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Ask HN: What are some black arts used by founders?

18 points by notabanker ↗ HN
I'm hoping this to be a funny-but-it-somehow-works thread of tactics.

Of late I've seen product creators declare staggering (unverified) revenues for their side-projects and make it to the front page of HN.

I've also seen people get keynote talks due to staggering user and revenue numbers they declared. Yet nobody seems to have asked for verification of their numbers.

Can you share examples of unwholesome tactics used by founders that got them results?

17 comments

[ 92.5 ms ] story [ 123 ms ] thread
andrefuchs
Talking about revenue without one word about profits.
muzani
Everyone raising money is expected to be unprofitable, no?
notabanker
Unprofitability is rampant among public software companies: https://survivingtomorrow.org/why-do-so-many-famous-companie...

Wonder if you have an opinion -- has unprofitability always been this pervasive or is this how businesses are generally run?

muzani
Tech companies are focused around asset growth, which is more easily converted to profit. The profit margins are usually huge, so profiting is rarely ever the problem. Revenue usually is. They have a lot of cash and it's easy to cut costs too.

From the linked article, it says, "In 2018, 81% of U.S. companies were unprofitable in the year leading up to their public offerings."

This is the most unfair way of judging it. This is like saying students have a negative net worth a year before graduation. It's missing the point - students take debt so they can make much more money later. Startups go cash heavy and take losses so they can make money after the exit.

notabanker
Thanks a lot for sharing your wisdom. A counterintuitive yet better way to understand how modern business works.
notabanker
I knew a startup founder who was spending 10-15K Euros on marketing each month. He knew the startup was a dead-end but had raised money and wanted a "managed X million $ budget" bullet point on his resume so he could apply for high-level job positions later on. It came down to fundraising for resume building.
arduinomancer
“AI” startups that are actually just linear regression/random forest as a service
notabanker
"AI" also gets used for cosmetic reasons. I knew a startup that got acquired. They had a .ai domain with no AI product whatsoever.
avalore
Sold a small SaaS product 2 years ago, which was marketed as an "AI" product.

Extract from the "model":

                $yearsBetween = $comparisonItems->created_at->diffInYears(Carbon::now());
                if ($yearsBetween <=1) {
                    $multiplier = 1.08;
                } else if ($yearsBetween <= 2) {
                    $multiplier = 1.12;
                } else if ($yearsBetween <= 3) {
                    $multiplier = 1.15;
                } else if ($yearsBetween <= 4) {
                    $multiplier = 1.22;
                } else if ($yearsBetween <= 5) {
                    $multiplier = 1.37;
                } else {
                    $multiplier = 1.41;
                }
Those multipliers were just from a bit of human-playing-around-with-the-data.

The thing is, customers were happy with the result and, as far as I know, still are. Internally it was always called the random number generator.

jstx1
How was morale internally? Did the whole thing feel disingenuous? Were people cynical about it?
louisharwood
Only a small team of three but I can’t say it ever felt like a bad thing. If anything, proud that we didn’t need to train a model to get a decent result and could concentrate on the rest of the product experience instead.

If customers weren’t happy or the results they were getting were wildly out (they weren’t) then might’ve been different.

In our minds the customers are buying a product to produce a result. If that’s from an ai model or a bunch of ifs it shouldn’t matter.

muzani
Set aside a marketing budget, and then basically sell the $10 item at $9, justifying that the $1 difference is marketing.

Have a marketplace. Buy $100 of goods from users selling stuff. The $100 is a marketing expense. Add $100 to GMV.

Have 5k users on Android, 3k on iPhone, 8k on web. Add them up to show the product has 16k users.

Raise money from an angel who owns a conglomerate. The angel forces all his businesses and people working in these businesses to adopt the app that others wouldn't otherwise trust. Use these totally legitimate clients to create glowing testimonials.

As an early stage investor, instead of putting a lump sum into the account, create a dummy company (or several) for the purpose of feeding cash into the startup. When you're raising money, just sign off half a million dollars of consulting fees to show that the startup is making money.

Create a review site targeting the users. Write a glowing review about how amazing this app is. Share it to gullible Facebook groups.

notabanker
Now I'm glad I started this Ask HN as your response is eye opening. You should write a blogpost about it.
muzani
That's interesting. I thought this was something everyone has experienced, to the point that it's possibly a Dilbert strip somewhere.
ecf
> Raise money from an angel who owns a conglomerate. The angel forces all his businesses and people working in these businesses to adopt the app that others wouldn't otherwise trust.

In other words, the YC model.

computator
> Have 5k users on Android, 3k on iPhone, 8k on web. Add them up to show the product has 16k users.

If it's a traditional desktop program like Word or Excel, I think it's perfectly fine to add up users from different platforms (which often even require a separate purchase). If it's something like Skype or Netflix, I can see how there might be some overlap -- the same person might use it from their iPhone one day and from the web on a different day. Is that what you mean?