It is similar to dressing the part you want - at least when that mattered. You buy more expensive clothes than you should be able to afford so that people think you are more successful than you are, and then they are more willing to bet on you, and then you become more successful.

There is nothing that is a red flag for me in the above story.

I also had a prospective first client want to visit our offices so I quickly rented an office and asked my part-time contractors to all come into the office that day to fill it out. It worked! And then I could afford an office and hiring those part-time contractors as full-time employees. So it was sort of a self-fulfilling.

Personally, if I were the prospective customer, I'd be angry at being lied to, and my message to my team would probably be that we'd be foolish to depend on this startup after they've shown from the start that they're dishonest.

If I were an established company, I think I'd also have our lawyers look at situation, to make sure the institutional knowledge was captured, and to see whether there's anything else we needed to do.

(For example of something else to do: though I'd treat things as confidential by default, in some future n-ary relationship/deal, is there a situation in which I'm obligated to mention to a third company that we previously had negative vetting info on the other company.)

But in the context of current startup culture, I don't think "fake (fraud) it till make it" is that unusual. And it's been normalized.

But I still don't want to do business with dishonest startup founders -- whether it's because they're naturally lying liars, or because they're surrounded by frequent dishonesty and they're not smart enough to cut through that.

There's a deceptive "fake it 'til you make it" aspect to both, and both play towards inflating the current appearance of scale/traction/experience, but I don't find them particularly damning.

Please note any positive connotations for the word 'revolution' should be abandoned at this point. Revolutions are short-term 100% bad and long term coin-toss bad, or worse. VCs love those odds.

You should listen to How I Built This. Tricks like this when starting out are pretty common, be it unicorn startups or personal businesses. So common that founders are openly willing to admit to it on public radio. In almost all cases, both parties came out better. It's not as if the client is at all upset at this "fraudulent" behavior.