Con Artists “Catfishing” Startups. An Epidemic?
This is a topic that has been on mind for several years and I haven’t been 100% on whether I
should, or how I would, address it. Finally, inspired by the article in Entrepreneur “It’s Time to Talk About Startup Scam Artists” it’s clear that the problem is widespread and really hurting people.
I have dealt with a similar issue in the marketing world, and especially public relations, for years. People may really have the best intentions but going about it all wrong, while others really, truly have the worst intentions.
I've even devoted my free time to teaching entrepreneurs and business owners about PR and arm them with information so that they could clearly see the PR wolf in sheep's clothing. In the past year, I’ve had more conversations with startup media and influencers, who also hear the stories of individuals scamming startups by posing as venture capitalist companies. These people talk a good talk but have no intention of helping the startup or small business. Good reporting means that victims need to be willing to come forward and name names. A tall order in a reasonably "small world" community.
I believe it's high time to call out the individuals and companies that are “catfishing” (seems the appropriate term here) on the ever growing startup and small business environment, so that they will stop, and hopefully save thousands of individuals from being “taken” each year.
If you have a startup, chances are good that you’ve been approached or even persuaded by someone claiming to be a startup mentor or investor, marketing agency or individuals who are self-proclaimed experts in social media or startups. Even I have met, networked with, individuals that turned out to not to be the real deal. Everyone wants to be a heavy hitter. Sadly, it’s not until you’ve paid thousands of dollars that you realize the promises made were never going to be realized.
I’ve seen this time and again….and just in Chicago. It makes my stomach churn. The startup world has become a hot bed for those seeking to get something for nothing, those looking to raise their status or create a profitable, influential profile. Much like Leonardo DiCaprio’s character in “Catch Me If You Can”, there are people out there willing to fill your head with the joyful realization of your dreams; curing your problems; helping to find funding; generate awareness and the promise of making you a multi-millionaire entrepreneur in short order. All you have to do is trust them. They find the weak and prey, all the while taking your money and selling lies to cover up what’s really being done, or rather what’s not being done.
In recent years, despite my vocal hesitation, I’ve had clients engage individuals who made big promises, spending thousands and thousands in valuable startup dollars, even personal money meant for personal expenses, with the belief that these people would do what they promised. “It’s going to take a little longer than we anticipated. Just stick with us for another six months” and $20,000, is always a common excuse. Only after finding themselves further in debt, without the money needed to move their business forward, or even to pay their personal bills, and the realization that they received horrible advice from a so called “expert”, do they realize that the people and companies in question were not authentically interested, or capable, in meeting those promises. They were, instead thieves in the night.
So, just how do startup founders and entrepreneurs spot the warning signs and steer clear of these impostors?
Listen to what they say and what they don’t say: This is true about all people. If you feel as if you need a shower after getting the sales pitch for an hour, then you should wash that “opportunity” right out of your hair.
Ask questions and pay attention to their answers: I find this mostly to be true with so called “mentors” and VCs who often have static answers to what they perceive to be static questions. Truth is that every business is unique and require unique strategies, and static answers or advice proves they do not know what they are doing.
Do not give them an exclusive: I know this is a touchy subject for some VCs, but any good, viable VC will understand that you want to see how the relationship may work out. After all, it will take time and it is a long relationship. Some people do not discern who they get into bed with, but you should.
Do your research: Trust and then verify again and again. Google is a powerful tool. Use it. By simply reading the bio on their website, you can see whether they have the knowledge or experience. I once noticed that someone claiming to be a social media expert had no YouTube account, 15 followers on Twitter and no business pages or accounts on LinkedIn or Facebook. My client was going to hire her until I presented my intel.
Believe them when they tell you who they are: Most people will tell you who they are upfront. Listen and believe them.
Ask for references: Talking to real life clients can help you decide whether the person or company is worth it. If they say they will get you references and never comply, then run.
Ask around: If you’re part of a dynamic startup community, then people know one another. It’s small world and, while people try to be PC by not spreading rumors, people know one another and may be honest enough to give you the truth over coffee.
Set up a trial period with measurables: If you are on the wire, try a 90-day trial period with realistic measurements that must be met and keep them accountable.
Keep them on task: If you are working with someone, say a VC, who steers the conversation away from funding to “we’re really thinking you need to invest in a rebrand” walk away. First of all, most of these individuals hire young people fresh out of college without a lick of experience and no business rebranding your business. This is, all most always, a ploy to keep your business.
If it seems too good to be true, it most likely is: Promises to solve big problems, make influential introductions or attract millions of dollars in funding in a short time….yeah. Enough said.
Pay attention to your intuition: We all have this six sense but few of us trust it enough to listen to it, let alone believe it. It’s called the Universe, God, and it always has your back. Trust and believe that.
The meaning behind “fake it ‘til you make it” doesn’t mean you have the right to fake out others, steal from them and ultimately hurt their livelihoods, which impacts employees, partners, other investors and families. If we cannot call them out by name, then hopefully those of us who have a platform will continue to educate small business owners, startups and entrepreneurs on how to protect themselves, their business and their dreams.
Let me just say, that there are far more good opportunities and individuals than there are bad. There are many great professionals truly dedicated to being of service to startups and entrepreneurs from mentors and VCs to marketing agencies. Some times when you're fishing you never know what you will catch. A trout, catfish or Asian carp. Like all things, don't allow a few bad fish in the sea keep you from catching your dream.
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