Bill Reichert, the Managing Director of Garage Technology Ventures and Guy Kawasaki's partner in crime, gave a talk at SmartCamp 2010, where he shared his list of the top 10 lies entrepreneurs give to VCs when pitching their products. It's a great list that points out many of the lies entrepreneurs actually tell themselves when starting their companies. Below are quotes from ten articles which give practical examples of how each of these lies gets in the way of building a business.

1. "Our projections are conservative." In truth, no entrepreneur actually knows what their sales will be. What is a conservative projection for a new industry with an unknown growth path? Mark Davis, a co-founder of Kohort and a partner at High Peaks Ventures, does a great job of breaking down what investors are really looking for in projections:

First, they want to see that reasonable assumptions will lead to rapid growth, confirming expectations based on the addressable market, the value proposition and the competitive landscape. Second, they want to see the math behind your projections to both understand your revenue model and assess management's ability to logically think about the drivers of the business. Finally, the projections will give VCs a sense for your strategic plan (how you will build the company), enabling them to better evaluate your management capabilities.

2. "Big name research firm says the market will be $50 billion in 4 years." These projections are usually wrong. VCs don't really care what some big firm says about the market 4 years from now. VCs don't believe these forecasts, so remove them from your deck. Davis does a great job explaining how investors evaluate growth:

[VCs] don't rely on your projections to evaluate growth. VCs evaluate growth prospects based upon, among other things, the addressable market size and competitive positioning of the business.

3. "Big name customer will sign a purchase order next week." Don't bet your business on one customer. Just because one guy buys your product doesn't mean others will. An entrepreneur Rieva Lesonsky wrote a great article where she shared a personal story with he following conclusion:

When it comes to growing'or even surviving'by relying on one key customer, I'd say luck is as much a factor as anything else. And betting your business on luck isn't a smart move in today's uncertain world.

4. "Key employees (VPs of Facebook, Apple) are set to join us as soon as we get funding.' Why aren't these people part of your team already? Are the people on your team currently not the key people? Another thing to remember is that "say" and "do" are two different things. Just because people promise to leave their cushy jobs for your startup doesn't mean they actually will. Philip Rosedale, founder of SecondLife, gave a great description of the type of people that would leave to join a startup:

Unless you feel a tremendous desire to see if an idea would work without earning a cent from the idea, you probably should not pursue it. Unless you're so nuts about the idea you're willing to lose money and take a chance with it, don't pursue it. You might be the only one who would take such a risk, which is great, this separates you from the rest.

5. 'No one is doing what we're doing.' It's extremely rare that you're the only one who has thought of your product and is doing something about it. Don't bet on it. If nobody else is pursuing your idea then either there is no market for it or you don't know how to figure out your competition. Richard Banfield, the CEO of the strategy & creative agency FreshTilledSoil, says it best:

Any business leader who claims to own the entire demand for a product or service is either lying, misguided or doing something illegal. For we all know what happens when you build a monopoly in a free economy. In the many years that I have been interviewing CEOs, entrepreneurs and executives, I have heard, 'We have no competition.' far too many times. It is an illusion of grandeur that no leader need boast about, nor believe. For starters, having no competition could very well mean that there is a poor demand for the product or service in question.

6. "Arrogance: no one can do what we're doing." Don't kid yourself. Most technology has been commoditized, which means the playing field has been leveled. Luke Hutchinson, a computer science researcher from MIT and TED Fellow, says it best:

When a technology has become commoditized, it becomes the newest "greatest common denominator" for the industry.

If you can do something, someone else can also do the same thing. The differentiation these days is not in the technology, but in execution.

7. 'Hurry because several other venture capital firms are interested.' It is very rare that this is actually the case. Don't create a sense of scarcity when it isn't true. You'll break your relationship with the investor. Ken Kaufman, the founder of CFOwise which has helped entrepreneurs raise over $100 million, wrote a great article where he explained the problems this statement raises:

Before they invest, they need to understand who owns what and how their investment fits into the overall equity structure of the firm. And they're wary of promises made to investors where the appropriate legal contracts and agreements were not utilized. It will be their money spent to resolve the shareholder lawsuits and other contingency claims to which you've exposed your business.

8. '[Big company] is too big/dumb/slow to be a threat.' They may be slower and have more bureaucracy but that doesn't mean they can't learn from your mistakes and crush you. They did not get where they are today by being dumb and slow. Jack Welch, the former CEO of General Electric, said it best:

There are advantages to size ' physical capacity, technical depth, funding ability, geographic coverage ' that can be leveraged in the right businesses to produce a leading, growing and profitable market position.

9. 'We have a proven management team."' The point here is that if you have to tell others you're great you're usually not that great. The way to demonstrate greatness is to prove it. A direct quote from Guy Kawasaki gives the best example of this one:

If the entrepreneur were that proven then he (a) probably wouldn't have to ask for money and (b) wouldn't be claiming that he's proven. (Do you think Wayne Gretzky went around saying, 'I am a good hockey player'?)

10. 'All we have to do is get 2% of the market.' Do you really want to just have 2% of the market? Not 5%? Not 50%? Not 100%? Do you want to be the leader in the market? Do you have the passion and fire to get more then 2%? Jonathan Tower, the managing director of Citron Capital, says it best:

There is little room for ventures that can, at best, be a nice little business. There is nothing wrong with 'nice little businesses,' mind you. Most small business in this country would fall into that category, but that does not make them appropriate venture investments.