The price of truth

Foreword by Lisa Garrud:

I’ve watched Bruce navigate enough negotiations to know what frustrates him most — and it’s rarely the outright lie. It’s the omission. The party who isn’t technically dishonest, but who quietly leaves something off the table, hoping it won’t surface. It always does. And by the time it does, you can usually trace a line back through the sleepless nights, the circular conversations, the wasted hours and money — all of which could have been avoided if someone had just put the cards down at the start.

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That’s what prompted me to suggest he write something on the idea that truth pays. Bruce, being Bruce, took the brief and ran in his own direction — into territory about authenticity, values, and what truth even is. Which is the article you’re about to read, and it’s worth your time.

But the thing I keep coming back to is simpler, and honestly a bit exasperating. It feels like a toddler lesson. You tell a small child it’s hot, and don’t touch a hundred times before it lands. Yet here we are, grown adults, still discovering the same thing: the information you withheld to be clever has cost you far more than honesty ever would have. I find myself rolling my eyes every time it plays out — wondering why humanity hasn’t collectively absorbed this one yet.

Put your cards on the table. Stop trying to be manipulatively clever. Think about who you want to be when you come out the other side of the deal, the conversation, the relationship. Because that person is the one you have to live with.

Over to Bruce.

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Lisa said I should write something on “truth pays.” I asked her why, and she said, “it’s how you have operated for as long as I have known you, and it seems to work.”

Two short words. So much ambiguity. What is truth, and what is pay or reward? Simple words, complex complexities.

Truth

A friend of my dad’s taught me how to commercially fish — and fishermen are the world’s most prolific liars. He said survival is sifting fact and fiction. Or truth and lies.

Facts, what are facts? Are they things you can see and touch? What is real? What is fact? What is opinion?

In accounting, we come up with a number called profit. Is profit a fact? Nah, it’s an opinion, and often a fiction that can be manipulated up or down based on the assumptions you choose to make. Hence why, when looking at accounts, I start with the balance sheet — which is where you park things to inflate profits if you wish. One man’s expense is another man’s asset.

Truth is something different altogether. Truth is an underlying philosophy — a way of thinking, a way of seeing. Your thoughts and your truths create instincts that guide how you act. Your acts create reactions in others, and those reactions are shaped by their own truths in return. When judgement is passed on those actions, it too becomes truth — to them, as theirs was once truth to you. One man’s truth is another man’s fantasy, a response guided entirely by what they themselves believe to be real.

I think what Lisa meant is that I have a very strongly developed sense of fairness and equity, and some core philosophies around decision-making that, as she has observed over a long time, are in fact pretty good at being right more than wrong. That doesn’t mean they are the truth.

Being right is as much luck, effort, determination, resilience, and adaptability as anything else. And being right for the wrong reason, as the statisticians will tell you, does not correlate.

Truth is also a way you communicate. I will always tell you what I honestly think. You may not like it — but I will tell you what I am seeing. Does it work? Sometimes. Sometimes people just don’t want to see it that way. They do it their own way. Sometimes it works for them; sometimes it doesn’t.

What I’m trying to say is this: there is no absolute truth.
There are just perceptions of truth.

So, what Lisa may have meant is that I am consistent and authentic — what you see is what you get. Fine, I’ll take that. She may also have meant I have some fixed values that guide my truth. Yup, I’ll take that too. In short, I know my truth and am fine with it. Applying my truth on others, of course, means I endure reactions and consequences.

To sum up: the only truth that matters is your truth. If you choose to play the ‘fake it till you make it’ game, you must live outside your value set. It never makes you comfortable. It burns energy. It is easier just to be authentic.

Truth in practice

Let me give you an example of how this plays out — and how complicated it gets in a real investment context.

We recently worked through a decision about whether to continue backing an early-stage spin-off. The question on the table: what milestones should govern continued investment? One party wanted revenue milestones. The founders proposed product milestones. An argument ensued.

There was truth on both sides.

Clearly, you invest to derive revenue and profit, but to have revenue and profit, you must have a product. The only milestone you can factually demonstrate is whether a product exists — because it either does or it doesn’t. The counter-argument, which was also truthful, is that building a matchbox no one wants is pointless. You may have a product, but if no one wants it, revenue never comes. So, revenue matters too.

With the four of us making the decision, how do you apply a universal truth from one context into a completely different context?

The answer, in the end, came down to one question: what is the stage of this business?

The answer was embryonic. Embryonic businesses are on a journey. Revenue normally comes at the end of that journey, not the beginning. The cash is needed now and will run out in a timeframe regardless. So, the question shifted to something more fundamental: can we trust the people? Are they diligent, hardworking, and honest? Have they, to date, done what they said they would do?

The answer was yes. They had a functioning, working product they could take to the world. They had been frugal and hard-working. The people were excellent. The product was needed. There wasn’t any revenue yet. Who cares?

The revenue will follow great people with a good idea and an excellent product. That is a universal truth.

What is pay?

I guess that means reward. What is reward? Money? Nah. That is an outcome of a lot of complex decision-making. But you tend to get better opportunities if you are a known quantity — predictable, clear values — than if you’re a bit opaque.

Authenticity and trust are correlated.

You also build better relationships. In a relationship and knowledge sense, truth pays. An added plus: those whose truths are diametrically different from yours tend to avoid you. Another reward — less grief and conflict. Sure, you’ll have debates and disagreements. Those are good things when they’re with aligned and caring people.

End result: you travel the path with less grief, friction, and misery.

The payment is contentment.

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Disclaimer: This article is written by Bruce Sheppard in a personal capacity. It does not constitute financial advice, and he is not a licensed financial adviser. Please seek independent financial advice before making any investment decisions.