Have you ever thought about your relationship with honesty? I bet you have at some point, given all the idioms and expressions we have about honesty and the truth. Look for it and you’ll notice that the idea shows up in our books, shows, songs, and films. Listen for it and you’ll hear the words everywhere; truth permeates our language like water in a sponge . . .
As honest as the day is long.
An honest buck.
An honest mistake.
A moment of truth.
Stretch the truth.
Let the truth be known!
The truth of the matter.
Truth be told . . .
To tell you the truth . . .
Ain’t that the truth!
The truth, the whole truth, and nothing but the truth.
The naked truth.
Keep me honest?
If I’m honest . . .
At least you’re honest!
Nothing could be further from the truth.
Honestly!
In all honesty . . .
Honesty is the best policy.
Honest to goodness.
Honest to greatness?
And yet, here’s the cold, hard truth: we’re all a bunch of no-good, dirty liars. And by the end of our time together, I’m confident you’ll agree that our dishonesty—as individuals, as groups, and as organizations—keeps us from success.
But, sadly, that’s not the worst part. The worst part is that most of us don’t even know that we’re lying. What are we lying about? Everything. We lie about the state of the world and what’s going on around us. We lie about the people around us. And, worst of all, we lie to ourselves. We have no clue that we’re even sabotaging ourselves with deceitful bullshit of the highest order. As a society, we humans have been acting dishonestly for millennia. We have dishonesty ingrained in us so deeply that getting it out will take a journey of self-discovery the likes of which you may never have considered before this moment. Luckily for you, your journey toward honesty is the exact same journey that the greatest leaders of our time have undertaken to create some of the world’s most prolific, industry-dominating, and game-changing organizations. Actually, that’s not even true. They haven’t undertaken them, as in the past tense; they are still, every day, undertaking their journeys toward honesty—and it’s the lifelong commitment to the journey that makes them successful.
That journey is the exact same one we’re going to undertake together—and through shocking revelations, thought-provoking questions, and surprising stories from some of the world’s greatest business leaders, you’re going to learn exactly how to use honesty. And when I say “use” honesty, I don’t mean put the word up on your wall at work, stare at it lovingly, toast it daily with champagne and crumpets (whatever those are), and develop a warm, fuzzy feeling about your moral compass. Instead, I mean wield honesty just as you’d use any other business strategy to drive organizational growth, game-changing profits, and industry-dominating results.
Wield honesty just as you’d use any other business strategy to drive organizational growth, game-changing profits, and industry-dominating results.
How challenging is it to use honesty as a business strategy? Well, the problem is that dishonesty still seems to work. Examples abound of fraudulent actors using BS as a powerful currency that produces results. The question is, will dishonesty continue to work in the future, and can we even rightly say that it’s working now? To figure that out, we need to see what happens when modern-day liars use dishonesty to get ahead.
CHEATERS NEVER WIN . . . OR DO THEY?
Are you an honest person? Don’t worry, you don’t have to answer that. I lie like a rug sometimes when the situation calls for it, so you should know that up front if we’re going to be friends. But hey, at least I’m honest about it, right? Nobody can tell the truth 100 percent of the time. I mean, if your terminally ill friend were to ask you, “Hey, do you think I might die today?” what are you going to say? “Well, chances are good that today’ll be it, bro. You best enjoy those last breaths just in case! It was real good knowin’ ya. Do you mind if I borrow your Xbox?”
Of course not.
We all have our own set of values—our own personal spectrum of right, wrong, honest, and dishonest. The vast majority of us live in the acceptable middle of a normal distribution of honesty—a bell curve of agreeable morality in which my dying-friend example exists among other beneficial half-truths. But some cheaters—existing in the tails of that curve—have no qualms about lying right to your face about who they are and what they do. And egregious though it is, those same peeps seem to be the ones rolling around in Scrooge McDuck–style success! WTF?
Over Thanksgiving, I was standing in my mother-in-law’s kitchen when she asked how I was. I answered that I was in the throes of producing what you are now reading, which was proving to be an arduous but highly enjoyable process.
When she asked what this book is all about, I told her it’s about showing how today’s most dominant leaders use honesty to achieve massive success. She paused momentarily before going back to assembling the jigsaw puzzle of deliciousness in the oven, then responded, simply, “Good for you. It always seems like you have to be dishonest to get anywhere in this world.”
Well ain’t that just the saddest thing? Her observation was not untrue; the truth of the matter is that unscrupulous people and dishonest companies are surviving and thriving, even in today’s increasingly transparent world. I’m sure you can conjure up a few “successful” individuals and organizations with virtually no scruples. Any politicians, CEOs, entrepreneurs, government entities, or businesses come to mind?
Dishonesty often works for a time, just as the wax-hewn wings of Icarus helped him soar close to the sun. But just as Icarus learned that the penalty for flying without the proper ingredients can be quite severe, so, too, can practicing dishonesty long term.
Just because honesty can produce industry-leading profits (as we’ll see in part two), and just because dishonesty is on its way out as the world becomes more transparent, doesn’t mean that dishonesty isn’t working for the time being; in fact, it’s working literally in every corner of life. But as with all elements of our discussion, I hope you’ll pause and ask, Is that entirely true? Does dishonesty always work? As with all good questions, the answer is it depends. Dishonesty often works for a time, just as the wax-hewn wings of Icarus helped him soar close to the sun. But just as Icarus learned that the penalty for flying without the proper ingredients can be quite severe, practicing dishonesty long term can also lead to disastrous results. Let’s look at a few juicy cautionary tales of modern-day Icaruses who disregarded honesty and ended up scorched. As you read, keep this question in mind: Is the risk of being dishonest worth the reward?
Health Care’s Billion-Dollar Bluff
Allow me to introduce you to a once-high-flying start-up called Theranos, formerly heralded as Silicon Valley’s next great “unicorn” company. Theranos was founded and led by Stanford dropout and company CEO Elizabeth Holmes, who quickly became the youngest female self-made billionaire—at least according to her sky-high valuation.
Started in 2003, Theranos grew over a short eleven years to be valued at $10 billion1—yes, that’s $10 billion with a b. This success rocketed Holmes to the covers of the biggest business magazines in the world. But by mid-2016, Theranos stumbled into the crosshairs of both the United States Justice Department and Securities and Exchange Commission. Regulators initially imposed sanctions, including banning Holmes from “owning or operating a medical laboratory for at least two years.”2 Shortly thereafter, she was indicted by a grand jury for fraud.
If you know the story, you know the heart of the matter: Elizabeth Holmes lied. She had promised that Theranos’s groundbreaking machines could detect health problems at an unprecedented low cost by testing only a mere drop of blood, a method that would drastically shorten the time and cut the cost of diagnosis using traditional tools. That would be quite helpful to our world—if only it worked.
In Wired magazine, reporter Virginia Heffernan wrote one of the most scathing accounts of Holmes’s downfall: “It’s clear . . . that it was she—and no one else—who managed to drive the company’s value up to $9 billion [at the time] without a working product.” Her modern-day bank robbery left legendary investors like the DeVos family (whose members include the former CEO of Amway and the US Secretary of Education) and the media mogul Rupert Murdoch down by about $100 million apiece, with another $700 million lost from a veritable who’s who of investing mavens. Heffernan called Holmes “a cheat, a pyramid schemer, an evil scientist, for heaven’s sake . . .”3
Most interesting is that Holmes’s cadre of investors could have easily spotted the signs, just as investors could have chosen to see the signs Bernie Madoff exhibited throughout his tenure as master con man (which is why many have compared Holmes to Madoff). Given her race to keep her deception under wraps, many close to Holmes shared that she went to drastic lengths to conceal the truth, publicly disparaging the investors, employees, and board members who asked too many questions about obtaining valid proof, even firing those who doubted her.4
Many close to Holmes shared that she went to drastic lengths to conceal the truth, publicly disparaging the investors, employees, and board members who asked too many questions about obtaining valid proof, even firing those who doubted her.
But eventually, the fear Holmes created put too much doubt into the minds of everyone around her, and piece by piece her narrative began to unravel. The deeper she got, the harder she pressed against her detractors, frequently gracing global stages to demonstrate how she would save lives all over the planet. “Bernie Madoff would never have sounded so earnest,” Heffernan quips, “P. T. Barnum would never have played his con as morally urgent. But that’s why Holmes was—for a time—the billionaire they never were. Eventually Holmes, like so many of us, got what she feared most: a whole universe of people who don’t believe in her.”
For Holmes, was the risk of being dishonest worth the reward? Clearly, she thought so at the time (though I suspect she might have a different opinion today, in retrospect).
Capitalizing on a Vice
Holmes is certainly not alone in her ability to bluff for profit; take, for instance, the ongoing saga of Shane Smith, the infamous cofounder of Vice Media. If you haven’t heard of Vice Media, that wouldn’t surprise me. Vice Media’s content is created especially for a young audience interested in fast-paced, transparent, and—yes—honest takes on people, places, and world affairs. (Don’t worry, the ironic part is coming.)
Vice was founded in 1994 when Smith and two colleagues used money from a Canadian welfare program to start a youth-oriented magazine in Montreal (think National Lampoon for millennials, but even more offensive). According to Reeves Wiedeman’s analysis in New York magazine, Smith did all the selling in those early days and was easily found running around the office proclaiming loudly that everyone who joined him would get wildly rich. His cofounder called him Bullshitter Shane, and Smith mainly sold advertising by sending a few copies of the magazine to random record stores and skate shops in farflung cities across the United States so that he could tell advertisers they had a broad, North American distribution. “Shane would talk all the time about how stupid people were for giving them money,” said one of Smith’s girlfriends at the time, according to Wiedeman.5
It turns out that “Bullshitter Shane” had a knack for turning BS into USD.
It turns out that “Bullshitter Shane” had a knack for turning BS into USD. In 1998, Smith told a reporter that Richard Szalwinski, a wealthy tech tycoon, had invested in Vice. Szalwinski had done nothing of the sort, but—and get ready to use that face-palm emoji—he was impressed enough with Vice’s boldness that he did invest in Vice, and moved the publication to New York City. One of Vice’s cofounders would later recount, “The reason those lies were so successful was because even we believed them after a while.”6
Later, after Smith moved to New York, a Canadian reporter came calling to do a profile. Smith doubled down on his deceit, paying a friend to pretend he was an MTV executive who was interested in a Vice show so the reporter would seed the idea into the story. And the story quickly picked up steam; as Smith ranted to his employees about a soon-to-come IPO, filling their heads with visions of glory, he perpetuated his appearance of success by pulling stunt after stunt. He once paid a neighboring architectural firm in Brooklyn to move out of their offices so that Vice’s people—along with an army of friends and family—could move in and make it look like they had been there all along. The swap was designed for a group of Intel executives who were interested in Vice’s marketing agency abilities, and the execs fell for it. Later, Smith famously sent Dennis Rodman to North Korea in a publicity stunt disguised as a documentary.
Former MTV chief Van Toffler would later recount that Smith boasted, “MTV’s over. You suck; we’re the new kids on the block.”7 And by the droves, investor after investor bought Smith’s story and invested millions, then tens of millions, and then hundreds of millions of dollars at sky-high valuations.
But that’s not the most shocking part. What’s most shocking is that even family-friendly brands like Disney created partnerships with Vice Media, ignoring its indecent reputation. For instance, Vice reportedly asked employees to sign a “nontraditional workplace agreement” in which employees specifically agreed they would not be offended by Vice’s indecent, violent, or disturbing environment. Even as investor money flowed in, Vice’s culture of widespread sexual misconduct began to get some unwanted attention from the New York Times. And, adding insult to injury, Vice had a reputation for underpaying employees. One senior manager reportedly joked about a “22 Rule”—“Hire twenty-two-year-olds, pay them twenty-two thousand dollars, and work them twenty-two hours a day.”8
Smith spent his growing, investor-made fortune on helicopter rides, acquiring the mansion featured in the HBO show Entourage, and wooing new investors by throwing all-nighters at New York City’s hot spots at which chief marketing officers would be treated to a noxious cocktail of booze, drugs, strippers, and more. That’s when Rupert Murdoch strode through the office with Bullshitter Shane, who would later brag, “I said to Rupert, ‘I have Gen Y, I have social, I have online video. You have none of that. I have the future, you have the past.’”9 His confidence garnered a whopping $70 million investment from Murdoch at a more than billion-dollar valuation. In addition, Murdoch’s blessing gave other would-be investors a peace of mind that would prove to be worth billions more to Smith.
Yet those on the inside of Vice knew Smith’s game. When an HBO executive congratulated Vice’s then-chief creative officer, saying, “It was nice to see the good guys win,” the Vice executive replied, “I’m not so sure that we’re the good guys.”10
When an HBO executive congratulated Vice’s then-chief creative officer, saying, “It was nice to see the good guys win,” the Vice executive replied, “I’m not so sure that we’re the good guys.”
Now the moment you’ve all been waiting for—the one where Icarus’s wings eventually melt away, leaving him to plummet back to Earth. By 2017, when Smith and Vice should have been dominating the millennial market, the Wall Street Journal reported on Vice’s $100 million revenue miss, painfully compounding the negative press swirling about Vice’s sexual harassment issues and workplace conduct violations.11 In 2018, Smith was replaced as chief executive by Nancy Dubuc, a veteran TV exec and former chief executive at A&E Networks.12 Despite the founders’ assertion that Vice is “the largest youth media company in the world,” there is evidence that Vice is no longer as cool as it thinks it is: a 2017 Google report listed Vice as the second least cool brand out of 122 on the test, according to Gen Z respondents, with Vice falling behind such uncool icons as Yahoo!, the Sunglass Hut, and JCPenney—yes, even JCPenney.13 With millennials, Vice didn’t fare much better; it ranked ahead of Sunglass Hut, but about on par with such hipsters as Verizon and Dell, and behind the ultracool Old Navy (yes, I jest). Those results can’t possibly be surprising. In the age of #MeToo, an old boys’ club founded on bluster, drugs, and alcohol can’t survive forever, regardless of which investors have blessed the beleaguered brand. Google Vice Media today, and you’ll see stories of key partnership dissolutions, job cuts, and other hallmarks of a company in desperate need of a turnaround.
“Shane would always say that young people are the number one bullshit detector,” said one departing employee, “which was annoying once you realized that the thing he mastered is getting young people to buy shit.”14 As an editorial correction, let’s make sure we understand that Smith didn’t just get young people to buy shit; he got young people and mature, wealthy, intelligent executives to buy shit—more than $5 billion worth of shit, to be exact. At least, for as long as Vice’s popular run lasted. (As an aside, Disney recently wrote off its entire 27 percent stake in Vice, suggesting it will get no return from its stake whatsoever.15)
In the age of #MeToo, an old boys’ club founded on bluster, drugs, and alcohol can’t survive forever, regardless of which investors have blessed the beleaguered brand.
What’s most sad is the lesson young people might take from Smith and his meteoric rise. After all, unlike Theranos, Vice is still alive (at least as of the time of this writing), despite all the sexual misconduct, layoffs, earnings misses, and other eventualities of building a global company on a cornerstone of deceit. Yet many might be tempted to look at Smith’s life and consider him a modern-day Robin Hood, laudable for his ability to swindle the “smart” big-business icons into releasing a dump truck of money into the backyard of the little guy’s not-so-little Entourage mansion. To me, it’s a testament to how far people will go to chase an opportunity that they know should be too good to be true. In Vice’s case, Murdoch and his compatriot investors needed to solve the problem of reaching young people, and Smith purportedly had the solution, opaque as it was and continues to be.
IS THE RISK HONESTLY WORTH THE REWARD?
If supposedly skilled and intelligent investors didn’t see Holmes’s and Smith’s deceit—or worse, chose not to see it—what truths are we supposed to take away? Do these examples encourage us to create our own masquerades? Can and should we “fake it ’til we make it”? Is that just the way it works in the world in which we live?
Ultimately, only you can decide if the rewards are truly worth the risks. It’s your career. It’s your life. You have to live with yourself at the end of the day and stave off the lawsuits and headlines that could attach a permanent anchor to your reputation.
As an entrepreneur, I must admit I admire their fake-it-’til-youmake-it attitudes. But there’s that bell curve of morality again, reminding us that lying to a customer about being able to deliver only works if you actually deliver. In the early days of my first company, my business partner and I absolutely told customers, “Sure, we can do that,” even if we hadn’t before. But that’s because we could, and we did. We had fail-safes and backup plans. We would’ve worked until the end of time to deliver on our promises before taking the chopper to the new mansion, because that would have been the right thing to do—the honest thing to do.
That particular entrepreneurial dilemma represents only one sliver of the massive gray area of life and business. When it comes to assessing the entire landscape of gray, my hope is that after you see in parts two and three what honesty can do for your sales, marketing, new product development, culture, and more, you see only risk in dishonesty and the promise of innovation in honesty. As we saw in these examples, deceit can open doors at first, but then what? Do the rewards mitigate the risks? What happens when the lies catch up with you?
Then again, you might be thinking that you’re too smart to be deceived like Murdoch, right? You would have seen through Bullshitter Shane’s bullshit. And you might have been smart enough to know that Netflix was actually the real deal. Maybe, but in truth, those are perilous assumptions. We humans are gullible. We embrace faith and belief as easily as the air we breathe. We love to tell ourselves stories and then wholeheartedly believe those stories without going deeper to find the kernel of truth that might run against what we already “know.” But in our defense, we can’t expect to save ourselves from believing our own stories when we have no better information. People were perfectly comfortable believing the Earth was at the center of the universe until they had new facts proving otherwise; then it was only a matter of time until they shifted their belief system.
And if you accept that line of reasoning, you must also accept that with more information about Vice Media’s or Theranos’s true inner workings, a lot of wealthy people could have bought a few (more) luxury yachts or rid a continent of dengue fever with the money they would have saved. Consider the sheer number of people who were affected by these dishonest organizations; consider the ripple effects and subliminal messages that these stories send to investors, employees, and watchful would-be entrepreneurs. I offer these stories up first to show the counterpoint to honesty, which right now can still work to lure powerful allies whose lack of vigilance can prop up bluster-filled charades. The good news is that transparency will save us from ourselves, and the organizations who jump on that trend first will prosper.
Beware the Herd Mentality or You Might Get Trampled
Today’s fraud is our fault: we enable fake news by giving it attention; we empower stories by clicking on their hyped-up headlines and sharing them neglectfully across social media; we embolden founders to defraud us when we shower them with money and praise without doing our due diligence (and/or without holding them accountable to basic moral tenets). Choosing to be honest is key, but it’s only part of the battle—because even if we consciously decide to be honest, we can (and do) subconsciously lead ourselves astray. Our human brains have an innate bent toward dishonesty—sometimes with others, but mostly with ourselves and our own biases. Having the ability to spot deceit takes an extra kind of personal honesty, the type of personal honesty that can make us better, more skeptical leaders who ferret out the truth instead of blindly following others. But that ain’t natural. Rather, we humans instinctively want to build community and look for social proof to guide and reinforce our beliefs and decisions. Few leaders are brave enough to admit how easily they can fall into the trap of herd mentality.
I can’t tell you how many “leaders” I’ve encountered who are obsessed with copying whatever their competitors are doing, which makes me eye-roll so hard that my eyebrows seize up. Crazily, in industries like venture capital, firms actively strive to be herd followers rather than independent-thinking leaders. Umm . . . no wonder Shane Smith did so well! Curiously, this follower-type mind-set broke Blockbuster just as it did Theranos and Vice, but in opposite ways. With Blockbuster, the powers-that-be couldn’t believe that the herd they’d known for decades was changing directions; with Theranos and Vice, investors believed that the herd was running away and that they needed to cling on for dear life. In both cases, a bit more objective truth seeking would have made billions of dollars’ worth of difference. Instead, herd mentality led to dishonest outcomes—en masse. In fact, if you really want to chuckle about herd mentality, allow me to tell you the story of a young British couple who waited months to dine at the hottest restaurant in Britain.
The Shed, as it was branded, was the number-one-rated restaurant on TripAdvisor for weeks at a time. Even getting The Shed to pick up the phone and take your reservation was a gift you could use as a badge of honor in your cocktail party banter and in your social media updates. Founded by Oobah Butler, The Shed quickly rose to fame on TripAdvisor, and the young British couple that finally scored a table couldn’t wait to dine there.
When they arrived in the middle of an innocuous suburban neighborhood, they took a space on the street alongside very few other cars. The house in front of them seemed ordinary enough; who would ever know that this place was the place? The couple was finally greeted by what must have been the host and ushered to the rear of the house, where a small, unspectacular courtyard greeted them. Their table awaited, situated in between the house and a small garden shed that framed the tiny backyard. This was certainly an experience! The couple went to work, busily snapping social media photos and posting pictures of themselves in this culinary hot spot. After eons of anticipation, they finally spotted the waiters dawdling out of the kitchen with dishes held high. This was it! When the waiters got to the couple’s table, they plunked the plates down with all the ceremony of serving a dog its Wednesday-night kibble. That might have struck the couple as odd, and, admittedly, they weren’t delighted by the food, but what does presentation or taste matter when the date-night war had already been won, with all the social proof this couple would need to punch their cool-crowd tickets for the rest of the year?
You might be surprised and entertained—more so than that young couple, I assure you—to learn that Oobah Butler has never owned or run a restaurant. Instead, he successfully turned his everyday backyard shed into the number-one restaurant on TripAdvisor by using the platform’s own procedures against it.16 The shed was just an ordinary, run-of-the-mill garden shed behind an ordinary house in an ordinary neighborhood—the very epitome of fake news. The entrees tasted exactly like frozen TV dinners—because that’s exactly what they were!
Recap: Butler, the most brilliant restaurant owner who never was, generated a waiting list for his “restaurant” and served frozen dinners on opening night, when people lined up to get a table in his backyard. Funnier still: even after dining there, no customer honored to earn a reservation wrote one negative word online about the unusual nature of the coveted dining spot.
And who was investing in Mr. Butler’s work while he was performing this and other feats of sensational bullshit?
Vice Magazine, of course.
We Need to Beef Up That BS Radar If We Want to Win
Not every organization is as deceitful as Theranos, as brash as Vice, or as purposely deceptive as The Shed, but be honest: How good are you at spotting fraudulent people and unscrupulous organizations? We humans love to blindly follow others, not ask too many obvious questions, and generally avoid the truth if it might contradict what we already believe is true—just like when we humans so fervently resisted Galileo’s radical idea that the Earth revolved around the sun.
But if we don’t fight those natural tendencies, they can lead us to catastrophic ends. We must dig deeper to see truths that could rise up and hurt us and the others around us. We must face the fact that we—the people—empower fraudsters by allowing ourselves to be deceived. As a leader, ask yourself: What happens every time you bury your head in the sand, just going along with what everyone else is doing rather than really assessing what’s going on in the world? What happens when you lie to the colleagues in your boardroom by putting your own beliefs ahead of the objective truth? What happens when you lie to yourself about what you want in life, or fail to test your most basic assumptions? Compounded, these small, oft-hidden lies are just as dangerous as billion-dollar deceptions—not only because you might get caught but also because you lose the opportunity to find the truth and all the doors to innovation and advancement that the truth naturally opens. Dishonesty is a sneaky threat; one small step toward deception can hurt you just as much as the big, glaring lies from those deceitful examples.
Compounded, these small, oft-hidden lies are just as dangerous as billion-dollar deceptions—not only because you might get caught but also because you lose the opportunity to find the truth and all the doors to innovation and advancement that the truth naturally opens.
Stories like Theranos, Vice, and The Shed are testaments to our biases, and demonstrate how much we’re willing to look beyond the surface and believe only what we want to desperately believe is true. In the case of Theranos, investors wanted to believe they had a golden goose in the lucrative health care industry. With Vice, investors wanted to believe that they had found the key to entertaining the next generation. With Butler’s shed, customers wanted to believe they had earned a coveted reservation at an exclusive venue—and, more importantly, that they had earned the social rank that came with such an honor.
They were wrong.
Lest we be too hard on them, however, we must remember that we humans are wired for deceit. If you’ve ever spent any time with a child, you know that children are born compulsive liars. We emerge from the womb able to say, “No . . . I didn’t eat the cookie you told me not to eat.” Our rocky relationship with honesty is as old as our ability to lie. That means we must actively work at transforming ourselves into honest, effective leaders. But before we can transform ourselves as individuals, we must deeply understand our complicated relationship with honesty as a society—because unless we understand the context around what we’re fighting, we won’t stand a chance.
QUESTIONS FOR HONEST REFLECTION
1.How might you develop a stronger “BS radar” to question what you’re seeing and hearing with healthy skepticism?
2.What are some of the behind-the-scenes motivations of the organizations, politicians, and news outlets around you? How honest are they?
3.To what extent do you succumb to herd mentality? How might you be following a trend without even realizing it?