Actionable Insights Backed by Research
Starting a business is exciting. The thrill of seeing your idea come to life can be intoxicating as others come to believe in your vision. Those who buy into your ambitions want you to succeed. They can be as enthusiastic as you are about the products or services that you promote. You believe in the product, and so do they. Getting to this point in the entrepreneurial journey often requires the use of hype, which can create a lot of momentum in your project early on. Hype involves casting vision around a project in ways that create excitement, often before it is fully known whether you will be able to deliver on this vision. In some cases, this works out and, in others, it does not. What happens when you commit to bringing your hyped product to market by a certain time but miss that deadline?
A recent study by Matthew Wood (Michael F. Price Chair in Entrepreneurship and Economic Development and Professor of Entrepreneurship) and Sean Dwyer (Assistant Professor of Entrepreneurship) who are both at the Price College of Business at the University of Oklahoma, and David Scheaf (Robert M. and Louise Rogers Chair of Entrepreneurship and Associate Professor) at Baylor University’s Hankamer School of Business, focuses on this topic. Their paper titled “Navigating the temporal commitments of entrepreneurial hype: Insights from entrepreneur and backer interactions in crowdfunded ventures,” was published in the Journal of Business Venturing in Fall 2024. Wood and colleagues contend that hype is a common and often necessary aspect of entrepreneurship, defining it as “a promise of a possible future where the features and benefits of that future are exaggerated and overstated to increase attention and generate excitement.”
By Matt Wood, Sean Dwyer and David Schaef
Hype often starts with entrepreneurs emphasizing how their idea is radically different from what has been offered before. We have all seen advertising that states, “the first-ever” or “the world’s most sophisticated.” This language is often the foundation of hype in entrepreneurship. While it is not surprising that entrepreneurs leverage this language to position their projects as attractive to supporters, previous research has overlooked the role of time in relation to the use of hype in entrepreneurship.
In their study, the authors demonstrate that entrepreneurs often make temporal commitments alongside their use of hype, promising supporters not only a novel product but that they will complete product development milestones at certain times. In this way, temporal commitments refer to the promises entrepreneurs make to supporters of “when” they expect to achieve “what” they promised to deliver. Through time-calibrated messaging related to the speed at which they are moving their project forward, entrepreneurs set expectations for when supporters should expect projects to be completed by.
This research study provides insight into how entrepreneurs using hype to promote their ventures subsequently manage supporter expectations after missing deadlines in their projects. The study reveals that while entrepreneurs often use “temporal language” to establish an order of events that appeals to the supporting audience when hyping their project, the reality is that developing a never-before-seen product can be exceedingly difficult. Accordingly, completing a project like this “on time” may be incredibly challenging and, thus, is likely to result in project delays. The study highlights the strategies entrepreneurs use to manage expectations with audiences after missing deadlines. The study reveals the effectiveness and limitations of these strategies, providing new insight into temporal aspects of hype.
The research study examined five early-stage ventures that raised significant funding from Kickstarter – a rewards-based online crowdfunding platform that facilitates entrepreneurs raising money for projects by collecting small contributions from backers. However, each venture failed to deliver their products to backers in a timely manner, providing a unique context to understand how entrepreneurs manage misaligned expectations with backers over time. The team examined temporal dynamics related to each project including the funding campaign launch date, funding campaign closing date, expected product ship date, revised product ship dates, and the end of the project. Over the course of the project, the entrepreneurs provided numerous “updates” to backers, which backers could directly “comment” back on – providing the authors the ability to examine changes in backer sentiment (i.e., negative emotions or reactions) over time. Through their analysis, the authors identified the strategies entrepreneurs used to manage project timeline delays to buy them more time as they developed their products.
The entrepreneurs had two primary objectives in mind. First, they sought to deliver a high-quality product to their customers that aligned with promises about the product (e.g., features) they had made when hyping the venture to backers. Second, they sought to do so on time. However, when temporal commitments clashed with reality, the entrepreneurs sought to extend this timeline as much as possible to finalize the product. The tension is that once funding is secured, there is a limit on the amount of time backers are willing to wait, and entrepreneurs are on the clock.
As the clock became a concern, entrepreneurs actively manage backer expectations associated with missed deadlines, using four narrative practices: frequency of communication, evidence of progress, temporal reach and time-quality trade-offs.
In terms of the frequency of communication, providing regular updates about the product development journey provides backers with peace of mind about the real-time status of the project, even after delays. The regular updates were a key element to backers’ willingness to accept product delivery dates. However, the effectiveness of this practice dwindled with time. After numerous delays, frequent messaging reminded supporters of frustrations, triggering backlash at the entrepreneur’s inability to live up to the hype.
The entrepreneurs provided evidence of progress to mitigate negative backer sentiment after a delay. This involved the use of “unbounded claims,” which are future-focused positive claims that are not a part of the current reality with the product, and “bounded claims,” reflecting present-focused positive claims that align with reality at that time. The bounded claims involved actual pictures of products, team members and warehouses, providing backers with assurance that the delays were warranted and the progress is continuing to be made.
After missing a deadline, entrepreneurs turned to offering revised deadlines to backers. The authors discuss a phenomenon called temporal reach, which refers to the length of time (closer to or farther away) the new deadline is from the previously committed delivery dates. The authors find that supporters will more readily accept a project delay if it is announced with a proximal temporal reach, meaning a revised ship date relatively close to the original deadline. The farther away the new date, the more negative the backer sentiment. Accordingly, shorter temporal reach reflected a more effective strategy than longer temporal reach. However, there are limits on the number of times entrepreneurs can delay project delivery before backers stop believing in the project.
Finally, the entrepreneurs used a narrative practice referred to as time-quality trade-off, explaining to their backers that a need for better quality is the reason for a missed deadline. In short, they argue that the attention they are placing on quality will be worth the wait. This practice was effective in reducing negative sentiment, as this excuse aligned with backers’ desires for a high-quality product. By spinning delays as a good thing, entrepreneurs could buy more time.
Beyond the narrative practices, the authors identified external pacers (i.e., external events) influencing the effectiveness of the narrative practices in reducing negative sentiment. Some external pacers included outside events, such as manufacturing plant issues, as reasons beyond their control as justification for why some delays were warranted. While this worked early on, over time, this approach had adverse consequences (e.g., signaling entrepreneur incompetence), making it difficult to mitigate the backers’ negative sentiment. In other cases, backers evoked their own external pacers, pointing to events such as other companies releasing similar products during the time of the delays. The backers argued that the once innovative technologies were becoming obsolete, invalidating the justifications for delays.
Building on the influence of time in their projects, the authors recognized that while the narrative practices were effective early on, the effects diminished over time, leading to “hype disappointment.” The venture’s backers were ultimately disappointed when entrepreneurs didn’t live up to the hype they created. The related outcomes involve backer outrage, where backers who invested in the hype turn against the entrepreneur and project due to failing to deliver on promises. Through these findings, the authors caution entrepreneurs using hype to attract backer support from making unrealistic promises not only related to “what” they are developing but “when” they promise to deliver it by.
In summary, this study provides insights on how entrepreneurs manage temporal commitments when using hype to generate support for the ventures. The use of hype can create issues when entrepreneurs fail to fulfill promises within a certain timeframe. When examining the results of this study, it is important to understand the purpose of hype – to generate excitement and enthusiasm. The entrepreneur’s communications, aimed at their audiences, had this effect. However, a potential downside of this hype is that it creates inflated expectations that can be very challenging to manage when things do not go as planned. The reality is that “things going as planned” is often rare in entrepreneurship. Entrepreneurs who use hype to generate support should be ready to manage the effects of hype to sustain support over time. While hype is effective at building momentum, entrepreneurs need to be ready to face tension if – and when – things do not go perfectly as planned.
