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Lying in both startups and even later stage companies has been way too accepted in the recent past. Granted investors should be doing better due diligence in ge

Lying in both startups and even later stage companies has been way too accepted in the recent past. Granted investors should be doing better due diligence in general, but the amount of acceptable deception going on is mind blowing when you get a chance to see behind the curtain. My hope is that a precedent is set that you can boast and talk about the future, but claiming something to be true which is patently false should be fraud. I believe that is already the definition of the word fraud, but would be better for all if the legal system enforces that.

lbriner 5y ago
The definition of fraud is to make false representation for "gain". In many cases, lying is not automatically fraud. The burden of proof is also on the prosecution so if you claim, "Salesforce will transform your business" and someone says it doesn't then they have to prove. 1) A reasonable person would understand the statement as fact rather than hyperbole 2) You have objectively not been transformed in your business 3) The problems are caused solely by your understanding of the Salesforce product and not just that you are a bad business owner So that's why some things sit in the grey area.
- deegles 5y ago
  Also, that statement doesn’t say it will transform it in a good way :)
- engineeringwoke 5y ago
  It's not a grey area. It's simply not enforced. If you're an investor and you find out that the co-founders gave you bad numbers to juice the next round (this is common to the extent that I have personally seen it multiple times), you have no incentive to get the law involved. You would lose your entire investment, instead of just some of it. And oftentimes, the extra juice gives them enough runway to make things work. Cheaters win, that's the way it is.
  - CRConrad 5y ago
    > If you're an investor and you find out that the co-founders gave you bad numbers to juice the next round [...] you have no incentive to get the law involved. You would lose your entire investment, instead of just some of it. > And oftentimes, the extra juice gives them enough runway to make things work. Above all, it gives you [1] time: To cash out that investment. Sell it to some later bigger sucker who doesn't already know or suspect what you know or suspect, maybe even at some more modest profit -- not making any loss at all! -- in stead of the super-jackpot you'd been hoping for if it were a "unicorn". Early investors who start to smell a rat don't only lack an incentive to raise the alarm, they have a positive incentive to keep the lid on the story. ___ [1]: The editorial "you", the hypothetical early(ish) investor.
  - WalterBright 5y ago
    The more I think about it, the more parallels with Bernie Madoff!
- himinlomax 5y ago
  > "Salesforce will transform your business" and someone says it doesn't then they have to prove. You'd have to prove that Salesforce didn't believe they could transform your business, not that they didn't do the transformation.
  - MartinCron 5y ago
    Claims like "transform your business" or "best pizza in town" are generally considered non-specific puffery and aren't subject to fraud or false advertising enforcements. Something like "perform n lab tests with a single drop of blood" is a very specific claim.

lbriner 5y ago

The definition of fraud is to make false representation for "gain". In many cases, lying is not automatically fraud. The burden of proof is also on the prosecution so if you claim, "Salesforce will transform your business" and someone says it doesn't then they have to prove. 1) A reasonable person would understand the statement as fact rather than hyperbole 2) You have objectively not been transformed in your business 3) The problems are caused solely by your understanding of the Salesforce product and not just that you are a bad business owner So that's why some things sit in the grey area.

deegles 5y ago
Also, that statement doesn’t say it will transform it in a good way :)
engineeringwoke 5y ago
It's not a grey area. It's simply not enforced. If you're an investor and you find out that the co-founders gave you bad numbers to juice the next round (this is common to the extent that I have personally seen it multiple times), you have no incentive to get the law involved. You would lose your entire investment, instead of just some of it. And oftentimes, the extra juice gives them enough runway to make things work. Cheaters win, that's the way it is.
- CRConrad 5y ago
  > If you're an investor and you find out that the co-founders gave you bad numbers to juice the next round [...] you have no incentive to get the law involved. You would lose your entire investment, instead of just some of it. > And oftentimes, the extra juice gives them enough runway to make things work. Above all, it gives you [1] time: To cash out that investment. Sell it to some later bigger sucker who doesn't already know or suspect what you know or suspect, maybe even at some more modest profit -- not making any loss at all! -- in stead of the super-jackpot you'd been hoping for if it were a "unicorn". Early investors who start to smell a rat don't only lack an incentive to raise the alarm, they have a positive incentive to keep the lid on the story. ___ [1]: The editorial "you", the hypothetical early(ish) investor.
- WalterBright 5y ago
  The more I think about it, the more parallels with Bernie Madoff!
himinlomax 5y ago
> "Salesforce will transform your business" and someone says it doesn't then they have to prove. You'd have to prove that Salesforce didn't believe they could transform your business, not that they didn't do the transformation.
- MartinCron 5y ago
  Claims like "transform your business" or "best pizza in town" are generally considered non-specific puffery and aren't subject to fraud or false advertising enforcements. Something like "perform n lab tests with a single drop of blood" is a very specific claim.