As we prepared a recent blog post about the fintech start-up Robin Hood, we noticed that a worrisome number of articles have been published in recent years about lying by entrepreneurs.

Many of them recount stories of entrepreneurs’ telling brazen lies to save their companies.

  • Gary Hirshberg (Stonyfield Farm) told the SBA that he had a bank willing to provide a loan and just needed the SBA to agree to guarantee it. There was no such loan, but the SBA agreed and a loan came later, saving Stonyfield Farm.
  • Shane Smith (Vice Media) sent a few copies of his company’s publication to a store in Miami and a store in L.A. and then told its potential advertisers that its readership was distributed all across America.
  • Martha Lane Fox ( simply invented customer testimonials to spark interest in her company.
  • Phillipe Kahn (Borland International) and Anthony Byrne (Product2Market) created “Potemkin villages” by temporarily spiffing up their offices and bringing in people who pretended to be employees so that their companies would seem to potential partners and investors to be more substantial and impressive than they truly were.

While many of these articles and the entrepreneurs quoted in them condoned or even approved lying by entrepreneurs, we urge caution.

Is lying wrong? A deontological analysis would conclude that it is. “Don’t lie” is a universal moral law. Kant would not approve. Similarly, a virtue ethics approach would conclude that a virtuous person does not lie. Aristotle would not approve.

Those who condone or approve lying adopt utilitarian approaches that might or might not gain the approval of Mill and Bentham.

The key argument seems to be roughly: “I have a promising company. I’m employing people. By telling this lie to an investor who will put money into the firm, I am saving jobs and will eventually contribute to the economy.” This argument presents a best-case consequentialist scenario. The lie may succeed in saving the company and thereby creating benefits, though it is unclear whether those benefits will outweigh the costs. Had the truth been told, the investor might well have chosen to invest in a different, more promising company, saving more jobs and creating greater growth. And such lies undermine trust in the economy, and trust is the very foundation of economic prosperity.

There’s no way to know with certainty which path would have created the greatest good for the greatest number (which, by itself, is a good argument for applying a deontological approach), but it is clear that both the overconfidence bias and the self-serving bias will often lead entrepreneurs to unrealistic appraisals of their companies’ chances to succeed or even to survive.

Furthermore, this same argument could be used to argue that robbing a bank or embezzling from a large company could be justified because the entrepreneur intends to use the proceeds of these crimes to save a promising start-up.

Capital should not flow to the most brazen and/or convincing liar. Unfortunately, even sophisticated and experienced investors can fall for a lie well told. As Nobel Prize-winning economist Robert Shiller demonstrated in his book Narrative Economics, convincingly told stories often have greater impacts on people’s economic decisions than all the Excel spreadsheets and certified financial statements in the world. Elizabeth Holmes (Theranos) and Adam Neumann (WeWork) provide unfortunate examples. Ultimately, their lies saved no jobs and contributed little to the economy other than distorting the efficient flow of capital.

The rationalizations contained in these various articles show on their face how lame the excuses for lying often are. One entrepreneur indicated that it’s okay to tell investors that there is lots of interest in funding your idea when there is not, but it would be going too far to say that you already had a term sheet. (Hill) Huh?

Gary Hirshberg of Stonyfield Farm didn’t feel he was lying because “look–you beg, borrow, steal, stretch. You do what’s necessary.” (Feifer) Even robbing a bank?

Hirshberg also argued that “everybody does it.” This is a dangerous point of view, because it gives rise to the conformity bias where nothing seems wrong if everyone is doing it. Lance Armstrong told Oprah Winfrey that because he thought everyone in the Tour de France was doping, doping didn’t seem wrong at the time. Unfortunately, what happens is those who wish to lie tend to conclude that lying is more widespread than it actually is, creating their own justification.

Feifer quotes professor Tomas Chamarro-Premuzic as giving this guidance to entrepreneurs:

Treat lying as a tool to be used in very particular moments. It cannot result in harm to individuals. It must lead to an opportunity you can genuinely succeed in. And very critically, it cannot become a foundation you build on with other lies.

We at Ethics Unwrapped view this as unrealistic advice. Combined, the overconfidence bias and the self-serving bias will often lead entrepreneurs to unrealistically conclude that of course they can genuinely succeed! Of course, they can build a profitable business and pay investors back. That is certainly what Elizabeth Holmes and Adam Neumann thought. They were wrong! And, equally worrisome, the phenomenon of incrementalism makes it exceptionally likely that those initial lies will become the source for a fountain of additional lies. Again, ask Elizabeth and Adam.

We are pleased that the view of professors Jensen, Byers, Dunham, and Fjeld in their recent Harvard Business Review article aligns well with ours:

It may be tempting to think that departures from the truth are just part of doing business—that we operate in a no-holds-barred capitalist arena in which all contestants are responsible for their own welfare and know the rules of the game. Unfortunately, such cynicism feeds on itself; when we encounter dishonesty or scandal, we become disillusioned and are more likely to engage in such behavior ourselves.

In other words, honesty is the best policy.



Robbie Allen, “15 Lies Every Entrepreneur Tells,” Medium, Feb. 6, 2020, at

Dan Cooper, “All Entrepreneurs are Liars, and It’s Stifling Your Company: Five Ways that Entrepreneurs Are Lying to Themselves and to You,” ColoradoBIZ, Oct. 1, 2019, at

Charles Duhigg, “Cool Story, Bro,” New Yorker, June 7, 2021.

Jason Feifer, “Should Entrepreneurs Lie? It’s a Tricky Question,” Entrepreneur, Oct. 31, 2018, at

Irene Finel-Honigman, A Cultural History of Finance (2010).

Andrew Hill, “Do Not Expect the Whole Truth—Entrepreneurs Bluff all the Time,” Financial Times, June 17, 2018, at

Daniel Isenberg, “Should Entrepreneurs Lie?,” Harvard Business Review, April 8, 2010, at

Kyle Jensen, Tom Byers, Laura Dunham & Jon Fjeld, ”Entrepreneurs and the Truth,” Harvard Business Review, July-Aug. 2021, at

Tom Kulzer, “The Lies Entrepreneurs Tell Themselves and Others,” Entrepreneur, Feb. 21, 2014, at

Gene Marks, “5 Lies That Come Out of Entrepreneurs’ Mouths,” Entrepreneur, Mar. 21, 2014, at

Robert Shiller, Narrative Economics (2019).



Conformity Bias:


Overconfidence Bias:

Self-serving Bias: