I think that level of honesty isn't unusual in Silicon Valley. Personally, if I were the prospective customer, I'd be angry at being lied to, and my message to

I think that level of honesty isn't unusual in Silicon Valley. Personally, if I were the prospective customer, I'd be angry at being lied to, and my message to my team would probably be that we'd be foolish to depend on this startup after they've shown from the start that they're dishonest. If I were an established company, I think I'd also have our lawyers look at situation, to make sure the institutional knowledge was captured, and to see whether there's anything else we needed to do. (For example of something else to do: though I'd treat things as confidential by default, in some future n-ary relationship/deal, is there a situation in which I'm obligated to mention to a third company that we previously had negative vetting info on the other company.) But in the context of current startup culture, I don't think "fake (fraud) it till make it" is that unusual. And it's been normalized. But I still don't want to do business with dishonest startup founders -- whether it's because they're naturally lying liars, or because they're surrounded by frequent dishonesty and they're not smart enough to cut through that.