Live from Business of Software 2011 - Jason Cohen, founder of Smart Bear Software, WP Engine, and several other successful companies, shares his wisdom on how honesty really does promote success... [Follow him on Twitter at @smartbear, and reap more wisdom on his awesome blog, www.asmartbear.com]

Disclaimer: I took these frantic notes in realtime. Apologies for mistakes, inconsistencies, and blatant errors! [Umm, like the URL... it IS Monday morning, after all...]

Lying is expected in business. We expect it - Smucker's 100% Fruit...is not even 50% fruit, and almost no one is surprised.

Some examples of blatant lies…
Republic of Cuba
People’s Republic of China
Lao People's Democratic Republic

Nexus says they're the Leading Provider of internet services – they are the ONE? The Best? Site hasn't changed since 2002? But they're the Leading Provider!

Social media pundits say you have to be genuine, human, honest – in order to succeed in social media.

"Honesty has to become a critical policy for every company on earth." – Gary Vaynerchuk

What about celebs? Joel Spolsky, Jason Fried, Gary Vaynerchuck, James Altucher, Seth Godin...
The people who are successful really do tell the truth.

Even so, lying by omission is common.

Would it turn off your customers if you admitted you had any flaws at all?

Data - what do people say in reviews? You'd expect higher-ratings to sell higher.

But sometimes even the low-rated products sell more. We're used ot the fact that the cheaper products will have flaws. But if they're well-described, you might buy it anyway. You want to know what the tradeoff you're making.

Data says the low-rated products became even more profitable because returns went down 20%. People got what they expected.

Real cost of a return - time on the phone, tech support, shipping back, fix, restock, etc. So you then have to sell 10 just to get back what you lost when you 'ate' on one defective return.

BazaarVoice (Austin company that does reviews) says the results are consistent - revenues go up on both products (high and low ratings) and profits go up as well because returns go down.

Tradeshows are like sex - when they're good, they're really really good. When they're bad, they're still pretty good. Same for Truth in Advertising.

WebMethods - awful, inhuman messaging. Stock price down 90% over last 5 years.

Peldi's initial site - very direct and honest - one person in a studio. Made $1M in first year.

Proactive Honesty - truth in limitations earns believability in advantanges. So if you're one guy, you can get away without answering tech support on Sunday. Or you can raise your rates because it may seem more fair.

WP Engine Short-term Cancels - 7-8% of new customers cancelled at one point - because they had an hour of downtime. So when it's down and you're new, not so good.  Had a 12 hour outage later, but this time were pro-active and started writing and tweeting - which then did not affect cancellations at all.

Blake - lives in poor section of town where children have no shoes. If you have no shoes, you're always getting sick - punctures, etc, stepping in mud, getting infected. And you can't travel far and you can't to school. So it's unlikely you can change your situation of poverty. Whenever you buy a pair of his Tom's shoes, he gives away shoes to a kid in Argentina. This is marketing, and it works because it's honest.

In 2010, Skechers decided to try it and launch Bob's - looks a whole lot like Tom's. They got a torrent of hate mail and pulled the campaign in 24 hours. But this was a trick - it wasn't honest.

"Honesty is big right now. See how we can spin that." (Anderson cartoon)

If you want to copy Peldi, copy the inspiration.

OKCupid - online dating site data. What a man can do well?

- have a picture with an animal

- show off muscles

- don't show travel pictures

What a woman can do well:

- don't want to see you with your horse

- camera at an angle, something weird. 'myspace' shot.

Presentations for Startups - truth in limitations earns believability in advantages.

Overcoming objections: too small, you might go out of buiness, too buggy, no 24/7 support, no experience, no track record, not enough customers, too transparent, not transparent enough.

How you can overcome these - there's a pattern...

"No 24x7 support" - if you call Rackspace at 3am on Sunday, they will answer but they won't know anything about your blog and they won't be able to fix it. They can only reboot the survey. When you call Rackspace on Thurs at 2pm, they still can't help you. When you call us then, we CAN fix it. Everyone here is an expert.

"I don't want to be your biggest customer." - of course who don't! Who does? There will certainly be issues. BUT for our company to be success, we HAVE to make you successful. So whatever arises, you can be sure it will be our first priority to fix it. Right now we have a biggest customer too - give them a call and see what it's like.

"The Enterprise Sales Call" - I don't have any slides, I'm just going to answer questions (no 47 slides today). Now I have to honestly say bad things about us. People will have to want to use the tool - otherwise it won't work. Tools don't fix social problems. But here are very specific way our tool can save time... and if you agreee with these things, it's an obvious buy.
Results: 50% of the time Jason did a demo, he closed an order worth $12k or more. Very few enterprise sales people have that kind of stat.

Why did you lie? What happens at the moment when you decide to lie?

"The Big Enough Company - Creating a Business that Works for You" - by Adelaide Lancaster and Amy Abrams

The benefits that acrue from lying are small. Whereas the penalties if you're discovered are huge. Telling the truth IS a competitive advantage and CAN allow certain advantages.

What else happens when you lie? Fear. For example, you tell someone your company has 3 people when it's only you. But if you say you're only one person, you're afraid they're not going to buy. And some won't. But if you fool them, neither of you will be happy in the long run.You'll waste a lot of time trying to make them happy. If you address the fear head on, can move forward and delight. "But I'm a boutique shop - I have a specific set of skills and I'm one of the few people on earth suited to fix your problem.

Being up front and honest at the beginning is how you build a relationship. Otherwise it's a one-night stand.

"My idea was be as real and honest as possible." - Howard Stern

Most people don't have the 'stones' to tell the truth, because it's easier not to. The few of you who do have what it takes to be honest. And you will stand out.