3 Surefire Signs a Startup Is Bogus

After working for decades in and around high tech firms, I’ve developed a well-honed BS detector. Here are the three “tells” that raise both my red flags and the hackles on my neck:

1. Spurned Investors

I’m deeply suspicious when I hear a remark like: “There were multiple venture capitalists who wanted to give me money but I decided to go it alone.”

While there are some specific situations where a company may not want an investor, like when a deal that doesn’t make sense, that’s the exception rather than the rule. Most startups are overjoyed if anyone is willing to give them some funding. Claiming to turn down multiple investors simply isn’t credible.

A common variation of this patter is when a CEO, entrepreneur, or (especially) a motivational speaker who using a book as marketing collateral says something like: “Publishers wanted to buy rights to my book but I decided to give it away for free.” (I literally heard this one last week from a Wanabee business guru.)

As (grown-up) Yoda might say: “To me a break please give.”

2. Anonymous Testimonials

This dead giveaway is on so many Websites that you’d think people would stop trying to pull it off — glowing customer reviews attributed to unidentifiable people like “Joseph K., VP of Research & Development.” 

Look, if somebody isn’t willing to go on the record to say something nice about you or your firm, they’re lying when they slather you with praise.  Assuming, of course, that they exist somewhere outside your own imagination.

Occasionally, you’ll run into a real-life happy customer who can’t be quoted due to “corporate rules.” Doesn’t matter. Even if it’s a real quote, it looks fake if it doesn’t have a real name and title attached to it.

3. Imaginary Employees

To paraphrase Mark Twain, the only individuals who should refer to themselves in the first person plural (“we”, “our”) are royalty and people who have tapeworms.

The same is true of startups. If you’re a one-person shop it’s lame to pretend that you’re an organization of multiple people. You’re not fooling anybody, except maybe a customer so gullible that you probably wouldn’t even want them as a customer.

Hey, there’s no shame in flying solo. I’ve been doing it for years. Beyond that, though, it’s always a bad idea to start a business relationship with a lie. What will the customer think when they figure out but your only employee is your tapeworm?

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.

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