startup Fibbing foggy ship

Startup Fibbing

Washington Business Journa;’s Bill Flook took on intentional vagueness last Friday in article titled Fuzzy math and other foibles: 5 questionable PR tactics that tech entrepreneurs use to achieve ambiguity. This was a rare and interesting poke at what other journalists either choose to ignore or are too ignorant to understand. Bill took on 5 standard practices of vague deception:

  1. The Ever Changing Headquarters – Like ID.me a company claimed by 1776 as one of their premiere tenants and yet the company is headquarters and the bulk of the employees are located in McLean VA. Then there’s Speek which is headquartered at Fishbowl and 1776 and possibly at Paul Singh’s new space in Crystal City. Many companies listed as 1776 tenants have left and 1776’s occupancy rates are widely thought to be inflated.
  2. The Big Numbers – Announcing a blended investment in which some of the cash goes to the balance sheet while other cash is simply purchasing secondary stock from prior investors. In other words a private transaction purchasing stock from private investors in which case none of that money goes to work for the company. Case in point, nearly all of the $136M in a 2011 Cvent round went to buy out prior investors and very little went to the companies balance sheet.
  3. When More Means Less – The standard practice of rolling prior convertible dept rounds into the total of a new round when the debt converts in order to inflate the significance of new funding round. For instance Speek announced a $5.1M round this past March. Yet according to Flook, Speek merely raised $2.4M of new capital and recounted the $2.7 million they raised and spent in prior rounds because that dept had converted to equity. So of the announced $5.1M only $2,4 is going to work for the company.
  4. Faux Stealth Mode – The practice of star entrepreneurs founding a new company, hinting about it, generating buzz about it and remaining coy in order to generate mystique and interest. It’s the playing hard to get thing in dating.
  5. Newsjacking – Companies putting out a Press Release to piggy back on or hijack other news headlines.

Here’s A Few of My Pet Peeves of the Bullshitocracy

  1. Faux Big Wins – When companies announce a partnership or strategic relationship as a big win, insinuating revenue when the deal is simply a hunting or fishing license. If every person with a fishing license caught a fish every time they dipped their line in the water there would be no hunger in the world.
  2. Faux College Attendance – Attending a college… like saying I attended Harvard. I also attended Harvard. I attended Harvard, worked hard, paid tuition for 4 years and was so proud when I finally held that diploma in my hands.Not one line in the previous paragraph is a lie. I just insinuated a falsehood. I attended when I visited my son, I paid for his college and he let me hold his Diploma. I didn’t get accepted to Harvard or earn any credits there.Unlike some a prominent DC founder, I don’t claim I attended Harvard even though I did attend a non-competitive, not for credit class on Sales and Pricing just like he attended a not for credit, open to all comers class. So while his bio states he attended Harvard, mine doesn’t mention Harvard even though I paid four years of tuition there.
  3. The Team – Single founders in one person companies referring to their singular selves as we or my team.
  4. Empire Building – Counting interns, part timers and 1099 workers as Full Time Equivalent Employees (FTE). Like insinuating that 2 part time workers, 5 interns, 2 1099’s and a partridge in a pair tree is 10 employee. Hey, I’d rather have no employees and $10M in revenue than 100 employees and $1M in revenue. Who cares how many employees you have. How many good ones do you have and how much revenue or profit do you generate per employee.I also love the old asking for help in how do you scale to 100 employees, or can you find me space for 100 new employees or does anyone know where I can find 50 new employees as a rouse to not appear to be boasting that you are hiring 50 new unpaid interns.
  5. Faux Exits – Claimed profitable exits are often highly suspect, unless theres’ an IPO and or the sale is publicly reported. Based on profitable exit claims,VCs and Angel Investors would never lose money on any deals. VC returns would be One Million Percent. People claiming a profitable exit should be required to show some verification.When a small private company is “acquired” by another small private company, it usually means two drowning men are trying to save themselves. Two drowning men have less chance of surviving than one drowning man.I verify every exit I claim on my about me section here.I only claim the one’s that are a matter of record and the one’s that I was present when the exit took place.. For instance I don’t claim the $80M acquisition of Cloakware by Irdeto because even though I had stock and made money from the exit, I was gone (canned…. fired) 8 months prior to the acquisition,