Depending on exactly where the boundaries of the pre-truth game are, I think I could argue no one is being deceived (I mean realistically there will be at least a couple naive investors who think founders are speaking literal truth, but there could be few enough that hoodwinking them isn’t the point).
When founders present a slide deck full of pre-truths about how great their product is, that slide deck is aimed solely at investors. The founder usually doesn’t publish the slide deck, and if they did they wouldn’t expect Joe Average to care much. The purpose of the pre-truths isn’t to make anyone believe that their product is great (because all the investors know that this is an audition for lying, so none of them are going to take the claims literally), rather it is to demonstrate to investors that the founder is good at exaggerating the greatness of their product. This establishes that a few years later when they go to market, they will be good at telling different lies to regulators, customers, etc.
The pre-truth game could be a trial run for deceiving people, rather than itself being deceptive.
This still creates another problem for founders who aren’t part of the good-ol-boys network and don’t know they are supposed to “pre-truth.” Their companies will be evaluated worse than they “should” by VCs because VCs downgrade their actually currently true claims as if they were pre-truths. Nobody is being “deceived” per se, but these founders are being harmed.
If you believe strongly enough in the Great Man theory of startups then it’s actually working as intended. If startups are more about selling the founder rather than the product, if the pitch is “I am the kind of guy who can do cool business stuff” rather than “Look at this cool stuff I made”, then penalizing founders who don’t pre-truth is correctly downranking them for being some kind of chump. A better founder would have figured out that he was supposed to pre-truth and it is significant information about his competence that he did not.
Realistically it is surely at least a little bit about the product itself, and honest founders must be “unfairly” losing points on the perceived merits of their product, but one could argue that identifying people savvy enough to play the game creates more value than is lost by underestimating the merits of honest product pitches.
Although to the extent that the founder’s savvy is used for the purpose of taking the company public even though their product is not as good as they “pre-truthed” it, then the ultimate purpose is that the founder and the early investors are essentially colluding to defraud less-savvy IPO investors. Seems not great.
SQZ Biotech is possibly a good example of this (I live nearby so have followed the story but don’t have any inside info about this company).
Depending on exactly where the boundaries of the pre-truth game are, I think I could argue no one is being deceived (I mean realistically there will be at least a couple naive investors who think founders are speaking literal truth, but there could be few enough that hoodwinking them isn’t the point).
When founders present a slide deck full of pre-truths about how great their product is, that slide deck is aimed solely at investors. The founder usually doesn’t publish the slide deck, and if they did they wouldn’t expect Joe Average to care much. The purpose of the pre-truths isn’t to make anyone believe that their product is great (because all the investors know that this is an audition for lying, so none of them are going to take the claims literally), rather it is to demonstrate to investors that the founder is good at exaggerating the greatness of their product. This establishes that a few years later when they go to market, they will be good at telling different lies to regulators, customers, etc.
The pre-truth game could be a trial run for deceiving people, rather than itself being deceptive.
This still creates another problem for founders who aren’t part of the good-ol-boys network and don’t know they are supposed to “pre-truth.” Their companies will be evaluated worse than they “should” by VCs because VCs downgrade their actually currently true claims as if they were pre-truths. Nobody is being “deceived” per se, but these founders are being harmed.
If you believe strongly enough in the Great Man theory of startups then it’s actually working as intended. If startups are more about selling the founder rather than the product, if the pitch is “I am the kind of guy who can do cool business stuff” rather than “Look at this cool stuff I made”, then penalizing founders who don’t pre-truth is correctly downranking them for being some kind of chump. A better founder would have figured out that he was supposed to pre-truth and it is significant information about his competence that he did not.
Realistically it is surely at least a little bit about the product itself, and honest founders must be “unfairly” losing points on the perceived merits of their product, but one could argue that identifying people savvy enough to play the game creates more value than is lost by underestimating the merits of honest product pitches.
Although to the extent that the founder’s savvy is used for the purpose of taking the company public even though their product is not as good as they “pre-truthed” it, then the ultimate purpose is that the founder and the early investors are essentially colluding to defraud less-savvy IPO investors. Seems not great.
SQZ Biotech is possibly a good example of this (I live nearby so have followed the story but don’t have any inside info about this company).