Why would a company lie about their revenue on IH?
Hey guys,
Just wondering - I read a lot of the products posted on IH and often in the comments I see "Show proof of revenue $X/month". I also noticed that Stripe verified revenue has been introduced, but I'm guessing that was implemented because Stripe acquired IH, and not because lots of companies lie about how much they make.
With that being said, what would the benefit be to a company who says they earn more than they actually do? It can't be for potential investment as investors would surely look through their books. Do users trust companies with more revenue? Would they want to discourage competition? (ie. we are already firmly established in the market?).
I don't understand why someone would lie about such figures and thus why such questions are asked/there is the Stripe verified feature.
Brand building. You see it a lot with people who launch low margin, high manpower stuff like productised services. Their 30k is someone elses 2k . Obviously 30k looks better but in reality it's not great as the money stops when the people stop and they don't get to take home much of that in any case.
Sorry I don't really understand what you mean: their 30k is someones elses 2k?
If you have an SAAS that costs $50 a month to run and markets itself via word of mouth and brings in $2k it's more valuable than if you have a productised service which requires you to work 8+ hours a day for the same $2k that you keep from the $30k. The $30k revenue number is meaningless unless we know more about what the net margins are. Consider this.... will the money stop if you get ill and can't work?
Have to agree on this. If i can make a SaaS that makes me 2k/month and needs little to none upkeep cost, is 100x times better then making 30k/month but have to put in 12h a day, just to stay competitive.
I guess some people want to impress and show an image rather they lead a story.
I find it hard to believe that they would just make a number up to impress, especially on IH as there isn't a lot of social interaction between users from which doing this would benefit.
Why? Mostly ego and people react and get excited by bigger numbers so if you have them lead with them. Most people don't differentiate revenue from profit so when they hear someone say "We made $30,000 revenue in one month!" they think "Wow that person pocketed $30,000 in a month what would life be like if I could do that".
When I see someone say they made $XX,XXX revenue or they turned over $X,XXX,XXX I generally assume they actually made almost nothing since both terms are used to hide actual profits and sound more impressive.
I also immediate discount income claims from crypto, dropshipping, productised services, and adtech companies because all of them often have very high revenue and very low margins.
I think ego is the key. It's not always to lie to other people for status. Sometimes it's often to lie to yourself - "it's worth the uncertainty to do this". Or to tell the best possible story (https://www.theatlantic.com/entertainment/archive/2012/04/why-storytellers-lie/255490/).
To lie, or exaggerate is very human. You should definitely control for it in yourself or others and look for the biases it creates.
why do you get the impression some people are lying?
Bear in mind that Stripe Verified revenue is revenue that Stripe can verify because it was collected through Stripe. If a product has implemented multiple payment gateways (say they accept money through paypal aswell) then Stripe won't be able to report on that portion of the revenue!
Maybe you didn't understand me: I've seen many comments asking for proof of revenue under products in the past. I'm not assuming people are lying, rather the opposite. I don't understand the purpose of lying in a business sense and therefore why other people ask for proof of revenue.
No one trusts anyone online. People are so conditioned to ask for proof that there's even a meme: pics or it didn't happen.
Oh ok. Yeah, I wouldn't even bother paying attention to those people. Some people believe in flat-earth. Don't waste time in idiots.
Haha yeah I agree with you - nice youtube channel btw.
Thanks :) Gotta upload a new video!
In a lot of instances, I think, people have a great launch and write their story then. After initial launch, revenues drop off and they don't go back and edit their interview.
Or similarly, they have great initial traction in weeks 1 - 2 and extrapolate that out to a monthly run rate even though they're not going to get that much business ultimately.
well some people believe if you show potential clients more revenue it means that more people are using your service, therefore, you become a more reliable for them to use the service
thats my understanding