We have seen the emergence of successful TeenVestors (young entrepreneurs, investors, inventors, and innovators) over the past few years. National news outlets and popular daytime television shows regularly feature TeenVestors running full-fledged businesses, displaying their scientific invention, or touting their investing prowess. Every once in a while, however, we are reminded that we need to be careful about buying such stories without taking a closer look. The quote below from Money.com says a mouthful:
“It didn't take long for New York Magazine's story on a 17-year-old stock whiz with a rumored net worth of $72 million to make a splash. But the story's juicy premise unraveled almost as quickly.” Money.Com
Lying About Success
The quote above related to a December 2014 story of a teenager who allegedly made $72 million in the stock market while still in high school. The story went viral on Facebook, was a front-page story in the New York Post and was featured in Business Insider after being published in New York Magazine. It didn’t take long for the lying teen, Mohammed Islam, to confess to making the whole thing up (See: Confession). As for New York Magazine, it now says: “We were duped. Our fact-checking process was obviously inadequate; we take full responsibility and we should have known better. New York apologizes to our readers.
This incident highlights what TeenBusiness.com believes is a big problem when dealing with the claims of TeenVestors: some teen entrepreneurs, investors, and researchers exaggerate claims of success and underplay the amount of assistance they receive from their family members – and journalists are far too willing to believe them.
For the record, we have been the biggest cheerleaders of young entrepreneurs and investors. In fact, we wrote the first book on how parents can help their kids become entrepreneurs (The Lemonade Stand: A Guide To Encouraging the Entrepreneur In Your Child – initially published by Bob Adams Inc.) and some of the earliest books on teaching teens to invest (TeenVestor: The Practical Investment Guide for Teens and Their Parents and Mad Cash: A First Timer’s Guide To Investing $30 to $3,000 – Both published by Penguin/Perigee). Over the years, we have researched hundreds of stories about honest TeenVestors and we have marveled at their desire to follow their passions to build a business or achieve some other innovation. Our website, TeenBusiness.com attests to our faith and confidence in today’s youth to help craft solutions to the world’s problems whether through entrepreneurship, research, or other innovative activities. (See news items about TeenVestors on our website).
However, experience also tells us that some TeenVestors will exaggerate claims of success and in some cases, will lie outright. This phenomenon is not particularly new. In the 1980’s, one of the first young swindlers produced by our research team was Barry Minkow. By the time he was 16 years old, Barry had already started his own carpet–cleaning business, ZZZZ Best. By age 18, he was a flashy Ferrari–driving millionaire living in a big house in California’s San Fernando Valley. By his twenty–third birthday, he was serving a 25–year sentence in a federal prison for 57 counts of fraud and conspiracy for billing insurance customers for bogus carpet restoration work. What makes this fraud by Barry really remarkable is that he fooled banks and big Wall Street executives alike. He fooled these professionals so much that his company was listed on the NASDAQ stock exchange at one point and had a market value of nearly $300million. (See our blog about Barry Minkow).
You may be asking, why does it matter if TeenVestors exaggerate claims of success? Who does it really harm? Outright fraud is not something we want to encourage amongst teen entrepreneurs, investors, and innovators for moral reasons. In addition, a TeenVestor who starts lying and/or exaggerating the level of his or her success at an early age will eventually get into legal trouble when the lies have to get bigger and bigger.
While Mohammad Islam and Barry Minkow are blatant examples of fraud among the ranks of TeenVestors, there are other problems we see with other types of claims by some young people. For example, scientific claims by TeenVestors have often not gone through a peer review process by which scientists evaluate the validity of such claims. Science prizes are great but they are often accompanied by media hype that take on a life of their own whether the scientific claims are true or not.
Ignoring The Existence of Helping Hands
Another problem regarding claims of TeenVestors is when they (or those who write about them) ignore the presence of “helping hands” in their journey to success.
If, for example, a well-connected parent, helps his son or daughter get products into a major department store, it would be good to reveal that information to other young people who may read a story about the young entrepreneur. Why? Because we don’t want aspiring TeenVestors to easily give up if they don’t quickly reach the same lofty heights other young entrepreneurs seemingly reached effortlessly. In addition, it would be a good thing to demonstrate to aspiring TeenVestors that they too should seek mentors such as adult family members or family friends who can help them achieve success just like other successful young entrepreneurs.
When TeenVestors don’t reveal sources of help, it reminds me of students who ace exams and then pretend that they didn’t study or get tutored on the subject. Revealing how they achieved good grades may encourage other students to study harder or seek more help. This would be better than leaving other students feeling that there is something wrong with them as opposed to pushing themselves to do better or finding people who can help them academically.
For the record, there is nothing wrong with getting help from family and friends in business. But we want more honesty in the disclosure of how some TeenVestors are making it big in business.
Questions You Should Be Asking About TeenVestors
The following are things that should be considered with regards the claims of TeenVestors.
Is the profit or revenue claim believable? In general, no TeenVestor who is just starting out in business or investing is going to make millions of dollars right off the bat.
Did the TeenVestor receive a large amount of financial assistance from family – financial or otherwise; if a TeenVestor is getting thousands of dollars from dad or dad uses any influence he may have with Walmart (for example) to get his son or daughter started, I think other aspiring young entrepreneurs should know this.
Is the TeenVestor truly the main individual running the business? If his or her parents are mainly the ones running the business, other aspiring young entrepreneurs should be informed.
Has the scientific claim been peer reviewed in any scientific journal? The lack of peer review does not mean that the scientific claim is invalid but it does mean that enthusiasm about such a claim should come with disclaimers.
If the TeenVestor has developed an app, did he or she do the coding? There are many people who outsource coding of apps to other people so this is not a bad thing but it should be disclosed.
How did the TeenVestor get the business idea or come up with the scientific research?
How did the TeenVestor get access to the scientific lab used for experiments? In general, no TeenVestor will be granted access to academic labs without some connection to the facility; once again, there is no crime in having such connections, but it should be disclosed.
Letting TeenVestors Have Fun
We would like for all TeenVestors to enjoy the ride of trying their hands at entrepreneurship, investing and finding innovative solutions to life's challenges. We don't think its so important that they show how much money they are making or that they have made a great discovery no one has thought about before. At TeenBusiness.com, we feel that it is enough for them to have the guts to step out of their comfort zone and take a chance at something with no absolute certainty that they will be successful. TeenVestors, in our mind, are already winners no matter what they achieve. No exaggerations of success or hiding sources of success are necessary.