The Risky Business of Enabling a "Fake it Till You Make it" Culture VCs cannot know the outcome of their investments, of course, but some have an agenda nonetheless - even if it means promoting a risky culture

Given the auspicious start of WeWork's growing empire, few expected that investors would lose enough confidence to cancel its highly anticipated IPO and wind up ousting chief executive officer Adam Neumann within one week. But now that we're here, I couldn't help but notice a pattern.

In pursuit of the next profitable innovation, vying for the support of a VC investment can feel like reality TV. With an abundance of driven, self-confident visionaries setting out to be the next great vanguards of tech, some continue to fall victim to the "fake it "till you make it" school of thought. But this approach didn't become popular overnight - some VC firms have strengthened its appeal by playing into it repeatedly, funding the hotshot entrepreneur with the right-pedigree, supporting only those who can raise the highest valuation, and encouraging growth above all else.

But the rare unicorn does exist, and a business will make it big. The rest might at least have a successful exit, like in the instances of Tumblr or One Kings Lane, and find a new home for perhaps 1/10th the peak value. But at worst, constant overinvestments result in a business bleeding money without maintaining any gross margins. Ultimately employees take the biggest hit, but stakeholders can also get left behind if the singular needs of a few shareholders take precedence.

VCs cannot know the outcome of their investments, of course, but some have an agenda nonetheless - even if it means promoting a risky culture. Adam Neumann, for example, is far from the only eccentric figure that has been rewarded by investors. Another is Theranos' Elizabeth Holmes, who took inspiration from big, successful personalities like Steve Jobs to the point of obsession; wearing black turtlenecks, excusing abrasive behavior, and surrounding herself with powerful people to dazzle investors into paying more and pushing for more - continuing the "fake it "till you make it" cycle until it cracked. In her case, the cycle made a full 360° turn. Encouraged by the idiosyncrasies of successful founders, she played a role until she convinced investors she was worth their money, despite promoting a questionable proposal. Adam Neumann, on the other hand, had a truly profitable idea, waylaid by his reckless business practices, including bleeding money without maintaining any gross margins.

So what can be done to break the cycle?

It's time to bring the focus back to two core pillars. First: a reliable business model where measuring practical KPIs (key performance indicators) over presumed valuation and growth potential is the real benchmark of success, and second: a business with solid governance at the center, responsible for both current and future needs of the organization. An investment of millions means very little if it can't be paid back - and without these key elements taken into consideration, it won't be. VCs have the power to spearhead this mentality and break the cycle, one entrepreneur at a time - and no time is better than the present.