How to Compete With the Cheats
First, don't be one of
them. The fake-it-till-you-make-it crowd is being called to account. That's
good, but there are others still willing to cross the line. You need to take
them on, smartly, because not all your customers will see value in
integrity.
BY HOWARD
TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH
INVESTORS@TULLMAN
Unrealistic optimism and
boundless passion are critical parts of any good entrepreneur's DNA. If
building something new and important from nothing was easy, anyone could do it.
And if everyone knew how difficult starting a business was going to be, no one would
ever try. Persevering in the face of what appear to be overwhelming odds is
also part of the requirements to eventually get to the finish line.
But what it doesn't take
is lying to your peers, investors, and customers, as well as to the media.
That's crossing a line that no one should ever cross. And whether you
acknowledge it to yourself or not, there's a surprisingly bright boundary in
almost every case. There's a day or a point in time or an ethical test that
presents a clear choice; you don't slip or fall into fraud, it's a
straightforward decision. You either consciously plunge forward into the abyss
of illegality or you sharply pull back and stay legit.
This is why it's so
important for the people who are trying to build real businesses in the right
way to call out the cheats and creeps. To make sure that everyone sees
that-- even if we all admit to ourselves just how easy cheating might be --
there's a substantive and real difference between readily available
rationalizations to justify illegal acts and actually making that initial bad
decision to head down the wrong road.
But just because you can
understand the complexities, temptations, and risks doesn't mean you get to
stand quietly by - especially when it's your own business that's being
adversely impacted by competitors willing to do and say anything to get the
sale. You're the one who has to act, even if it's clearly not easy.
I call this asymmetric
competition (or bringing a knife to a gunfight) because one side is always
trying to do the right thing and compete fairly while the other side has no
limits, no ethics, and no boundaries on how low they're willing to go.
In fact, the Orange
Monster and the scum on the other side think that dishonesty is an admirable
survival skill and claim, much like Trump bragging about being smart enough to
evade any taxes. That cutting corners, shaving points and edges, and using
inferior goods and components are all part of a big game where only winning
ultimately matters. As Hitler said: "It is not truth that matters, but
victory. The victor will never be asked if he told the truth."
Confronting and dealing
with competitors who are lying to your customers is a very complicated task.
There's a fine line in the customers' minds between complaining and whining and
the problem is growing because in the Trump era, where no lie is too big, bold,
or unthinkable, the numbers of unscrupulous players are multiplying. It's
becoming more and more difficult for buyers to determine who's telling the
truth and who isn't. Worse yet, in the startup world, facts and factoids are
often confused and concrete "proof" is often hard to come by.
Consider that JPMorgan Chase alleges it got hoodwinked by Charlie Javice,
the 30-year-old founder of Frank, a fin tech the bank bought for $175
million. The celebrated "fake it" culture, and the media's
glorification of growth at any cost, hasn't helped to clarify the worsening
situation although we do seem to finally be turning a corner.
It's been encouraging to
belatedly see the demise of the "fake it 'til you make it" excuse
for outright and grievous instances of theft and fraud although the general
commentary in the mainstream media stills lags in calling out the harsh
realities in many of these cases. It appears that, in addition to simply
creating copy, filling space, and dancing around the truth, too many members of
the tech press feel obliged to insert a paragraph or two reciting this old
Silicon Valley saw, apparently in the name of neutrality, objectivity and
even-handedness.
In truth, spewing this
bullshit adds nothing helpful to the conversation. This startup malarky
persists even after convincing and broad-ranging criminal convictions. It
confuses and confounds the public and prospective investors, misleads other
serious and honest entrepreneurs, and frankly continues to provide some shelter
and comfort to people who are demonstrably criminal.
We just had another
round of criminal convictions in Chicago in the Outcome Health cases and
sadly there are still far too many social media comments about how the thieves
and villains are nice folks and did so many supportive things for others right
up until the time their criminal scams and schemes were disclosed and
prosecuted.
There really aren't two
sides to these stories. Try telling the firemen that the arsonists aren't
really such bad guys -- they just have a thing for matches. This bogus approach
closely resembles the oblivious stupidity of the political press in constantly
attempting to equitably compare the positions of conscientious and
well-intentioned Democratic politicians with the dishonest, manipulative, and
extortionate proposals of performative MAGA morons whose sole interests are to
delay, disrupt, and interfere with the ongoing governance activities of the
Congress and with those of state legislatures as well.
Instead of talking about
what's happening in Washington, where one party is creating a potential
catastrophe and attempting to hold the country and the economy hostage to their
crazy demands, the media talks about the situation as if it were a normal,
two-sided conversation among rational actors instead of a circus conducted by
performative assholes. These acts are so outside of the norm that the
traditionalist and temperate Democrats like Dick Durbin don't even know how to
address them. It's hard to pretend that it's business as usual when people you
have to call your colleagues are lying to your face and to the public daily,
but that's what's going on and the country's much the worse for it.
Startup entrepreneurs
face the same problem: trying to honestly compete with liars and criminals in
their own marketplaces. You've got to say something, you need to call the
customers' and clients' attention to the situation - both for their sake and
your own - but it's a difficult conversation to have. It's frankly surprising
how often we have to rediscover an old and very basic lesson, which is that
customers and clients don't really care even a little bit about your
constraints and concerns, even when they clearly should. Even if their businesses
could also be at risk.
The pandemic presented
case after case of this problem - honest suppliers (especially of food
products) incurred enormous additional costs to avoid any risks of passing on
virus-contaminated material. But many were woefully unsupported when
they tried to share these costs with customers. They were happy to find
lower-cost and less conscientious vendors willing to sell them similar products
and who falsely claimed that they had also taken suitable steps and precautions
to avoid any problems.
In the end, your
customers and clients believe that they hired you to do a job and not much else
matters - get the job done, now, and correctly. They don't want you to
waste their time with apologies or excuses. If that's all you've got to try to
justify your concerns, you can bet that there's going to be some unhappy times
ahead. Let's be clear, though, that an apology isn't an excuse. Honestly,
there's no such thing these days as a good excuse. But a thoughtful and solid
explanation of the situation is an entirely different thing. The trick is to
find the right way and the right time to tell your story.
Here are three key
things to keep in mind.
(1) The context of
these kinds of conversations matters at least as much as the content. Find the
right time and place and make sure that the customer is willing and able to
listen. A congested and busy office isn't the right place. A rushed phone call
or having the talk while standing in the hall between meetings won't get the
job done. Invest the time to make the conversation personal. Forget Zoom, face-to-face
matters.
(2) In the war on
truth that's raging these days, the only certain way to lose is to be passive.
Honesty is difficult and sometimes painful at first, but it's the only way to
develop a long-term relationship based on trust, which is the ultimate key to
success. A sincere effort is all anyone can ask. If you tell the truth, the
truth becomes part of your past. If you lie, the lie becomes part of your
future. The truth only hurts when it ought to.
(3) Focus on a few
important facts and stick to your story. It's more important to repeat the
critical and personal concerns than to try to cover everything. Our minds
process meaning before details. Passion and energy are more compelling and
effective than a particularized parade of horribles. Take your time and be
patient. Don't lose your place or your temper. If you're angry, people will
focus on your anger and not on the facts that matter.
The objective in these
conversations isn't to sell, convince, or share your burdens; it's to
demonstrate why it's in the customers' own best interests to look carefully at
the alternatives and the risks they face before they make the wrong choice.
