Amazing story about Manti Te’o. First, when I heard his girl died like most people I assumed there was a physical relationship. Second, like the rest of the world, I felt bad for him. It’s tough to lose a girlfriend and a grandmother in the same week.
But it brings up a broader point. Howard Tullman has said the world will go mocial. Your real persona will merge with your online persona creating an identity you cannot escape from. Manti should have known better. He’s a huge celebrity. All kinds of hangers on would try to attach themselves to him.
Ignore the fact that he developed an emotionally charged personal relationship with someone that he would call his girlfriend, Teo failed to do his diligence.
When looking at startups, it’s critical to engage in all kinds of diligence. People say a lot of things. But, until you validate those statements they aren’t worth anything. Due diligence isn’t just going through the numbers and hashing through a checklist. It’s really checking a person’s references, statements about their record, and getting comfortable with them personally. It’s talking to people that have worked with them to see how they react under different kinds of situations.
It also goes for checking out the people you partner with. Reputations sometimes precede them, but it’s still worth a quick phone call to a source for a neutral opinion. Everyone acts in their own self interest and tries to maximize their own utility. That statement is true of how people act in a marketplace. But it’s also true of how people act when they try to do business.
On a broader note, this brings up all kinds of issues with regard to cutting edge topics in entrepreneurial finance like crowdfunding. Are you really willing to send a check across the country to a virtual company? How do you check them out? Do you rely on others to do the checking for you? How do you know you can trust them?
One of the things we learned on the trading floor was that there were a lot of sharks swimming among us. They were looking for an easy meal. Same goes for the startup community. There are plenty of sharks circling that are looking to rob either VCs of their money, or startup companies of theirs.
Best to engage in deep due diligence before you develop an emotional attachment. Otherwise you get burned.
John Kass of the Chicago Tribune also blames the media. Why didn’t they check out the story? It’s a fair point-and a good one. Too often the media accepts things at face value. They also try to “make the news and shape the news” rather than report the news. We see it time and time again. For example, the media is just now reporting that the US has a debt crisis. I guess we didn’t have one before November. They aren’t reporting why, just that we need to raise the debt ceiling. There is a lack of critical thought in our media today and the Teo incident confirms it.
A friend of mine on Facebook ($FB) posted this video. Hilarious.