The Entrepreneur Who Cried Wolf

Harkening back to my childhood days, I remember a wonderful Aesop’s Fable called The Boy Who Cried Wolf. As the story goes, a little boy had a tendency to sound a false alarm that a wolf was attacking a flock of sheep. After doing this repeatedly, the villagers eventually stopped taking him seriously. Then when the wolf actually did eat the sheep, the little boy’s cries fell on deaf ears. In some versions of this story, the wolf also eats the boy. I believe that this fable is more apropos for our society today than perhaps at any time in recent memory. The current state of political affairs comes to mind as a perfect example of how over-the-top proclamations about how our country is doomed are being bandied about on a daily basis.

We can expand a modern-day Aesop’s Fable to include entrepreneurs – more specifically, entrepreneurs who engage in lying and distortion. There’s a distinction between puffery and lying. Puffery involves hyperbole which by definition is “obvious and intentional exaggeration not intended to be taken literally.” For example, if we say that our widgets are the “best,” there’s no objective way to measure this claim and the public generally understands the context to contain a degree of hyperbole. On the other hand, if we say that 99% of all our customers agree that our widgets are the “best,” then this is a factual claim that can be verified. And it becomes a lie if this fact is manufactured or we can’t prove that 99% of all our customers agree with our statement.

Where this gets really dicey for entrepreneurs is when the integrity line is crossed. Alex is the CEO of a start-up company and is pitching a group of investors for funding. During an interview with the investor group, he says, “Our firm has 35 customers and we’ve generated $500,000 in revenue.” What he doesn’t reveal is that he doesn’t really have 35 paying customers. He actually has 25 prospective customers that are using a beta version of his product for free; five current customers that are currently paying for his product, and five former customers that quit because they had issues with the product. What he also neglected to say is that his company has been in business for three years and $500,000 is the cumulative revenue generated during that time period. Did Alex lie about his company’s progress or did he engage in a form of puffery? While it’s not quite the false cry that a wolf is eating the sheep, Alex has definitely crossed the line through omission of key facts. Any savvy investor will drill down and quickly learn that Alex has misrepresented his situation – which will probably cost him the investment.

As entrepreneurs our integrity is our most valuable currency. When we go to the bank for a loan, it’s important that we put our best foot forward, but in an honest manner. We should be fact-based with our approach and present a true picture of our operations. At the same time, there is nothing wrong with sharing data trends that portray our company in a growth-mode. When we are reporting to our investors, we share the true, unvarnished facts. If things aren’t as rosy as we’d like, we provide an explanation about the issues we are experiencing. We have a real estate fund and write a quarterly report for our investors. Periodically I like to include a section called, “What’s Not Working.” In it, we discuss some of the challenges we are facing and what we are doing to overcome them. We’ve had feedback from investors who appreciate the fact that we’re not always trying to sell them on unicorns and rainbows.

Another problem area for entrepreneurs is that of overpromising and under-delivering. In fact, we would be much better off doing the opposite. We would do well to find one of the most skeptical members of our team and have him or her help set expectations. It’s likely that our optimism would be dialed back to a more realistic degree. Overpromising once may be forgivable. But if it happens over and over then we’re probably moving past the realm of hyperbole and into the arena of deception.

We all want to win which is a critical element of entrepreneurship. Doing so in an honest and forthright manner may not be the easiest path to take, but it will likely keep us from being eaten by the wolf.

You can also listen to a weekly audio podcast of my blog. What you hear will be different than what you read in this blog. Subscribe on iTunes or wherever you get your podcasts. You can also click on this link – Click here to listen to Audio Episode 106 – A Boomer’s Advice to Millennials.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

Mind-Blowingly, Stunningly Epic!!

Unique. One-of-a-kind. Award-winning. Leader. State of the art. Cutting edge. Bleeding edge. Next generation. Revolutionary. Robust. Extraordinary. Legendary. Transformative. Groundbreaking. Best in class. Magical. Out of the box. Feature-rich. World class. Dynamic. Premier. Amazing. Iconic. I think you probably see where this is going.

Ah yes, the world of superlatives and puffed-up buzz words. As an entrepreneur, I want to persuade you that my product or service is the best thing since sliced bread – maybe even better! And thus I have a tendency to use embellishments to convey a certain sense of excitement that will emotionally influence you to buy what I’m peddling. Sometimes advertising and marketing that exaggerate are just plain fun. Dos Equis beer uses a spoof in its commercials of The Most Interesting Man in the World. Generally this sort of marketing is easily identifiable and the audience goes with the flow.

What we want to avoid is falling into the “salesmany” stereotype. When I hear entrepreneurs use terms like “crushing it” or “killing it,” I cringe. It’s one thing to extoll the virtues of our product or service, but when we cross over into too much puffery our credibility suffers. Is it possible that being more quiet and understated in our approach to marketing and sales could produce the results we seek?

Our customers don’t really give a whit whether or not we are “#1” or provide “world class service.” What they are interested in is how our product or service solves their problem or provides them with real value. Here are a couple of example marketing statements to compare.

Statement #1: “At XYZ Motors we sell more Kias than anyone else in the universe! We’re also number one in service and have won more awards from Kia than any other dealership in the country.”

Statement #2: “At XYZ Motors we are creative and will help figure out a way to put you in a new car that can fit comfortably within your budget. We are also pleased to keep our service department open every weeknight until 10:00 PM because we know that many customers can’t bring their car in until they get off from work.”

Obviously the first statement is full of backpatting and chest thumping. The focus is completely on the dealership. The second statement is customer-centric. Here, XYZ Motors shows great empathy for both the customer’s pocketbook and his or her busy schedule.

One of the reasons that businesses use hyperbole is because they haven’t figured out how to differentiate their product or service. This is especially true for companies that compete in the commodity space. Apparently they believe that yelling as loud as they can, will motivate customers to show up and shell out their hard-earned dollars to save a cent or two. And there’s no question that some people are inclined this way. But I think that most people aren’t thrilled to be insulted by such boorish and uninspired messaging. An alternative approach might be for the business to become much more creative in determining its value proposition and then develop a marketing campaign around the benefits to the customer.

Entrepreneurs must also be mindful of how different generations respond to marketing and salesmanship. But as political campaigns have become more and more over-the-top with either fluff or mudslinging, I think there’s a carryover impact on the business world. All consumers, regardless of generation, are more skeptical of dubious claims and mindless drivel. Instead they want facts and substance. They need real data that supports a marketing/sales pitch and explains the WIFM in plain English. And of course WIFM means “What’s in it for me?”

Laying out the case for how our product or service solves a problem for our customers can be done in an innovative fashion. And we don’t have to appear like a stereotypical pushy salesperson to do so.

 You can also listen to a weekly audio podcast of my blog. What you hear will be different than what you read in this blog. Subscribe on iTunes or wherever you get your podcasts. You can also click on this link – Click here to listen to Audio Episode 25 – Confluences

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

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