Metrics Can Be Falsified

Shaan Puri and Sam Parr discuss how startup metrics and due diligence work in practice, revealing that most early-stage investing relies heavily on trust rather than verification, despite how easy it is to falsify data.

• Most investors do minimal due diligence:

  • Meet the founder
  • Try the product
  • Basic background checks
  • Quick social proof (Twitter, reviews)

• Verification challenges:

  • Self-reported numbers aren't verified
  • Screenshots can be photoshopped
  • Even "direct access" to analytics can be manipulated
    • Example: One company doubled their metrics in code
    • Most investors can't/won't read website code

• Real due diligence is rare:

  • Few "angel" investors do deep dives
  • Notable exceptions:
    • Ryan Hoover - talks to customers, uses product, checks competitors
    • Ankur from Teachable

• Trust is fundamental because:

  • Silicon Valley is a "long-term player's game"
  • Early-stage reputation matters more than short-term gains
  • Most people are honest
  • But it's "very easy to lie and get away with it for a while"

• Scale of the problem:

  • Shaan admits "100% of them could be lying to me and I would not know"
  • Most investors rely on others doing proper diligence
  • Even when diligence is done, sophisticated fraud is hard to catch