By Yuliya Snihur (IESE Business School)

In recent years, the downfall of once-celebrated startup founders has become a familiar story in Silicon Valley and beyond. Yet, the culture of swaggering ambition persists, tempting entrepreneurs to blur the line between vision and deception. Entrepreneurs, as well as their investors, partners, and employees risk becoming complicit in deceit when reality does not meet expectations. Founders—and those who back them—would do well to remember that “fake it till you make it” can lead to more faking than making.

Ambition can morph into greed and persuasive storytelling slide into deception. Think of the downfalls of Sam Bankman-Fried, Elizabeth Holmes, and Adam Neumann.

Even well-intentioned founders can struggle to stay the course when envisioning the future. Ambitious entrepreneurs have to walk the knife’s edge between futurescaping and selling snake oil. My recent research with colleagues Raghu Garud, Nelson Phillips, and Llewellyn Thomas explains why: stakeholders, including investors, business partners and employees, often abet deception when entrepreneurs begin to embellish reality. But they also are uniquely positioned to prevent lies.

Successful entrepreneurs must be optimistic and able to paint a compelling vision of the future. We know that people are more receptive to abstract concepts when considering events in the distant future. The deception often begins with entrepreneurs framing their ventures in abstract terms, focusing on the grand vision and aspirations, leaving the specifics vague. Early on, it is often impossible to know what can be achieved with new technologies, products, or business models.

As the timeline shifts from future to present, audiences naturally demand concrete evidence and tangible results. When faced with this demand for details and the awkward reality of unfulfilled promises, entrepreneurs are sometimes tempted to bridge the gap through deception, ranging from omissions to embellishments and outright fabrication when asked specific questions about their users, prospective customers, or prototypes.

This is especially true for disruptive innovations, where bold forecasts are both common and difficult to deliver on. Hype around breaking rules, obsessing over potential innovation, and establishing the founder as powerful enough to reshape the future are cornerstones of entrepreneurship. But when hype turns to hyperbole, trouble follows.

The pursuit of increasingly risky ventures, driven by the fear of failure and fueled by the need to maintain a facade of success, further worsens the situation, leading to unrealistic stretch goals and a deeper entanglement in the web of lies. This cycle of doubling down on lies can continue for a surprisingly long time. This is because some stakeholders can achieve short-term gains from deception. Some investors, partners, and employees become as complicit as the founders.

However, when deception is publicly exposed, moral outrage and intense scrutiny ensue. At this time, founders bear the brunt of the devastating fallout.

A conversation about the dark side of entrepreneurial framing and the ethical boundaries of “faking it until you make it” is needed.

The celebrated startup culture that often glorifies overambition—risking a descent into deceit—needs a critical reevaluation. Entrepreneurship can reshape industries, but even the best-intentioned founders can slip into dishonesty. Cultivating an ethical entrepreneurial environment requires collective effort and shared responsibility. Investors, business partners, and employees must remain vigilant, scrutinize claims, demand transparency, and, most importantly, resist being blinded by the excitement of early-stage hype.

Yuliya Snihur is a professor in the Entrepreneurship Department at IESE Business School.