You know who they are. Comment if you think anyone you know of falls into that group. Not a single functioning revenue stream, but high-end Nespresso machines in the pantry.
Posting thrice a day on Instagram and Facebook. Posing after four hours in the salon. Plastic smiles and plastic money. I am sure all of you have come across such founders / entrepreneurs whose sole business acumen is the MBA they have from a premier university and their presence on social media talking about a business model nobody understands.
Yet, they have investors through several rounds of fund raising. What is so delicious to these funding agencies and individuals? The colour of the PPT infographics?
One group of so-called entrepreneurs who had connected with me seeking help ran a sports infrastructure aggregator model. They were not willing to pay me for my advisory services; neither were they willing to part with 18% equity, which I demanded in place of cash. They were trying to paint a picture of a rosy future where their start-up will rule hearts all over India and the world. I told them in no uncertain terms that at the rate they were going and according to the model they were functioning, they had less than six months before winding up. They lied to me that they had 30,000 downloads of their app, before I showed them on my phone that Google Play clearly stated that they just 9,000. They were not offering from Apple App Store. On the other hand, each co-founder had a swanky car and occupied equally swanky offices.
Another example I could quote was that of a company offering domestic cleaning services. They picked up venture capital funding and their presence on social media increased tenfold. Other than that, neither their order book grew nor did their net profit. They had called me to assist in their brand building and their operations. The chief founder spoke like a cow-belt politician in soft tones and told me that they would call me again when they had more money to hire me. The brand as of today, does not exist; neither does the P&L’s black ink. Their office looked like a lifestyle influencer’s studio: polished wooden floors, beanbags, fancy light fixtures. Not a single functioning revenue stream, but high-end Nespresso machines in the pantry.
So, going by the headline again, the best start-ups are those (for corrupt and unscrupulous founders) that exist heavily on social media, enjoy venture capital funds for personal expenses and achieve nothing for net profit. And yet, somehow, these ventures keep raising money. Seed, Series A, Series B — the rounds never end. What exactly do funding agencies and individual investors find so irresistible? The gradient backgrounds of their PowerPoint slides? The size of their total addressable market on paper? The promise of being “the Uber of X” or “the Amazon of Y”?
Why Venture Capital Enables This
It would be easy to blame these founders alone. But the problem runs deeper. Venture capital itself — especially in its more speculative form — often rewards hype over fundamentals. Despite the fact that less than 14% startups either make it or even survive.
For many funds, the objective is not sustainable profit but growth-at-any-cost. They want the next unicorn, the next big exit, the next headline. They chase “Total Addressable Market” slides rather than profit-and-loss statements.
This creates a perverse incentive: Founders are encouraged to prioritise optics over operations. A well-designed pitch deck, a viral social media presence, and a few media write-ups can open doors to millions in funding, even if the underlying business has no real moat.
Internationally, there are numerous cautionary tales. One particularly famous mobility company expanded globally, burning through billions of dollars, subsidizing rides to create artificial market share. For years, it posted staggering losses while projecting a future monopoly. Investors lapped it up. Another wellness start-up promised to “change the way the world works out” with luxury spaces and celebrity endorsements, only to collapse spectacularly when the revenue didn’t catch up to the hype.
The Startup Theatre
There’s a term increasingly used in business circles: “Startup Theatre.”
Startup Theatre is when a company behaves like a successful enterprise without actually being one.
• Flashy office spaces instead of functional ones.
• Frequent media appearances instead of operational improvements.
• Buzzwords instead of clear strategies.
• Hiring “Chief Evangelists” and “Growth Ninjas” before building a sustainable customer base.
• Expanding geographically before achieving product-market fit.
In Startup Theatre, every founder is a thought leader, every product is revolutionary, every partnership is “strategic,” and every setback is rebranded as a “learning pivot.”
This isn’t restricted to India. A European fintech startup once boasted of “unprecedented user growth” but counted anyone who visited their website as a “registered user.” A North American food delivery company spent lavishly on influencer campaigns and celebrity endorsements but folded within two years because the unit economics simply didn’t make sense.
The Vanity Metric Trap
One of the biggest culprits in this phenomenon is vanity metrics.
Downloads. Impressions. Followers. Media mentions.
These numbers are easy to inflate and easy to market. They look great in a deck. They make investors feel they’re backing something with momentum. But they rarely correlate directly with profitability.
What matters are metrics like:
• Customer acquisition cost vs lifetime value.
• Retention rates.
• Gross margins.
• Cash flow.
But those numbers are harder to talk about on Instagram. It’s much simpler to post: “We hit 100,000 followers today! 🚀 #Milestone #StartUpLife #Growth.”
There was a widely publicised American co-working company that epitomised vanity metric obsession. Its valuation skyrocketed based on community buzz, branding, and user sign-ups, not profits. When the IPO filings finally revealed the financial reality, the valuation cratered overnight.
Lifestyle Founders vs Mission Founders
A quiet divide exists between two kinds of entrepreneurs.
Lifestyle founders see their startup primarily as a ticket to a glamorous life — conferences, interviews, speaking gigs, networking events, foreign junkets. The company is a means to project an image.
Mission founders, on the other hand, are obsessive about their product, their customers, and their numbers. They’re usually too busy solving real problems to spend all day on Instagram.
Unfortunately, in the current climate, lifestyle founders often get more attention in the early stages because their polish and projection are attractive to investors. By the time the financials catch up — or don’t — the damage is done.
International Echoes
Consider the global examples of overhyped start-ups that imploded after astronomical valuations:
• A healthcare testing company once valued at billions collapsed when its core technology was revealed to be unreliable. Its founder had graced magazine covers and conference stages, but the business was smoke and mirrors.
• A luxury coworking space provider expanded rapidly worldwide, focusing more on curated experiences and designer offices than profitability. It ended up being one of the most spectacular valuation collapses in recent history.
• A European scooter-sharing company raised hundreds of millions, plastered its branding across major cities, but folded when regulatory issues and poor unit economics caught up.
Different sectors, different countries, same pattern: hype first, numbers later (if ever).
The Social Media Multiplier
Social media acts as a force multiplier for this phenomenon. It allows a startup to look far bigger than it actually is. A handful of professional photo shoots, a polished content calendar, and some paid promotions can create an illusion of massive traction.
Founders become mini-celebrities. Panels invite them. Newspapers feature them. Awards are handed out for “most innovative startup” even before a single rupee or dollar has been earned.
This performative aspect of entrepreneurship has grown to such an extent that some founders spend more time strategising their content calendar than their business plan.
The Burn Rate Problem
When venture capital meets lifestyle projection, the result is often a burn rate far higher than justified. Money is spent on:
• Fancy offices.
• Unnecessary hires.
• Branding agencies and PR stunts.
• Events, parties, influencer tie-ups.
Meanwhile, the core engine — product development, customer acquisition, retention, and operations — remains underdeveloped.
This is why so many of these startups run out of cash within 12–24 months. When the next funding round doesn’t arrive, the house of cards collapses.
Why It Keeps Happening
You might wonder why investors fall for this repeatedly. There are several reasons:
• FOMO (Fear of Missing Out): Investors don’t want to miss the “next big thing.”
• Pattern Matching: Investors back founders who “look the part” — polished, articulate, confident.
• Portfolio Strategy: They know many startups will fail, but one or two big wins will cover the losses.
• Short-term optics: Early funding announcements boost a fund’s perceived success, even before outcomes materialise.
This creates a cycle where startups are incentivised to focus on appearance and fundraising rather than sustainable business building.
The Real Cost
Beyond the schadenfreude of watching overhyped startups collapse, there’s a real cost to this phenomenon.
• It distorts the ecosystem, making it harder for genuinely innovative, less flashy startups to get funding.
• It disillusions young entrepreneurs, who think building a startup is more about personal branding than solving real problems.
• It wastes investor capital that could have been directed toward meaningful ventures.
• It creates job insecurity for employees who join such startups, only to face sudden shutdowns.
This isn’t to say all startups on social media are hollow, or that venture capital is inherently bad. Some of the world’s most transformative companies have leveraged capital wisely and used media smartly.
But there’s a growing subset of ventures for whom the performance of entrepreneurship has overtaken the practice of it. These are the startups that look successful until the numbers arrive.
When the Instagram filters fade, when the conference lights dim, when the venture capital dries up — only the fundamentals remain.
And too often, those fundamentals are missing.
The Culture of Splurge
Venture capital money, instead of being channelled into research, development, and customer acquisition, often funds lifestyles. Founders fly business class, rent luxury offices, and host extravagant launch parties.
I remember a start-up in Southeast Asia that threw a three-day beach festival to celebrate “community.” DJs, laser shows, celebrity influencers—it looked like a music festival, not a business launch. Within a year, the start-up had shut down, citing “market conditions.” Translation: the party was great, but nobody bought the product.
The same splurge is visible elsewhere. A European delivery start-up burned millions expanding into markets without demand. Their offices had foosball tables, nap pods, and gourmet cafeterias, but deliveries remained unreliable. Eventually, they exited multiple countries, shrinking back to where they had started.
The Consequences of the Circus
The larger problem is this: such behaviour undermines the start-up ecosystem itself. Genuine entrepreneurs struggle for credibility because the market is cluttered with hollow players. Investors, burned by failed bets, become risk-averse, depriving solid businesses of growth capital.
Customers too become wary. How many times have you downloaded an app, only to find it buggy or untrustworthy? Each such experience erodes consumer trust in the “start-up promise.”
What Real Entrepreneurs Do Differently
Real entrepreneurs don’t spend three hours planning a LinkedIn post. They spend that time refining their product. Real entrepreneurs don’t chase vanity valuations; they chase paying customers. Real entrepreneurs don’t need to rent Lamborghinis for Instagram; they would rather own a modest hatchback if it means having positive cash flow.
Across the world, small but solid start-ups have proven that building brick by brick works better than burning millions overnight. A South American fintech firm, for example, started with microloans in rural areas. With steady repayment cycles, low defaults, and real impact, it grew sustainably. It never went viral, but it never went bankrupt either.
Similarly, in Asia, a logistics company quietly digitised small transporters, cutting paperwork and delays. They didn’t trend on Twitter, but they earned customer loyalty. Today, they’re profitable while their “viral” competitors have faded away.
Lessons to Be Learned
Profit beats popularity. A million likes can’t pay salaries.
Customer retention is gold. Downloads mean nothing if users leave in a week.
Frugality is strength. A cramped office with revenue is better than a lavish campus with losses.
Hype has an expiry date. Social media buzz fades. Strong business models endure.
