Ethics and Entrepreneurs

By on May 15th, 2016 in Case Studies, Ethics

The Wall Street Journal outlined a series of the ethical issues facing start-ups, and even larger tech companies: “The Ethical Challenges Facing Entrepreneurs.” Having done time in a few similar situations, I can attest to the temptations that exist combining ethics and entrepreneurs.

Here are a few of the key issues:

  • The time implications of a startup — Many high-tech firms expect employees to be “there” far more than 40 hours per week. Start-ups are even more demanding, with the founders likely to have a period of their lives dominated by these demands — families, relationships and even individual health can suffer. What do you owe your relationships, or even yourself?
  • Not in the article, but in the news: In the U.S. many professional employees are “exempt” from overtime pay. This means they can be expected to work “when needed” but often it seems to be needed every day and every week, yielding 60 hour work weeks (and 50% fewer employees needed to accomplish the work.) I did this for most of my life, but also got stock options and bonus pay that allowed me to retire early … I see others in low paying jobs, penalized for not being “part of the team” as an exempt employee even when they have no work to actually perform. Start-ups can project the “founder’s passion” onto others who may not have anywhere near the same share of potential benefit from the outcome. This parallels a point in the article on “Who is really on the team?” — how do you share the pie when things take off? Do you “stiff” the bulk of the early employees and keep it to yourself? Or do you have some millionaire administrative assistants? It sets the personality of your company; trust me, I’ve seen it both ways.
  •  Who owns the intellectual property (IP)? — It would be easy if we were talking patents and copyrights (OK, maybe not easy, technologists often get shortchanged when their inventions are the foundation of corporate growth and they find they are looking for a new job.) But there are lots of grey areas — was a spin-out idea all yours, or did it arise from the lunch table discussion? And what do you do when the company rejects your ideas (often to maintain their own focus, which is laudable). So is your new start-up operation really free and  clear of legacy IP?
  • Misrepresentation is a non-trivial temptation. Entrepreneurs are looking for venture capital, for customers, for ongoing investors, and eventually to the business press (“xyz corporation fell short of expectations by 13% this quarter”). On one hand, if you are not optimistic and filled with hopeful expectations you can’t get off the ground. But ultimately, a good story will meet the test of real data, and along with this your reputation with investors, suppliers, customers, and in the worst case, the courts. There is a difference between “of course our product has ‘abc'” (when you know it doesn’t), and “if that’s what it takes, we will make it with ‘abc.'” I’ve seen both – it’s a pain to do those overtime hours to make it do “abc” because the salesperson promised it. It is more of a pain to deal with the lawyers when it wasn’t ever going to be there. Been there, done that, got the t-shirt (but not the book I’m glad to say).
  • What do you do with the data? A simple example — I worked for a company developing semiconductor design equipment. We often had the most secret designs from customers to work out some bug they discovered. While one aspect of this is clear (it’s theirs), there are more subtle factors like some innovative component, implicit production methods, or other pieces that a competitor or even your own operation may find of value.
  • What is the company role in the community? Some startups are 24/7 focused on their own operation. Some assume employees, and even the corporation should engage beyond the workplace. Again, early action in this area sets the personality of an organization. Be aware that technologists are often motivated by purpose as much as money — so being socially conscious may be a winning investment.
  • What is the end game? — Now that you have yours, what do you do with it? — Here I will quote one of the persons mentioned in the article: “The same drive that made me an entrepreneur now drives me to try to save the world.

I will suggest that this entrepreneur will apply the same ethical outlook at the start of the game as he/she does at the end of the game.