On November 6th, LinkedIn is hosting a live Q&A session with Dan Lyons (a.k.a. “Fake Steve Jobs”). I will be the moderator of the event. It is open to all although seating is limited. Click here to learn more. Click here to RSVP. I’ve never interviewed a “fake” before, so this will be fun!
Date & Time: November 6 @ 6 pm
Like CEOs, marketers, engineers, entrepreneurs, and venture capitalists, lawyers tell their own specialized tales. Most of my experience is with lawyers who do work for tech entrepreneurs, so this is my focus.
“I’m really excited about what you are doing and will give your company my personal attention.” Once someone gets to the partner level, making it “rain” is as important as doing “work.” This is part of a standard sales pitch, so don’t let it go to your head.
“Our firm is really excited about what you’re doing, so we’d like to invest in your company too.” Also part of the standard sales pitch. Most firms invest in most of their startup clients—it’s simply the law of big numbers: Invest in enough dumb ideas, and one will turn out to be a Google.
“We can work on the billing so that you pay us when you get financed.” The final flattery in a good sales pitch. As with the others, don’t think you’re special. This is a common offer.
“I’ll have that to you by the end of the day.” The important question for you to ask when you hear this is, “End of exactly which day?” Because every day has an end. And you should find out how your lawyer defines the end of the day: 6:00 pm or 11:59 pm (thanks, zakstar).
“Don’t worry about the date on that option grant; it’s not a big deal.” Unless you enjoy getting indicted, you should run from a lawyer who utters such stupidity.
“The bill would be lower if it weren’t for the lawyers on the other side.” You do realize that the lawyers on the other side are saying this about your lawyers too, right?
“I thought you were more interested in getting it right rather than saving a few dollars.” In other words, the legal bill for your series A funding may exceed the amount of capital raised.
“Your case is much stronger than theirs; I’m sure we can convince them.” If your position is so strong, you don’t need lawyers. It’s when your position is weak that you need them. Also, your opponent is hearing the same thing about their case.
“We have relationships at the highest level in Shanghai/Munich/Mumbai/New York/LA.” In other words, someone from the firm once flew in first class to Shanghai/Munich/Mumbai/New York/LA with the vice premier’s uncle’s sister’s nephew.
“We’d much rather be on the company side than on the investor side.” Let me get this straight: Your lawyer would rather be on the side of two guys/gals in garage who are raising $500,000 than a venture capital fund managing $500 million whose partners play golf at the same country club?
“We usually don’t bill the full retainer; it only happens if there are unforeseen issues that come up.” One of two things is happening: either you’ve been sandbagged with an artificially high estimate or your lawyer just passed the bar.
“Sure we’re busy, but I’ll make sure you don’t get handed off to a green associate.” Translation: Your main contact passed the bar a year ago.
“I’ve done work with Google/Microsoft/Apple, so I know how to structure deals with them.” Translation: “My favorite search engine is Google which I use on my Windows laptop while I’m listening to my iPod.”
“We think you will have a very strong patent.” If you hear this, ask this question: “So if Microsoft infringes on it, we’d win?”
“We know the opposing attorneys, so we’ll be able to work out something quickly and cheaply.” This is like asking the hotel concierge what restaurant he recommends. There is usually no such thing as quickly and cheaply. There’s only “good and expensive,” “quick and lousy,” and “cheap and lousy.” Pick one.
“I can call several venture capitalists to help you secure funding.” Actually, you should select your lawyer as much for his/her connections to the venture capital community as much as legal expertise. However, take this very literally: He/she “can” call—this is different from “will” call.
My buddy Mathew Johnson suggested this topic, so if you’re a lawyer, and this posting upsets you, blame him.
At the suggestion of, and with the help of, Glenn Kelman, here are more lies. These are the lies of CEOs running a companies that are beyond the startup phase. Startup phase lies you’ve read here before.
“Working together, we’ve established our goals.” In other words, these are the goals that the CEO decided will make him look good. Few managers believe that these goals are doable, and yet they are the ones who are going to have to accomplish them. But that’s what working together means: the CEO decides and the workers do.
“It’s like a startup around here.” This could mean that the place lacks adult supervision; capital is running out; the product is behind schedule; investors have given up, and employees are paid below market rates. Sure, it could alternatively mean that the company is energized, entrepreneurial, making meaning, and kicking butt, but just be sure to double check.
“Your project will be a skunkworks reporting directly to me.” This means that no one else at the management level buys into the idea. The CEO might protect you—as this lie implies. Or, you may be fighting for your life against the naysayers when the CEO moves on to the next brilliant idea du jour.
“I wanted to do this, but the board wouldn’t let me.” This is a cop out. A good CEO tells the board what she wants to do. She doesn’t seek permission—forgiveness maybe, but never permission. So this statement means one of two things: the CEO didn’t really try her best to get something approved or the board is losing confidence in the CEO.
“I expect you to figure this out.” This is a loaded, supposed backhanded compliment. It’s supposed to mean, ”I have such confidence in you that I know you can do this.” Sometimes it does means this. Most times, though, it means that the CEO has no clue and is praying that you can save his butt.
“Our sales pipeline looks good.” This means that the vice president of sales leaned on the regional sales manager who leaned on the regional sales rep to pump up the forecast because the CEO doesn’t want to look bad to the board of directors.
“We will be profitable soon.” After leaning on the sales organization and it “came through with a great pipeline,” the CEO could then ”reliably“ predict profitability. He never did check with the CFO, though. If the company isn’t profitable, then it’s the fault of the vice president of sales or CFO anyway.
“The stock price is not important; what’s important is building a great company.” There are handful of visionary CEOs who mean this when they say it. However, you don’t work for one of them. If one could get an honest answer out of CEOs, most would tell you that they’d rather have a rising stock price than a great company. Very few have the courage to build a great company and trust that a rising stock price is a natural outcome of this accomplishment.
“I’ve never worked with a better group of people.” The career limiting comeback to this is, “Well, I have—starting at the top.” This can be a legitimate morale boosting statement when it is infrequently made. However, if a CEO spouts this off more than once every five to ten years, and you know there are clearly bozos on the team (often protected by the CEO), then you know that he’s playing you.
“I’m open to new ideas.” The CEO must have recently read a book by a management guru. She’s certainly open to his own new ideas. She’s probably open to new ideas from the consultants that she hired at $10,000/day. Maybe she read a new idea in a blog, God help us. The relevant question is whether she’s open to new ideas from the rank-and-file employees who really know how to fix the company.
“I want to hear the truth; I don’t want yes-men around me.” Maybe this is the truth: he doesn’t want yes men around—he wants yes women. But I doubt it. It could be that he’s so arrogant that he believes that he’s always right so there’s nothing to disagree with. But I doubt that too. The most likely situation is that he’s just lying, and he wants people to always agree with him.
“I will gladly step aside when the time comes.” Sure, with a $10 million severance package, who wouldn’t be glad to step aside?
“This is how we did it at (name of previous company he was fired from), and it worked.” And that’s why the company let him go. And that’s why the employees at the previous company rejoiced when the news spread. And, unfortunately, that’s why the directors of this company hired him: because he was a senior-level packaged goods guy who was available, and the board thought that your tech products should be sold like laundry detergent.
“I don’t need to understand all that whiz-bang stuff to be a good CEO.” Absolutely. Your customers aren’t that smart. Neither are your employees, vendors, and partners. The CEO just needs to stand there: tall, white, and gray haired, and let everyone kiss his ring.
“I don’t need to rehearse my speech.” This is because he’s not to going to gauge audience reaction since his limo is waiting to whisk him away. He’ll simply ask his handlers, Trixie and Biff, how they think he did. And they will tell him that the emperor has very fine clothes indeed.
“We are a customer-focused company.” If only the CEO had appended two additional words: "this quarter." Because next quarter the company will be an innovation-driven company. And the quarter after that a Six Sigma driven company. And the quarter after that the company will be producing purple cows. And the quarter after that it will be evangelistic (depending on whether the CEO reads my book or Seth's first).
Bonus: “I can telecommute and still keep my house on the golf course in Carmel.” The CEO should be living and dying with the company. If anything, he should be there more than anyone.
Rather than these lies, here are four things you’d like your CEO to say:
Written at: Alesund, Norway
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In a manner of speaking, I’m running out of lies to tell. So far I’ve taken care of entrepreneurs, venture capitalists, engineers, and marketers. The target of this posting is “corporate partners.” (You might find a previous posting, “The Art of Partnering” interesting.)
These are the large, infinitely rich, and high brand-recognition companies that supposedly provide a partner with instant credibility, fundability, and viability. Unfortunately, dealing with a large company is like being “stuck in the belly of a snake”—as my buddy Heidi Mason describes corporate partnerships. She is the co-author of The Venture Imperative.
Before those jaws close around you, and you are eaten alive, listen for these lies.
“We want to do this for strategic reasons.” This is corporate-ese for, “I have no idea why we’re doing this. My CEO met your CEO at a boondoggle conference and told me to talk to you guys.”
Ideally, what you’d hear instead is, “We think we’ll make a lot more money by partnering with you.” In other words, the large company wants to do this for tactical, not strategic, reasons. This would mean that the partnership has a chance of being “built to last.”
“Our management really wants to do this.” There are two ways you can take this. First, you have a great product, the large company “gets it,” and life could be great. Second, the large company is clueless and desperate. As a rule of thumb, if you’re not 110% sure it’s the former, then it’s the latter. Then you should be thinking, “Do we really want to get in bed with them?”
“We can move really fast.” This means that so far very few people in the organization have been exposed to the idea. As more people get involved and the turf wars begin, progress will slow down, if not reverse. It could also be that this isn’t a lie because “really fast” means nine to twelve months from the large company’s perspective.
“Our legal department won’t be a problem.” In other words, the legal department hasn’t seen the proposal yet. There are two kinds of legal departments in large companies: (a) the kind that automatically says, “No,” when asked, “Can we do this?” (b) and the kind that automatically says, “No,” when asked, “Can we do this?”
(a)“The engineering team really likes it.” (b)“The marketing team really likes it.” Respectively, these lies mean that (a) the marketing team hasn’t seen it yet; (b) the engineering team hasn’t seen it yet. Look at the bright side: once you get past marketing, engineering, and legal, only accounting is left.
“We want to time the announcement of our partnership with the release of a new version of our product.” This is a lie of good intentions. Unfortunately, it means that the gating item of your partnership is a large company’s ability to deliver a new product. May God be with you.
“Our primary concern is whether you guys can scale.” This isn’t a lie. They are really concerned about this--as they should be. After all, your team has never shipped a product before, and you only have six months of cash in the bank. You have may no choice but to lie too. :-)
“We’d like your servers to host most of the code and functionality.” This isn’t a lie, per se. It’s more a frightening admission that the large company’s product is held together by baling wire, duct tape, and chewing gum, so making any changes could make it blow up. Welcome to corporate partnering: one of the things that you’ll learn is that the emperor has no code.
“We’re forming a cross-functional team to ensure the success of this project.” This ensures that no one is responsible for the success of the partnership, nor is there anyone who’s going to take the blame. Instead, you want the large company to identify one “champion” for the partnership. One champion is always better than one cross-functional team.
“I’m leaving soon, but I’ve found a great person to take over my role in this project.” Uh oh, now your champion is splitting, and the person who was arguing against the partnership is going to be in charge of implementing it. You’ve got some major evangelism and bridge repairing to do. May the farce be with you.
By popular demand, here are the top ten lies of marketers. Actually, it was too hard to stop at ten, so this list is a dirty dozen. As my mother used to say, "How can you tell if a marketer is lying? His lips are moving."
1. "Our PR firm says it can get Walt Mossberg to review our product." It's not clear who is dumber: your PR firm for saying this or your marketers for believing it. Walt reviews about fifty products a year, so the odds are not good that yours will be one of them. Certainly, no PR firm can guarantee a review.
2. "If we can finish the product we'll be invited to demo at Demo." Let's say that your engineers are running behind schedule. (It's not their fault, of course--it's the marketers for not specing the product properly, but I digress...) A marketer rushes into the engineering department to announces that if the engineers could finish, then your CEO can demo the product at this premier technology showcase.
If the person who runs Demo, Chris Shipley, would schedule more Demos, there would be a lot more innovative products in the world because marketers would have more opportunities to tell this lie to engineers.
3. "We have a really good strategy to get A-list bloggers to write about our product." Yeah, as if it's that easy and as if all A-listers are alike. Why some A-listers even claim that you don't need to suck up to them and ply them with freebies like wine. The best strategy has two elements: (a) a great product and (b) sucking up. How convenient: one role for engineers and another for marketers.
4. "We're confident that our product is extremely viral." Steve Jurvetson best defined virality as "the involuntary adoption of a product." The key word is involuntary--for example, in the early days of instant messaging, ICQ was a viral product because if you wanted to instant message, you had no choice but to install ICQ. Any decent product can generate word of mouth advertising, but very few products are truly viral.
Anti-example: Have you ever wanted to post a comment to an MSN-hosted blog only to be confronted with the message that you have to sign in with a Microsoft .NET Passport? That's not virality--that's innoculation.
5. "Conservatively assuming that each user only tells three additional people, we will have an installed base of five million by the end of the first year." Do you know why we've heard about MySpace and FaceBook? It's not because it's easy and commonplace to amass millions of users. It's because it hardly ever happens. Whenever a marketer makes a forecast like this, add one year to the timeline and divide the installed base by 100.
6. "BigNameCompany is really excited about partnering with us." As long as you understand that the most realistic definition of "partnering" is "a relationship that lacks a business model," this lie can't hurt you too much. Especially because it's unlikely that Big Name Company is really excited, so nothing will happen at all. (See next lie)
7. "Jane Doe, vice president of biz dev of Big Name Company, isn't returning my phone calls or emails." Actually, this isn't a lie. It's the truth. It's just that this nugget of truth follows weeks of lies about how excited Big Name Company is to partner with you. Now, all of a sudden, it's not the marketer's fault that nothing is happening--it's simply that Jane Doe isn't returning his calls or emails.
8. "Conservatively, the total addressable market for our product is $50 billion." In seven years of dealing with venture capitalists including four years of being one, I've never met an entrepreneur who wasn't addressing a $50 billion total addressable market. Suppose you are starting a sushi restaurant. Is the total addressable market the grand total of what Americans spending eating out per year? I don't think so.
9. "This is how we are going to position the product." This is a lie of naivete that indicates a lack of real-worldliness and experience. You might try to position your product in a certain way, but ultimately customers, not you, position your product. You take your best shot and then you see how customers react--if, frankly, they react at all. But, at the end of the day, you're hardly in total control of positioning.
10. "We need outside consultants because we don't have the bandwidth to do all the marketing ourselves." What Bangalore is to engineering, "outside consultants" is to marketing. Much as most engineers hate to hear this, the two professions have lots in common including this fallacy of outsourcing. Nine marketers can't produce a baby in one month any more than nine engineers can.
11. "The PR firm (ad agency, whatever) that we interviewed really loves what we're doing." Not to put too negative a spin on this, but prostitutes tell customers that they'll love them "a long, long time"--which is about as true as this lie. The severity of this lie depends on what phase of the bubble you're in. If it's a frothy time, then you might have to convince a PR firm to take you on as a client. If it's a down cycle, then getting someone to love you isn't that hard.
12. "We found a rock star to join our marketing team." There's nothing like setting a person up for failure by creating excessive expectations. I've spoken to event managers, and they tell me that rock stars make all kinds of ridiculous demands like painting the backstage walls purple for Prince or punching a hole in a wall so that another performer could walk directly to the stage. Forget the rock star: Hire good, bright people who want to prove themselves, not live off the past.
Addendum:
"All we need is a 1% market share to make this work." (Peter Kim). How could I forget this one? Perhaps because I try to block this very common lie out of my consciousness.
"Our product is so unique that it has no competition." (Maura Welch). It has no competition for two possible reasons: (a) You're clueless and don't know how to use Google; (b) there's no market for it so no one else is dumb enough to do the same thing.
Here's a good counter balance by Alain Thys called, "The Top Ten Truths of Real Marketers"
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After a several month hiatus, I would like to return to my top-ten lies series. So far, I've covered entrepreneurs and VCs, Today's topic is the top ten lies of engineers.
1. “We're about to go into beta testing.” This is a meaningless statement because it doesn't matter when you go into beta testing--what matters is when you come out of beta testing. (The only hard and fast deadline for coming out of modern-day beta testing is “before you run out of money.”)
In the good old days, “alpha” used to mean “all features are implemented though not necessarily working properly.” “Beta” used to mean “there are no more repeatable bugs.” Nowadays beta means “we've gone as long as possible past the shipping date that we promised our investors.”
2. “I don't know anything thing about marketing...” This is a lie of false modesty. The engineer is thinking, in totality, “I don't know a thing about marketing, but how hard could it be compared to what I'm doing? I should run marketing and engineering. I just hope that the marketing the MBAs come up with is worthy of my code.” However, don't worry too much about this lie because it self-corrects as the engineer misses deadline after deadline and comes to realize that he has bigger issues.
3. “I'll comment the code, so that the next person can understand what I did.” This is a lie of good intentions. Really, the engineer did intend to comment the code but as the schedule slipped, priorities changed. The question put to management became: “Do you want me to comment the code or finish it sooner?” Guess what the answer was. Luckily, the lack of comments usually doesn't matter because the code is so crappy that a total rewrite is necessary in a year.
4. “Our architecture is scalable.” This is the lie that I enjoy hearing the most. Typically, an engineer who has never shipped a product says this after creating a prototype in Visual BASIC. The whole conversation goes like this: “Google's architecture isn't as scalable as mine. They can support 25 million simultaneous searches. We will be able to easily handle a billion.”
Luckily, in most cases, the adoption of the product is slower than the CEO's “conservative” forecast, so scalability never becomes an issue. Yeah, those clowns at Google, Yahoo, Oracle, Microsoft, Apple, and AOL don't know anything about scaling compared to the engineer...
5. “The code supports all the industry standards.” This is almost a truth but for a short omission: “This code supports all the industry standards that I agree with.” The engineer has made a personal decision to ignore standards she doesn't like--for example, those promulgated by Microsoft. It's no big deal--customers will never know...
6. “We can do a Macintosh version right after we finish the Windows version; in fact, much of the Windows code can be re-used because of how we architected it.” The truth is that version 1.0 of any software is an experiment. It can be a magnificent experiment, but it's an experiment nonetheless. Thus, Windows version 1.0 is held together by duct-tape. The Macintosh version is a copy of the duct-taped Windows version written by an engineer who just finished college and got his first Macintosh a month ago. How hard could it be to learn to program for a different platform? C++ is C++, right?
7. “We have an effective bug reporting database and system.” Of course, the assumption behind the design of the bug reporting database and system is that there are no bugs in the code, so there's not much to database and report. Generally speaking, if the largest number of documented bugs doesn't ever exceed 1,000, it means that the company isn't tracking bugs carefully.
8. “We can do this faster, cheaper, and better with an offshore programming team in India.” Rank and file engineers usually don't tell this lie; it's the CTO who does. Somehow we've got it in our heads that every programmer in India is good, fast, and cheap, and every programmer in the United States is lousy, slow, and expensive. My theory is that for version 1.0 of a product, the maximum allowable distance between the engineers and marketers is thirty feet.
9. “Our beta sites loved the software.” In twenty five years of working in technology, I've never heard a company report that its beta sites didn't like its software. There are three reasons for this: first, many beta sites are so honored to get pre-release software that they don't want say anything negative. Second, most beta sites haven't used the software very much. Third, most beta sites don't want to seem cruel by criticizing a company's new product. Doing so is as socially unacceptable as telling someone that his baby is ugly.
10. “This time we got it right.” The scary thing about this lie is that the engineer really believes it. Again. The problem is that “this time” occurs over and over again. I have great faith in engineers and believe that in the long run, they do get it right. It's just that in the long run, we're all dead.
Addendumbs (sic):
“This code is so bad it would be faster to write it all from scratch than debug and expand the current shipping code.” (Joel.)
"I like thinking about architecture, but I can code." (Glenn Kelman)
"It works on my machine." (Gaurav)
"Of course I can let go of the code and run the business instead." (Jason)
"Even my mom can navigate the screens." (Nitin)
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(Since I've antagonized the venture capital community with last week's blog, I thought I would complete the picture and “out” entrepreneurs to begin this week. The hard part about writing this blog was narrowing down these lies to ten.)
I get pitched dozens of times every year, and every pitch contains at least three or four of these lies. I provide them not because I believe I can increase the level of honesty of entrepreneurs as much as to help entrepreneurs come up with new lies. At least new lies indicate a modicum of creativity!
PS: here is an interesting commentary on this blog by Jason Fried.
Written at: Vallco Shopping Center, Cupertino, California
Venture capitalists are simple people: we've either decided to invest, and we are convincing ourselves that our gut is right (aka, “due diligence”) or there's not a chance in hell. While we may be simple, we're not necessarily forthcoming, so if you think it's hard to get a “yes” out of venture capitalist, you should try to get a conclusive “no.”
This is because there's no upside to communicating a negative decision. Entrepreneurs will simply hate us sooner--instead the game is to string along entrepreneurs in case something miraculous happens to make them look better. (An example of a miracle would be Boeing approving a $5 million purchase order.)
Alas, entrepreneurs are also simple people: If they don't hear a conclusive “no,” they assume the answer is yes. This is an example of the kind of breakdown of communication between venture capitalists and entrepreneurs that causes much pain and frustration for entrepreneurs.
To foster greater understanding among the two groups, here is an exposé of the top ten lies of venture capitalists.
Written at: Starbucks Ward Center, Honolulu, Hawaii.
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