An investor explains why he walks away from founders who lie about their metrics. Investors expect returns and honesty, he says. Market downturns are forgivable, but deliberate dishonesty kills the relationship.
when entrepreneurs create more problems for themselves than they should. I mean, we're doing diligence on deals. Hans is a real sleuth. And sometimes entrepreneurs at best are misrepresenting their numbers. And sometimes they're kind of lying. And that's frustrating, right? Because guess what? We're considering putting money into your company. And for most of us, that money matters too, right? It's not just straight out philanthropy. At least that's not the intention. Until you get a return, it is sort of. Philanthropy, but you can be pushed when an entrepreneur is not honest, you know, for example. And then at that point, your empathy may wane, but that's their doing. You don't go into the conversation like, I'm better than you, I'm smarter than you, and I have the money, so I'm going to treat you disrespectfully, right? If somebody wants to compromise that relationship, and most of the time it'll be, you know, basically integrity, that's what I find. Even if somebody with all the integrity in the world, kind of fumbles the company because, you know, the market changed, you know, that is— that should not be a reason for you to, you know, lose your respect for the founder. In fact, that's out of their control in many cases, and those are sort of the ones that I think your real character, you know, shows, you know, right? And we all— if you've made, you know, 10 investments, you're going to have 4 or 5 of those kind of situations, right? That's not the one I'm talking about here. It becomes more of an acute conflict when somebody is being dishonest, for example. And that's when the best approach is, in my experience, to walk away. You're also not there to teach them a lesson.
