There’s a New York Times article entitled “The Surprisingly Large Cost of Telling Small Lies”. According to it, the best strategy for success in business is never to lie. Not surprisingly, few people can get through even a short conversation without telling a lie. I don’t disagree with the premise that honesty is often the best approach to forming a genuine, long-term relationship. However, it wouldn’t be honest for me to give the advice that one should never lie in business. In fact, there are times when it’s the optimal approach, and even cases when it’s ethically the right thing to do.

It’s rare that someone will say, under his or her real name, that people should lie on their CVs or have peers pose as ex-managers on reference calls or otherwise misrepresent their prior social status. I won’t exactly go that far. If the purpose of your lie is to turn a truthful 90th-percentile CV into a pants-on-fire 99th-percentile one, you should usually spare yourself the headache and not lie. If you have an ex-boss who hates you and has cost you jobs with negative references, you probably should have a peer fill in for him. These are judgment calls that come down to a case-by-case basis, and I don’t think the general problem has a simple solution.

What I can offer are three principles for lying in business: lie big, lie harmlessly, and own the lie.

1. Lying big

By “lie big”, what I really mean is, “lie effectively”. The lie has to be big enough to matter, because unskilled and small lies will drag a person down with unanticipated complexity. You can easily paint yourself into a corner. We just don’t have, as humans, the cognitive bandwidth to keep up ten unrelated lies at the same time without becoming utterly exhausted.

The cost of a lie isn’t, usually, being caught. Perhaps 99% of the lies people tell to inflate their social status are never explicitly caught, but they can do damage on a subconscious level. Social interaction is a real-time problem, and the psychological overhead involved in keeping up a network of lies is often detectable. The lies themselves aren’t detected, and the conscious thought, “he is lying”, probably never occurs. However, the liar appears less genuine. Astute people will find him “fishy” or “sketchy”. He might seem like he’s trying too hard to impress people, or that he’s a “politician”. Nothing formally sticks to him, but he doesn’t warm hearts or earn trust. That is the most common case of the person who lies too much: never caught, but never really trusted. He’s a blowhard, full of himself, and probably doesn’t have the best motivations.

That, above, is the logical endpoint of too many lies. How to people get to blowhard status? Small lies. Pointless, minuscule lies that inflate the liar’s status but in a meaningless way, like cheating at a golf game. In sitcoms, these “white lies” blow up in some hilarious way and are resolved inside of 20 minutes (“oh, that Jack!”) In real life, they tend to just accumulate. People don’t like confrontation, and it’s more fun to egg the liar on anyway, so they prefer not to call the blowhard out on his shit. They’d rather watch him make a fool of himself. The only people who’ll do that for the blowhard are his best friends; but some people are so addicted to the petty thrill of tiny lies that they alienate everyone and have no friends. Then, they’re past the point of no return.

One big lie that achieves a strategic effect is infinitely superior to the cognitive load and social upkeep of a hundred little lies toward the same effect. Make the lie count, or don’t lie.

So, what are some good reasons to lie? This is going to sound completely fucked-up, but the best reason to lie is to earn basic trust (a technical term that I’ll define later). Now that I said something that sounds obnoxious, let me explain why it’s not. People lie, most of the time, for one basic reason: social status modulation. This establishes a taxonomy of lies that gives us four categories: (I) up-modulating status to equality, (II) up-modulating status past equality, or to superiority, (III) down-modulating status to equality, and (IV) down-modulating status to inferiority. I’m not going to focus on down-regulation here. Type III lies are usually harmless omissions, justifiable as social humility, and Type IV is sycophantic and rarely useful. So, let’s focus on the upward lies: types I and II. Type I lies are to establish equality, and those I recommend. If you’re an entrepreneur dealing with an investor who’s never been fired, then you’ve never been fired (even if you have). Type II lies are the lies of the blowhard. Avoid those. Once you are lying just to seem smarter, better, or more connected than the people you are lying to, you’re going to come under a hundred times more scrutiny. If you only lie to establish equality, the level of scrutiny is much lower, because to scrutinize your claims is to assert superiority, and people (even in positions of power) generally aren’t comfortable doing that.

So, the best reason to lie is to up-regulate one’s status to equality, and not beyond it. People who fixate on superiority become small liars. Rather than lying strategically, they’re so focused on being dominant at everything that they lie even when the stakes are petty, and eventually make fools of themselves.

That said, when is it right to lie? Examine your past, your job history, and reputation. Are you a social equal with the other party, and would you expect him to feel that way? You need not be more accomplished; he might be older or just luckier. You need not be richer. You do need to be a social equal. Figure out what that means in your given context. Next, are you looking to form a long-term friendship or a “weak tie”? If the former, try to avoid generating new lies. If you’re interested in forging genuine friendships, honesty really is the best policy. Weak ties have different rules. A weak tie is a tacit understanding of social equality and credibility. It’s only about what I’ve termed “basic trust”. You don’t get a lot of time in which to form (or not form) it. You’re going to be judged superficially. It’s not enough to be a person of merit; you have to look like one.

A theme that continually recurs around the question of honesty is complexity. Small lies generate a nasty complexity load. Even though you won’t be caught on specific lies– because if you’re a known blowhard, no one cares– you’ll start to lose your general credibility (basic trust). Astute people can practically smell the smoke of an overheated mind. Complexity is the devil. In software, it’s a source of bugs. In data science, it’s a source of “over-fitted” models with no predictive power. In politics, it’s a source of exploits and loopholes. In social interactions, it’s a source of general enervation. People throw their hands up and say, “I can’t figure this shit out”, and it’s just lose-lose. When you want them siding with you, they back away slowly.

So when is it the absolute right strategy to lie? Sometimes, the truth is too complex for people to handle. The lie might be simpler, and this might favor it, especially under the superficial judgments that form (or break) weak ties in business.

Take the biggest disappointment of your career, dear reader. Chances are, there were multiple contributing factors. Some were your fault, some weren’t. There were probably months of warning signs along the way. This setback or disappointment will be different for everyone, so let’s come up with a model example: a two-year-long “hero story” that still leads to a negative outcome, such as being fired. On the social market where weak ties are formed, are most people willing to hear a story that complex, and expend the cognitive energy necessary to come down on the right side? Nope. They hear the words “I was fired” and the “bozo bit” goes into the on position. Everything else becomes a story of a weak or unlucky person trying to justify himself. In these cases, it’s better to present a simple lie that goes down easy than the complex truth. It might even be more socially acceptable. For example, “bad-mouthing” an ex-employer is usually more disliked than telling a bilaterally face-saving story (that is, a lie).

This importance of weak ties and simplicity to the heart of it, which is the (above-mentioned) notion of basic trust. Basic trust doesn’t mean that a person is trusted in all things. Would you, as reader, trust me with a million dollars in cash? Probably not. However, you’re reading what I am writing, which means you trust that what I have to say is worth your time. Basic trust is the belief that someone is essentially competent and has integrity. The person is worth hearing out, and treating as a social equal. This is more bluntly termed the “bozo bit”, or “flipping the switch”. If the bozo bit is “on”, that person’s input is ignored. If it’s “off”, that person will usually be treated as a social equal, regardless of differences in rank or wealth.

Organizations can be trust-sparse or trust-dense, and tend to “flip the switch”, collectively, at once. Elite colleges are trust-dense, insofar as students generally trust each other to have valid intellectual input. Some people may lose that trust (because there are idiots everywhere, even at top schools) but new people start out with the bozo bit in the “off” position. There’s a basic trust in them. Most companies become trust-sparse at around 50 people. The way one can tell is to examine its attitude toward internal mobility. Formal performance reviews are already a sign of trust-sparsity, but when those become part of the transfer packet, the organization is stating that it only considers managerial input in personnel decisions. Trust sparsity is the rule, and non-managerial employees (i.e. those who haven’t been vetted and placed on a trusted white-list) have their bozo bit “on”. At a later point, organizations become trust-sparse even within the managerial subset, and begin requiring “VP-level approval” for even minor actions. This means that the organization has reached such size that even the managerial set exhibits trust sparsity, and only a smaller subset (those with VP-level titles) are trusted by the organization.

Trust sparsity is unpleasant, but something one must contend with. If you cold-call a company or send a resume without a personal introduction, you have to prove that you’re not a loser. One might find high-status arrogant people with shitty prejudices (“I don’t hire unlucky people”) abhorrent. Abstractly, I might agree with that dislike of them. That doesn’t mean they’re never useful. I wouldn’t want to have a meaningful relationship with a hiring manager who thinks anyone with a less-than-perfect career history is a loser, but he is a gatekeeper, and I might lie for the purpose of using him.

When should you lie in business? There is one good reason. You lie to “flip the switch” on your bozo bit. It’s that simple. In a trust-sparse organization, or the world at large, it often takes a reasonably big lie to achieve that. Lying by saying that you earned “Employee of the Month” in July 2007 won’t do it, because that’s one of those small lies that really doesn’t mean anything; you need affirmation that your previous company considered you a genuine high-potential employee. (You were placed in the semi-secret “high-potential program” and had lunch once a month with the CEO.) So lie big. Make the lies count, so you can make them few, and keep that complexity load down. Massage your past and reputation, if needed. Change a termination to a voluntary departure. If it suits your story, back-recognize yourself as a leader or a high-potential employee by the organization where you last were. Flip that bozo bit into the “off” position, establishing social equality with the other party. And lie no more than that.

2. Lying harmlessly.

It is my reckless honesty that has me speaking on the rectitude of certain classes of lies in business. Good lies are those that get past peoples’ prejudices to establish basic social equality and form useful “weak ties”. I do not advocate being unethical. If you make a promise you can’t possibly deliver, you’re doing the wrong thing and deserve the punishments that fall upon you. If you claim to be a licensed doctor and you’ve never set foot in a medical school, that’s job fraud and you deserve to go to jail. That’s not what I’m talking about.

If you massage dates on your resume to cover a gap (remember that a simple lie can be better, socially, than a complex truth) then that’s ethically OK; you’re not doing anything wrong. (Still, don’t get caught on that one. Many in business have Category 5 man-periods over even the smallest resume lies. Best to keep lies out of writing.) If you falsely claim to been in the top bonus bucket during your analyst program, because the private equity firm to which you’re applying won’t interview you otherwise, you’re doing no wrong. They deserve to be lied to, for having such a shitty prejudice.

Lies that hurt people are more likely to be caught than those that don’t, and most lies that hurt people are flat-out unethical. Avoid that kind. Your goal in lying should be to make yourself win, not to have others lose.

In a trust-dense setting, one should never have to lie, and one generally shouldn’t lie, at all. It’s lies that bring the organization or subculture toward trust-sparsity in the first place! On the other hand, trust-sparsity admits opportunities in which one can lie while causing no harm to anyone. In trust-sparse settings, people are assumed to be low-status idiots (“bozos”) unless formally recognized otherwise, with accolades such as job titles and managerial authority, and they’re almost never given the opportunity to prove otherwise. If a person of essentially good character and ability can use strategic non-truths to establish credibility, and lies no more than is necessary to do that, then no harm was done. In fact, it can be ethically the right thing to do. The person simply took ownership of his own reputation by inserting a harmless non-truth. This “flipping one’s own switch” is subversive of the general trust-sparsity, but trust-sparsity is goddamn inefficient at any rate, and society needs this sort of lubrication or else it will simply cease to function. This is why, in the MacLeod analysis of the organization, so-called Sociopaths (who are not all bad people, but generally political and willing to employ the forms of dishonesty I uphold) are so necessary. Without lies, nothing gets done in a trust-sparse world.

The problem is that people often do lie harmfully. There are two major kinds of harmful lies. The first is a false promise. This ranges from outright job fraud (claiming a capacity one does not have) to the sympathetic but reckless, but not consciously dishonest, optimism of the typical entrepreneur. I am in no way advocating promises that one cannot keep. Rather, I’m advising people to bring their reputation and status to where they belong, but not past that point. Don’t claim to be a surgeon if you’re not. The second (very common) kind is the lie to hurt others: rumors invented to disparage and humiliate. In addition to being generally unethical and toxic, they’re almost always counter-productive. No one likes a rumormonger or a bearer of bad news, even when that news is believed to be truthful.

Occasionally, one is in an adversarial situation where lying about another person is required. An example would be a bad reference. It’s best to avoid bad references by having peers substitute as ex-managers, but one might get caught in the blue, betrayed unexpectedly or nabbed by a “back channel” reference check. (Note: subvert back-channel reference checks by faking a competing offer and imposing time pressure. If you ever face a back-channel reference check, you failed in getting the offer fast enough.) In that case, my advice is: discredit, don’t humiliate.

You might be very angry when you find a negative reference. You have the right to be angry. You’ve been sucker punched. You might be tempted to say, “That’s because I caught him sleeping with his secretary.” Don’t do that! (At least, don’t sabotage his personal life while looking for a new job; keep your projects separate.) You’re better off with a lie to the effect of, “That’s funny, because he asked me to come back three months after I left. I declined respectfully, but he must be bitter.” That discredits him, but it doesn’t embarrass him any more than is necessary to do the job. You can’t appear to enjoy delivering news that makes someone look bad. With the affair with the secretary, you’re reveling in your ex-boss’s (made-up) demise. With the latter, you’re painting yourself as a top performer (even your ex-boss recognized it) and leaving the other party to connect the dots (that the bad reference is an artifact of the ex’s bitterness).

Also, one must always assume that, when lying about another person, that person will learn of the lie. So “discredit, don’t humiliate” is an aspect of a more general principle, “intimidate, don’t frighten”. You want your adversaries to be intimidated. Timid people shrink from action. They’ll shut the fuck up about you and let you focus on better things (like selling yourself, not justifying yourself in light of rumors). Frightened people, on the other hand, are humiliated, angry, and unpredictable. Even though fright is more of a psychic punishment than timidity, having severely-punished people on the stage is not good for you.

Lies (or truths) that destroy people tend to have enough kinetic energy to boomerang. Even the people who had the news first, unless they’re investigative journalists and the news is truthful, will be hit hard. Negative rumors are best avoided in all contexts: don’t start them, don’t spread them, and don’t even hear them in public. That is the general rule. There are (very rare) times when it is best to break it, and those involve frank combat. In frank combat, you don’t seek to humiliate or frighten your enemies. You have to destroy them, before they destroy you.

Competition is not enough to justify lying harmfully. If the only way to win among multiple candidates for a promotion is to lie harmfully, it’s probably worth passing on that round. (Maybe the other candidate actually is a better fit for the role.) If someone’s legitimately outperforming you and you lie harmfully to bring her down, you’re committing a grave wrong. It’s a much better use of the energy to befriend and learn from her. Jobs are short, but careers are long, and a rival in one bardo is often a great friend in the next. Good-faith competition is not frank combat, and the rule of “lie harmlessly” (or, better yet, not lying at all) still applies. Frank combat exists not when you are being outperformed in good faith, but when your reputation is being attacked. You didn’t choose war, but it chose you.

In frank combat, the best policy is still to lie with minimal harm, but not to shrink away from force if you need to use it. If a stun gun will work, use it instead of the revolver. Only use lethal force if the assailant won’t respond to anything else. The guideline of “discredit, don’t humiliate” applies when it can, but some people just won’t accept that they’ve been discredited (i.e. shut the fuck up) until they’re down for the count. That is a rare case, but it’s the one in which nasty, negative rumors might be the best way to go. Even then, there’s a subtlety to it. Not only must the rumor be believable, but you have to deny it in the public. Negative rumors, most of the time, aren’t so devastating because people actually believe the non-truths. Rather, it’s because they lower the target’s status, generate complexity (leading to people, as discussed above, just giving up rather than rendering judgments) and paint the person as one who “fits the mold” for the rumor, even though you, personally, haven’t taken a stand and won’t call it true.

All this said, frank combat is quite rare and always best avoided. Like a bar fight, no one wins. There’s pain, there’s losing, and there’s losing big. Winning at frank combat is like winning an earthquake. Go out of your way to avoid it.

Most ineffective liars don’t intentionally put themselves into frank combat. The problem of harmful liars is that, like the small liars, they enjoy the petty win over the other person and lose sight of the one valid purpose of lying in business: to flip one’s own “bozo bit”. Unless someone is calling you a bozo, you gain nothing by setting his “bozo bit” back into the “on” position, and you make the world worse (trust sparsity). People who lie harmfully contribute to trust sparsity, also known as discord, and Dante has them in the Eighth Circle of Hell for a reason.

(Part 2 will come out later this week.)

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