my terms.
(Score: 0) by Anonymous Coward on Sunday August 02 2015, @05:48PM
"40 days a week"
So you write 4 bots to work five days a week?
(Score: 1) by Gearloose on Sunday August 02 2015, @10:55AM
Under pure capitalism, the only possible way to survive is to make something people want. Like it or not, people seem to really want social networks, uber and aibnb.
States and governments are the one trying to shove things down our throats that we don't really want but have to accept anyway (e.g. war!). They try to force us to use taxis even though we voted for Uber with our wallets. Under capitalism, money is money. Under statism, you are a peon and should do what you're told.
Of course most startups will fail. What they are trying to do is very hard (make something people want). Nobody ever created a reliable recipe for this. You just have to take the risk. Founders know this and investors know this. Only peons are surprised.
(Score: 2, Touché) by Anonymous Coward on Sunday August 02 2015, @11:24AM
A lot of people really, really want war! for the very same reason that they really want social networks: to fit in with the moronic crowd. There is no draft, buddy. How else do explain why so many stupid, stupid, stupid asshole scum volunteered for war! when there are wars! on? People don't even have to be told what to do when peer pressure is so very effective to persuade stupid shits.
(Score: 1) by Gearloose on Sunday August 02 2015, @01:26PM
That is a good point.
(Score: 2) by zafiro17 on Sunday August 02 2015, @05:52PM
Don't forget, there's an enormous industrial-military complex that wants war too, not for idealistic reasons but because it puts dinner on the table. If you're trained military sitting around in lovely, gorgeous peace, your job is at risk and your skills are of no value. But if unspecific threats lurk around every corner (let's call it something like 'schmerrorism'), you can not only stay employed but potentially drum up lots of new opportunities and get paid for them. What's the saying? "If you can't be part of the solution, there's excellent money to be made in prolonging the problem." Same goes for the industrial interests that make easy money selling tanks and aircraft and bullets and stealth goggles, and so on. The same goes for the research interests that support development of new technologies. It is all business, and it's important. Yeah, there are some doofuses out there that get seduced by the idea of fighting for God and country and virginal blondes under threat of bearded extremist lunatics (and God bless them, I'm not here to cast aspersions on our troops). But sometimes the guys beating the drums of war are beating them with stacks of invoices they'd like you to sign ...
Dad always thought laughter was the best medicine, which I guess is why several of us died of tuberculosis - Jack Handey
(Score: 2) by FakeBeldin on Sunday August 02 2015, @07:31PM
Under pure capitalism, the only possible way to survive is to make something people want.
Another way to survive is to make people want something.
As old Bill would say: Aye, there's the rub!
(Score: 4, Touché) by Beige on Sunday August 02 2015, @07:29AM
I doubt anyone in the tech industry is surprised to learn that startups are more volatile than established businesses. Or that startups have to hype their business case in order to convince people to take them seriously.
Likewise, I doubt anyone in finance would be surprised to learn that startups with unproven business models and management teams are riskier investments than companies with proven track records. Ability to price risk is a fundamental requirement of VC.
Perhaps this Crichton can next write an expose on how some restaurants are claiming their product is tasty without any verifiable scientific evidence thereof. Oh, and by the way, most restaurant startups fail within the first year or two as well.
(Score: 2) by darkfeline on Sunday August 02 2015, @09:50PM
"Hype" is kind of different from "lie", as least as far as I'm familiar with those words.
Hype: our product is so-so -> "Our product is great!"
Lie: we have no product -> "Our product is great!"
Join the SDF Public Access UNIX System today!
(Score: 2, Insightful) by khallow on Sunday August 02 2015, @08:28AM
(Score: 5, Insightful) by Anonymous Coward on Sunday August 02 2015, @10:31AM
It's interesting how this appears to be some kind of justification of the transfer of debt. Think for a moment, instead of having the person who'll make the wealth pay for the job to be done, the job is paid for by the employees, either through low pay or no pay.
So the people who actually pay for the project in the opening phases aren't the investors or the owners, who will profit the most, they're the staff who can never get back what they've given.
(Score: 2) by zafiro17 on Sunday August 02 2015, @06:02PM
The word 'lying' here is a bit inappropriate, I think. Better, in my opinion, would be 'cognitive dissonance.' See https://en.wikipedia.org/wiki/Cognitive_dissonance [wikipedia.org] I support the basic premise of the article, which advocates for more transparency about the basic foundation of start-ups so that investors and employees can make more rational and well-informed decisions based on better quality information. But are these folks really 'lying?' I don't think that's a fair characterization.
Dad always thought laughter was the best medicine, which I guess is why several of us died of tuberculosis - Jack Handey
(Score: 0) by Anonymous Coward on Monday August 03 2015, @01:18AM
The Wikipedia article you cite states that "cognitive dissonance" is "the mental stress or discomfort experienced by an individual who holds two or more contradictory beliefs." That article has some relevant side topics related to Silicon Valley, such as Social Engineering and Marketing; also keep in mind that certain people are more tolerant of withstanding cognitive dissonance than others (and I feel that your average MBA or business-oriented startup founder falls into that subset of people rather nicely).
However, if you posit that a startup founder promoting and release-dating a feature that doesn't have staff allocated for it yet isn't a lie, or that a founder painting a rosy picture about potential VC funding when they're going to be short for the next payroll, I disagree. Those are lies. Sometimes there are times when businesses will want to hold their cards close to the chest for PR reasons (and privately funded businesses are within their right to do this, so long as they hold to other legal standards and due diligence), but it does create a bit more of a "caveat emptor" situation for customers, as well as employees. (Case in point: if a payroll round bounces, RUN.)
The pervasiveness (and inanity) of Silicon Valley startup mentality is only one side of the current mess of 21st century business, although I would prioritize it as the biggest threat to technology advancement as well as livelihood advancement for the overwhelming majority of the citizens of the United States and other countries. The other side of this is what Michael Dell terms the "90-day shot clock" of demands from technologically ignorant shareholders that are hampering Fortune 1000 companies with byzantine policies. Another major factor is belligerent activist investors such as Carl Icahn and Paul Singer buying up positions of companies to ultimately ruin them, all while claiming to add value, when in fact they're ultimately perpetrating a complex, long-con form of "pump-and-dump". (If one of these activist investors touches your company, RUN.)
Amid both sides of these are a sea of cognitive dissonance, and the lies that form the foundation. Some revel in cognitive dissonance, while others are driven to extreme stress.