I think the problem is that people often get away with doing ethically dubious things in early-stage startups. It only makes news when they got caught.

For example: Airbnb started out by scraping Craiglist for their listings. This was not only ethically dubious, it was against Craigslist's terms of service.

They got away with it, though, and have obviously gone legitimate since. Same with YouTube and copyrighted content.

In previous threads on Theranos numerous posters defended the practice of early-stage companies lying to investors about their capabilities in order to gin up capital, the rationalization being it was okay if the capital let you eventually actually build those capabilities.

You are 100% correct in defining its original intent. I'm just afraid it is taken a bit to literal at this point.

If you don't mind being a liar

I think the real "fake it till you make it" does work and is very common. But you have to "fake" things that are reasonable. So when a customer or employer asks if you can do something, you say yes. It's one thing if you have never done it before. You can surely learn. It's another if you are saying you can do something that no one has ever done before.