Tech’s growth story shifted this year. How has that impacted transparency?

When Vijay Chattha was building a startup, his competitor was what some would call a media darling. The competition had a good story, which created investor interest. In turn, that interest helped land key customers. And so the cycle repeated. Chattha eventually sold that company in a lukewarm exit and took with him an important lesson: Earned media has the power to be a kingmaker.

Chattha is now the founder and CEO of VSC, a public relations firm that has helped launch over 600 companies. The firm works with startups across all stages and recently introduced a $21 million venture firm to back the companies that it advises. (Or, as Chattha puts it, to put some skin in the game).

Now, 20 years in, Chattha has thoughts regarding how tech’s cyclical nature has impacted its relationship with media, the power of sharing real numbers and whether founders should prepare to fall on their sword in the name of transparency.

“I think it’s a dangerous thing. It’s like water. If you don’t have publicity, you can be dehydrated. But if you have too much you can drown.” Vijay Chattha

My entire conversation with the entrepreneur can be found wherever you listen to podcasts, so take a listen if you prefer audio over words (in that case, what are you doing here‽).

Below, we extracted several key excerpts from the interview for your reading pleasure.

What’s your temperature reading on how vulnerable founders are right now when it comes to sharing hardships publicly?

Vijay Chattha: It depends on the founder. Is it their first startup, their second or their third? Generally what I find is the more successful and the more wisdom you have, the more transparent you are over time, and possibly even cynical, right? But the first-time founders, they’re under a lot of pressure [to do] whatever the VCs or hired people around them are telling them to do. They’ve got to do it. They’re very concerned that the competitors are reading this stuff.

As you get more mature, as a second-time, third-time founder, those things become less important. It becomes more about what you believe in, and why the people that have joined your company are there. [ … ] Second-time founders, they start to think more thoughtfully around who they want to be. If you find a first-time founder that is that authentic about who they want to be, that’s amazing. Like, that’s very rare. But it’s also transformative. People want to work with those kinds of folks.

My goal [when covering a startup] is to try and explain why a company is worth a reader’s time with the tensions that exist in the market today, whether it is this downturn, whether it’s a pandemic, whether it’s an Uber-sized competitor, and it’s something I struggle with sometimes because it’s this weird thing of like, I’ll ask a question, but they want to answer it so that they can recruit. But I want the question answered so I can explain that tension to readers. And I always wonder: Are we getting closer or farther from our goals being aligned?

I think there’s a lot of uncertainty in the market right now. You can’t rely on constantly getting funding stories out there to build your brand, right? You can’t keep saying, “Oh, look, I have this valuation, because that valuation is going down.”

I was anti-“let’s talk about this valuation” thing.

Well, let’s talk about this because I’m pro.

Look, that’s just a number in time. My feeling is, once you put one number out there, you gotta keep having a higher one out there in the market. And that’s not going to sustain. I mean, Amazon’s down like, whatever percent this year — how can these startups do it?

I think it’s very dangerous to talk about valuation, but all of a sudden, it became in vogue, again, kind of around the SoftBank era, when they started pumping money, creating instant unicorns. We had fights with our founders: Do we need to say that we’re worth $2.2 billion? Does it matter [that] we don’t have that much revenue? It was a fight. Some of them were smart not to do it. As soon as you do it, and you don’t hit the goals, you get attacked and people say this unicorn has fallen.

It’s not a sustainable play, and I’m anti because it’s not sustainable. But a new generation of people make the same mistakes every 10 years. Everybody gets caught up in greed and FOMO.

I flip-flop on this. Because you come to me when you’re a unicorn, but then the next time you raise you decline to disclose. In some ways, I think that looks even worse because “no comment” means so much at times. I get why that clashes with the goals you just mentioned, but I also think that there’s a greater good that I try and live by as a journalist. If we get the truth out, or if we get a window into what a startup is going through, doesn’t the startup market feel more realistic and human over time?

I think it’s super important to be critical of companies. I think the role of journalists in our society is more important than ever. In a world where people are pumping themselves up on all those other channels, someone has got to hold people accountable. Frankly, if you ask any founder out there, yeah, they don’t want to be the one who gets corrected in their article, but they really appreciate it when their competitors are corrected.

As for the idea that “startups that get the most press get the most money and get the best hires,” do you feel like that’s ever been threatened? Or has it ever not been the truth?

It’s kind of always been the truth. I do think that there’s an authenticity that the best talent in the world can now see through. So it may not be the most publicity, but it could be a founder that’s really smart and uses their Medium or LinkedIn or Twitter to talk about their business. They’re so legitimate about it, they’re so deep on it, that they attract the right people. It’s also about who the investors and angels are, because that’s a signal. You may hear about a company that’s in stealth, there’s no website, but the right VC’s behind it, super excited that everybody wants to know about it because there’s nothing on there, right?

Ultimately, I always find that the most flow goes to the top. And to be at the top, you have to be known, and you have to create a category. And then lastly, I think it’s a dangerous thing. It’s like water. If you don’t have publicity, you can be dehydrated. But if you have too much you can drown. We saw that with FTX. We see that with Theranos. It can actually taint the founder by getting too much press — and then they start to believe their headlines a little too much. Then it becomes a Frankenstein situation. That’s an extreme case — 99% of startups will never get that much press. So it’s actually more about just getting a little bit of a sip of water here and there. But it’s interesting how the extremes work.