The Dark Side of Silicon Startups

I was personally surprised to see the lack of business ethics in the LA start-up world. People say all CEOs are assholes, but I refuse to believe that. Calling someone an asshole almost frees them of the responsibility they must take for their actions. I noticed that people with poor ethics all had a drive to succeed that surpassed any drive to do good, and this misplaced ambition was highly encouraged by greedy investors. The type of ethics I consistently see lapses on are workers’ rights, and untrue marketing and public statements.

This happens because entrepreneurs, pushed by investors, tend to value rapid growth over anything else. Because the space is so liberal, no one mentions workers’ rights. People think it’s a given. That’s how leaders in $ilicon $tartups get away with it.

Rapid growth encourages people to be scrappy. Scrappy with pay, products, and sometimes, how we treat human beings. The goal of “disrupting an industry”, sometimes stretched to “saving the world”, can become an excuse for shady business practices.

“We’re a money-losing company. This is not some situation where, for example, we are just greedy capitalists who decided to skimp on safety in order to have more profits and dividends and that kind of thing. It’s just a question of how much money we lose. And how do we survive? How do we not die and have everyone lose their jobs?” — Elon Musk

[src: Tesla factory workers reveal pain, injury and stress: ‘Everything feels like the future but us’ ]

If we look at Musk’s argument, we see that the options are binary: it is either bad working conditions for employees or the death of the business and everyone’s jobs. If your business model is so challenging that you have to hurt your employees, then what the fuck your model is a failure.

Keep in mind that there are many people who profit from money-losing companies. Even if these were the only two choices – it makes more sense to just let the company fold since the work conditions are clearly unsustainable.  The false dichotomy might fool you into thinking the decision-makers at Tesla had no choice but to de-prioritize a safe working environment. Don’t fall for it. They screwed up. On top of that, they made excuses for it instead of taking responsibility. This is a pattern of behavior in the startup world. This is just one notable example that made it in the news. It happens all across the startup world in situations where there is high pressure for rapid growth. Take a look at the transportation and food delivery startups that use private contractors, many of them undocumented immigrants. What you find will make you very uneasy. It seems like startups have run out of code to hack, so ethics are what’s next on the chopping block. 

Can entrepreneurs maintain values and still make money? Yes. There are many values that raise our probability of success. Courage is a notable one when it comes to risk-taking. Valuing empathy, community, and fairness enables entrepreneurs to maintain low-turnover and high-quality work environments. High quality job creation in turn rewards businesses with excellent networks, low hiring costs, and better per-capita output. Honesty begets admiration and loyalty. Creativity helps save costs in new and unique ways.

The ‘problem’ with these values is they tend to have long-term returns and short-term losses. It requires entrepreneurs to value a few things above rapid growth. This can be scary. That’s why you need courage.

Values are critical to success. After all, it’s more important to know why you’re succeeding than to succeed. Like Admiral Adama said:

It’s not enough to survive. One must be worthy of survival.

Many startups are imperfect and scrappiness is a given. Many also abuse workers to impress their investors.

For a sector that claims innovation at every turn, it can be surprising to see the human costs that are brought up by the news every couple of weeks. The dark side of rapid growth is becoming more and more apparent – but this doesn’t mean it can’t be done right. It’s time for Silicon Beach/Valley to stop using survival as an excuse for unethical treatment of workers. It’s time to be worthy of survival.