What You Need To Know About Startup Scam Artists
To deter you from making the same mistakes as the many who have before you, here's what you need to know about startup scam artists, and the best routes of avoiding them.
You may be surprised by how many young businesses have formulated unpopular tactics to heighten both their public prominence and revenue streams. It can be hard to believe that said "trusted" companies, whether large or small, could do something that outright negatively effects their customer base, clients, and/or even their staff. It's out there, though, and it's happened before. Such scam startups have appeared much more frequently than you could have ever imagined.
Though that trustworthy entrepreneur may have appeared, at first, like a real businessman with real strategies for success, there's a higher chance you're being conned. Sounds kind of crazy, especially in this now business driven enterprise of a world, but it's a commonplace occurrence, one that has been alive for quite some time without any communication or dialogue from its past victims.
Worried? I would be, and if you're not, I guarantee you will be after uncovering what you need to know about startup scam artists. These fraudsters can be anywhere from an investor with capital-less term sheets in hand, or an entrepreneur, who's millions worth in company earnings, on top of his diverse personnel team, is all nothing but wind.
There are some very powerful lessons learned from employment, one such being knowing the difference between a good company, a great company, and a fraudulent company. Be stringent, be wary, but most of all, be very smart. In order to outpace and undermine the unhealthy companies with scam artists at their helms, one must be in the knowhow of leading business insights, and the avenues with which these scammers use to propel themselves, as well as their startups, further into the mainstream.
Lying in Wait
One of the most common and easiest of insights into what you need to know about startup scam artists is their core vehicle of the con: lying. Now this should be an obvious estimation, but many of the public tend to be over-trustworthy, or too naive to see the bullshit so well hidden between the lines.
One sad story from Entrepreneur discusses how an individual, who was claiming to be an entrepreneur, came forward with an idea that at first may have seemed ingenious, yet everything was a smokescreen for the biggest folly of all: human belief.
Nearly 50 top name executives left their jobs to join this so-called entrepreneur's brilliant new company, some of whom pumped their entire life's savings into this fraudulent venture. Behind this entrepreneur were signed contracts with many US municipalities, a viably working product, and his own capital stream in the form of personal funds.
Come to find out, rather horridly, everything this Scammy Sammy said was all built upon a lie, of which inevitably led to the unemployment of his entire personnel team, plus a loss of millions in damages. Do not, under any circumstances, trust disreputable, or rather unknown entities having zero form of backing or reference from any particular industry. If you sniff the oncoming of a lie of any kind, whether it be the background of a person's business knowledge, or the accomplishments said person has achieved from these knowledges, get out quick.
This makes asking the right questions in an interview an exceptional skill to have, and can be the deciding factor when curiosity of a startup's seemingly erratic behavior grows into suspicion. Do your own homework. Search for the most reputable of founders, or enterprises, and know them deeply before doing any type of structured business with them. Knowing the oncoming of a lie is, by far, one of the most necessary in what you need to know about startup scam artists.
"I Am Awesome."
Egoism and having a big-brained mentality comes with the territory in strict enterprise and is relatively common in almost all business leaders, some, of course, much more than others.
When it comes to the founder or entrepreneur who smells just a little bit plastic, in terms of reliability and trustworthiness, than one of the easiest signs of not in what you need to know about startup scam artists is the over-egotistical nature of that particular person. If most conversations ride on the prowesses and particularly grandiose exhibitions provided by said scam startup, than you've got a problem.
Take it from a writer, like myself; in the history of writers ever to exist, I guarantee not a single one of them ever said that they were the best, or at least boasted of having the best stories ever. Like writers, musicians, or generally any kind of talented individual, the more egotistical one is of their endeavors and feats, the more probable these accomplishments are in all actuality a fallacy.
Do not ignore these signs. While liars may be at the top of the list in terms of what you need to know about startup scam artists, egotistical personal natures can point to this fact, as well, and will oftentimes go hand in hand for that particular entrepreneur's scam to work effectively.
The Greatest Salesmen in the World
While big businesses and valued enterprises all share in the commodity of having the best of the best in terms of salesmanship, con artists use this trait as one of their more allusive ways in getting what they want: Money, money, money!
Salesmanship, or the art of selling, is the con artist's weapon of choice. In their arsenal are all of these other components, but what excels most is the aspect of selling: selling their lies, their business, themselves, and the extended avenues with which they are using to, in all affects, sell you absolutely nothing.
One such example can be found in this Business Insider article on a scammer who sold his way to the top of an international business with unrealistic holdings and a product that was, if anything, worthless. This seedy entrepreneur, Charles Surry, would be deemed "the world's greatest salesman" by one of his victims for his charisma, persuasiveness, and instant likability when working with investors. After a string of arrests, from Florida to California, Charles changed his last name to Lawrence, upon which he built a host of fraudulent companies and instigated a massive startup scam that only recently was demolished.
Stories like Charles Surry's are extremely unsettling, but exist more so than you may ever believe, which is why what you need to know about startup scam artists is so important now more than ever. To eliminate the riskiness of dealing with untrustworthy individuals with extremely well-defined selling capabilities, research is paramount. Know your business, know your entrepreneur, know investors, investments, and know, most of all, what it is you are selling.
Enterprises of Mitigation Name-Dropping
We all find a scapegoat for something we know we did; it's a more common form of human interaction than you may think.
However, when it comes to the fraudulent entrepreneur, mitigation of sometimes illogical or unnecessary means is high on the list of what you need to know about startup scam artists. Shady business deals built on a mountain of lies will oftentimes show through in this capacity, by way of that founder's ineptitude toward showing the product or resources behind the particular startup. If you're entrepreneur or founder is late with paychecks, losing staff, doesn't show you any actual product, or any other irregularities mixed with illogical explanations, than you've got yourself a fraudulent business growing right under your feet.
The proverbial he said, she said cliched defense won't work here. Know your trusted advisors, or business partners, and never ever accept something that sounds like nonsense as fact. This can be especially important when the startup scam artist in question name-drops a ton, or is consistently naming names so as to make you think that he/she knows them. This is obviously not the case. Know the company or entrepreneur deeper than just a one-on-one conversation, pick up the phone and dial up some of these mentioned people.
What you need to know about startup scam artists is that they will use any which way to conjure up the perfect fraud, either by using your own sense of naivety against you in the form of illogical excuses, or by drawing your attention elsewhere. Vigilance is foremost key in dealing with shady business deals; vigilance of the sale, seller, product, and founder. Also, be very vigilant of the company's exterior popularity, which can oftentimes display signs that your company is going under, and you always want to be ahead of the curve before the red tape shows up.
Fraudulent Self-Directed IRAs
Fraudulent investment strategies can be extremely difficult to look out for, if at all see with your own eyes. Scam artists will create what is called a self-directed IRA (Individual Retirement Account), which is more often than not provided by a particular business, and gives a whole list of incentives and investments, ranging from real estate and mortgages, to limited partnerships and intellectual property. Fraudsters bolster their schemes by way of using the self-directed IRA as a curtain, hiding their scams with vague appeals, lower tax rates, and an elevated sense of viability.
As a custodian of a self-directed IRA, scam artists can pursue the benefits from the account's inclusion of other investment strategies, while also keeping investors in their grip with the financial penalties of early withdrawal associated with the account. On top of this, said custodians have less obligations for keeping their investors informative on what may be going on with their accounts. This has created an ill-gotten pattern for fraudsters to make use of when scamming investors, clients, and even employees.
There are a great many investment strategies that have and will lead to some form of fraudulent premise, as designed by the founder or entrepreneur in control. Knowing the difference between business-savvy investment practices, linked with a knowledge for human interaction can be the very stepping stone in discovering what you need to know about startup scam artists. Don't fall into the hole, like many have before you. Know your business, know your entrepreneur, and know your industry. Before taking a founder's advice or a job, invest in the knowledge of fraudulent business tactics. It may just be the difference between being scammed, or scamming the artist.