This sounds like my company. I work at a startup as well and the founder would often times shows items where the HTML was still wet and not really explain that in order to get this to work, many man hours would be required. I think there is a balance between salesmanship and technical mis-representation. We have moved past this as we matured our development process, but I found it to be dishonest. This type of behaviour continues when we report numbers of users, $, etc. Not good.
We have bigger issues, but yes. We eventually cut him out of the loop and would not let him show stuff that was not ready. Working on quitting not from issues like these, but they are not too far off. If you are will to stretch the truth, then basically you are not trustworthy, whether when dealing with end-users, investors or employees. Next it will be 'mis-communications'regarding raises, options, titles, etc.
