In the world startup, success is never assured. Some promising businesses have unfortunately failed because of the illegal acts of their owners. Even the most promising businesses can be brought down by illegal actions.
In this post, we examine some examples where startups could have grown into reputable brands had their founders not made misguided decisions. We also explore the motivations for some young entrepreneurs to engage in fraudulent activities and the potential consequences.
High-Profile Startups Fail
There have been several high-profile cases of startups failing due to the illegal actions of their owners, including the following companies that became household names – for the wrong reasons.
Theranos
Theranos is a startup in the blood-testing industry that claims to be able perform hundreds tests with only a few drops blood. But the founder of Theranos, Elizabeth HolmesIn 2018, the company was accused of fraud after it became apparent that its technology did not perform as advertised.
Zenefits
Zenefits is a software company that provides companies with an easy way to manage their employee benefits. Parker Conrad, the company founder, was forced into resigning in 2016 when it was discovered that Zenefits staff were selling insurance with no license. Businesses can hire internal auditors Help them to stay on the legal side.
Clinkle
Clinkle was an unsuccessful mobile payments company that raised more than 30 million dollars in funding. The founder of the company, Lucas DuplanWas accused of mismanaging company funds, and spending money for lavish parties and on personal expenses.
Juicero
What is made? Juicero Its high-tech juicing machines were popular, as they could squeeze juice out of specially designed packs of fruits and veggies. Doug Evans, the founder of the company, was accused by some of falsely claiming that the machine had certain capabilities. overstating the company’s financial prospects.
What Under 30’s Got Wrong
A few startup founders under 30 have had spectacular failures. The Guardian Charlie Jarvice is the founder of Frank, a startup that provides financial aid to students. He has been charged by the Justice Department with wire fraud and bank fraud.
According to her, she inflated the number of clients that her company has to get it sold to JPMorgan Chase at $175 million.
Javice has stated on LinkedIn, that Frank has served over 5,000,000 students at more than 6,000 colleges. However, in reality, there were only around 300,000 customers.
Jarvice has been accused of hiring a data scientist in order to create a few millions fake customers to get the inflated database numbers.
Anyone can guess how it didn’t raise a red-flag for JPMorgan Chase when they were doing their due diligence. Unfortunately, Javice can be sentenced to 30 years in prison for her actions. Javice has denied all the allegations made against her.
Charlie Jarvice’s failure to be realistic is not unique; many young entrepreneurs fail to do the same, including:
- Martin “Pharma Bro Shkreli”
- Ivan Pavlich – Hypernet
- Obinwanne Okke – Invictus Group
Shkreli is convicted for securities fraud.
Although Pavlich and Okke were unaware of each other, they both became enticed by the possibility of making a fortune using cryptocurrency. Although they had promising careers, the lure of potential wealth through illegal activities was too much for them. cryptocurrency investing. Unfortunately, the pursuit of cryptocurrency wealth ultimately led to their downfall.
Why Young Startup Founders Fail
What drives young entrepreneurs to engage illegally in bank fraud and other criminal activities?
Note that fraudulent behavior is not a sign of a successful young entrepreneur. In cases where young entrepreneurs engage in fraudulent activity, this is not a characteristic of successful young entrepreneurs. bank fraudThere are many factors that could lead to such behavior. These include egoism, greed, desperation and others.
1. Financial pressure
Entrepreneurs may be under financial pressure, such as meeting loan obligations or investor expectations.
An entrepreneur who feels they cannot meet their financial obligations may resort to fraud in order to pay for their expenses or maintain a lifestyle.
2. Overconfidence
Overconfidence can lead to an overconfidence in entrepreneurs. Entrepreneurs can commit fraud if they believe their business will be successful enough to recover losses.
A inflated ego may also make you believe that you can do things that are borderline legal or illegal.
3. Desperation
Imagine entrepreneurs struggling to keep afloat their businesses or face bankruptcy. If they are desperate, they might resort to fraudulent activities as a final resort in order to maintain their business.
4. Greed
Some people will do anything to get richer at others’ expense.
5. Moral compass or lack of ethics
Finaly, some young entrepreneurs might not have a solid moral or ethical compass. They may engage in fraud simply because there is nothing wrong with the activity or they think the ends justify their means.
Note that fraudulence is not an excuse for these factors and that such behavior can lead to serious consequences, both professionally and legally. Young entrepreneurs should prioritize ethical behavior when faced with financial or business problems. They can also seek support and resources.
Fake it Until you Make It
The expression is: “Fake it till you Make It” What is the reason for young entrepreneurs creating their own success?
Ivan Pavlich of Hypernet said it was at Standford University where he learned to develop a ‘take risks’ mindset. Clearly, it was a bit too much.
The phrase “Fake it until you make it” implies that if one acts as if they have confidence and competency in a certain area, that confidence and expertise will eventually develop. Although this can be an useful tool, it is not the only one. mindset Individuals lacking in self-assurance should not engage in unethical, illegal or criminal behavior.
Some young entrepreneurs are tempted to invent their company’s success. This is especially true if they think it will help them attract investors or clients. This is not only unethical, it’s also unsustainable. It is inevitable that the truth will be revealed, with severe consequences, such as legal action and reputational damage, or even loss of clients.
It is therefore important that entrepreneurs focus on building businesses sustainably and ethically. It means being honest with their strengths and weakness, asking for advice and mentoring when necessary, and being transparent to investors, customers, or other stakeholders. They can avoid dishonesty, deception and build a strong foundation for the success of their business.
